12012021 - COVID-19: FG may suspend NIN registration — MINISTER

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24 — Vanguard, TUESDAY, JANUARY 12, 2021
Marketers eye another subsidy as Bonny Light price surges to $55 per barrel
By Prince Okafor
OPERATORS in the
downstream sector have
started canvassing for fuel subsidy
as the price of Bonny Light,
Nigeria’s premium oil grade rises
to $55 per barrel.
Market statistics showed that, oil
prices witnessed a marginal
decline, following renewed
concerns about global fuel demand
amid strict coronavirus lockdowns
in Europe and new movement
restrictions in China, the world’s
second-largest oil user.
According to market statistics,
Brent crude oil futures declined by
42 cents, or 0.8 percent, to $55.57 a
barrel after hitting an all-time high
of $56.39, its highest since
February 25, 2020.
Nigeria’s grade Bonny Light
stood at 54.91, after witnessing a
rise of 1.80 percent.
Also, the United States West Texas
Intermediate (WTI) slipped 22
cents, or 0.4 percent, to $52.02 a
barrel.
The Federal Government had in
the first quarter of 2020, announced
the removal of petrol subsidy after
reducing pump price to N125 per
litre from N145 per litre.
For instance, as at July 31, 2020,
the Petroleum Products Pricing
Regulatory Agency, PPPRA used
an exchange rate of N387.63/$1 to
calculate the cost of petrol.
Also, last weekend, naira closed
at 393.50 against the dollar at the
Investors’ and Exporters’ Foreign
Exchange Window, while
maintaining 472/$1 in the parallel
market.
The Federal Government had
through the PPPRA in the third
quarter of 2020 gazette the marketbased
pricing regime of the nation's
petroleum downstream sector.
Consequently, oil marketers
across the country now have the
power to fix petrol pump price
based on market forces.
The Executive Secretary, PPPRA,
Saidu Abdulkadir, said during a
press briefing that, “The
pronouncement that the sector is
deregulated means that prices
would strictly be based on the forces
of demand and supply.
“It is a market that is open, based
on bargaining power and based on
where you source your product. "
TUESDAY, JANUARY 12, 2021
Post privatisation: Nigeria’s stranded
power rises 263% to 3,742MW
.As generation average 4,050MW
By Obas Esiedesa
CONTRARY to expectations,
there are indications that
Nigeria’s electricity sector has
recorded huge set back since the
private sector take-over seven years
ago.
Data obtained by Vanguard
Energy last weekend shows that
volume of stranded power has risen
by about 263 percent to 3,742
megawatt (MW) as at end 2020,
from 1,031MW it recorded when the
power plants were handed over to
private investors in 2013.
Stranded power represents
available energy capacity which
could not be generated, transmitted
and distributed in the value chain due
to system failures.
It also indicates poor level of
investment in the value chain
especially the Electricity Distribution
Companies, DisCos, that could have
strengthened power supply and
utilization.
The stranded capacity of the nation
rose by over 100 percent to 2,735MW
in the first year of privatisation, before
dropping to 3,373MW in 2016.
Average generation
However, the nation’s average
power generation rose to 4,050MW,
from 3,184MW indicating 27.2 per
cent over the period under review,
meaning that not much has changed
in terms of actual power generation
by the Generation Companies
(GenCos) in the past seven years.
A breakdown showed that the
average power generated in 2014
(the first full year post-privatization)
was 3,419MW.
In 2015, the average generation
rose by 5.46 per cent to 3,606MW,
showing an increase of 187MW,
while in 2016, the average power
generation dropped by 9.40 per cent
to 3,267MW.
However, power generation
recovered with about 10.89 percent
rise in 2017 to 3,623MW, and also
recorded another increase of 6.65
percent to 3,864MW in 2018, before
dropping again in 2019 by 2.12
percent to 3,782MW.
The data also shows that in 2020
the average generation rose by 7.08
per cent to 4,050MW.
Installed capacity
However, Nigeria’s generation
capacity increased from 4,214MW
to 7,793MW, indicating an increase
of 84.93 per cent during the period.
ERGP target
Although this output represents the
peak performance, it indicates about
22.07 per cent underperformance
against the target of 10,000MW set
by Economic Recovery and Growth
Plan, ERGP.
Also, the current output represents
a huge gap against the national
requirement, currently estimated at
over 20,000MW.
In its target obtained by Energy
Vanguard, the nation's Economic
Recovery and Growth Plan, ERGP,
stated: "The ERGP aims to increase
power generation by improving
operational capacity, encouraging
small-scale renewable projects and
building additional generation
capacity. Medium term, the ERGP
aims to ensure the delivery of at least
10,000 MW (on-grid and off-grid) of
operational capacity by 2020 by
optimising the existing installed
capacity available for generation,
addressing gas supply issues
including vandalism and
completing major gas infrastructure
lines for power.”
Limited distribution, others
Besides, an investigation by
Energy Vanguard showed that, the
the nation lacks adequate capacity
to transmit and distribute 7,793MW
available generation to consumers
nationwide.
Specifically, the Transmission
Company of Nigeria (TCN), which
puts its capacity at 8,100MW, added
that it can only wheel an average of
4,00WM for distribution.
In a recent statement obtained by
Energy Vanguard, TCN General
Manager, Public Affairs, Ndidi
Mbah, also stated: “The
Transmission Company of Nigeria
has once again successfully
transmitted another all-time peak of
5,584.40MW recorded by the power
sector on Thursday, January 7, 2021,
at 21:15hrs. This is 24 hours after the
previous peak of 5,552.80MW was
recorded on Wednesday, January 6th,
2021 at 20:15hrs that was equally
transmitted.”
She added: “This latest all-time
peak transmitted, surpasses the last
peak generation of 5,552.80MW
transmitted by TCN by 31.60MW. The
management of TCN assured that it
will continue to work hard to ensure
efficient transmission of power
generated on the nation's electricity
grid.”
Like the TCN, the Electricity
Distribution Companies, DisCos,
can only deliver about 4,000MW to
consumers because of poor and
limited facilities.
Mr. Aaron Artemis, Special
Adviser, Media and
Communication to the Minister of
Power, Mr. Sale Mamman, in an
interview with Energy Vanguard,
said: “The Nigeria power sector is a
market chain, where the generating
companies, generate electricity
through gas and hydro plant and
send to the TCN, who now transmit
to the different DISCOs in the
country. The various problems and
losses would be greatly reduced
when investors increase their
capacities to generate funds as well
as invest in new facilities to deliver
adequate electricity to consumers
nationwide.”
Impact on businesses
In its recent position obtained by
Energy Vanguard, the Organised
Private Sector of Nigeria, OPSN,
stated: “It is fundamentally true that
improvement in electricity supply in
terms of tariff, quantity, quality,
reliability, and efficiency in service
delivery is critical to the growth and
development of the private sector
businesses, especially
manufacturing. The is the major
reason why the OPSN has followed
with keen interest, all recent
developments relating to issues of
electricity supply, particularly the
desire to put in place a cost-effective
electricity tariff in the industry.
“For the records, private business
operators in Nigeria, especially the
manufacturing sector is already
plagued by high cost operating
environment arising from the poor
regulatory environment,
macroeconomic asymmetries and
the high cost of energy. This
unfriendly operating environment
is responsible for the oscillatory
performance of the sector in the past
few years. For instance, Electricity
outages average about 10 hours per
day, electricity expenses still constitute
about 40% of the total cost of
production and the average cost of
self-generated electricity averages
N119 billion in 2019 alone. Most
worrisome is the fact that operators
in the Private Sector, especially the
manufacturing sector bear the
burden of commercial and technical
losses through very high monthly
electricity bill that is largely
estimated.”
Also, in a statement obtained by
Energy Vanguard, the President,
Lagos Chamber of Commerce and
Industry, LCCI, Mrs. Toki
Mabogunje, who complained about
poor supply and arbitrary billing,
called for adequate metering of
consumers.
She stated: “This is the only way to
engender the confidence of
consumers in the billing process.
Metering should be accorded a high
priority.”
Privatisation
The sector was privatized in
November 2013 with six power
generation plants and eleven
electricity distribution companies
handed over to the private sector.
The Federal Government retained
control of the Transmission
Company of Nigeria (TCN).
Experts
Nevertheless, in an interview with
the Energy Vanguard, weekend, a
former Chairman of NERC, Dr. Sam
Amadi noted that the new
generation peak is not an indication
that the sector has improved
significantly since it was privatized
in 2013.
Dr. Amadi who teaches law at
Baze University, Abuja, pointed out
that the sector is still as fragile as it
was at privatization.
According to him, “Was the
5,500MW distributed to Nigerian
households and businesses? So, all
the peak transmission may not be a
big deal if we cannot distribute
5,000MW.
“The price review is partly because
DisCos sold less than 4,000MW in
2020. I think we should stop
deceiving ourselves that we are
witnessing any serious
improvement. No, we are not. The
system is still as fragile as it was in
2013”.
He added that, “we need to
seriously review the policy direction
and go back to the basics so that we
can have a sustainable
improvement in the network.
“The reason we cannot have a
better power supply is because all
the value chains are very weak and
lack financial capacity and
managerial competence to
drastically improve the grid”.
Speaking in a telephone interview,
Professor Adeola Adenikinju,
Director, Centre for Petroleum
Energy Economics and Law,
University of Ibadan, said it was
shameful that a 5,584MW
generation peak was being
celebrated in a country of 206
million people.
Adenikinju, a former President of
the Nigerian Association for Energy
Economics, pointed out that the
sector has not shown serious
improvement in the past seven
years.
He, therefore, called for a policy
rethink that would tackle the
challenges facing the sector.
“I think it is a big shame and an
indication of the not too successful
privatization of the sector. It was a
failure of publicly managed utilities
before, now we have the failure of
privately managed utilities. We
really need to re-evaluate the whole
privatization of the power sector if
we are celebrating this with our
population. If you look at our
population of 2013 and you look at
our population now in per capita
term, what we have added
generation wise will be very
insignificant, that is if there is any
addition at all”, he stated.
He observed that without
breaking the jinx of poor electricity
supply “there is no way we can
actually, develop as a country. There
is no way we are going to meet the
target of reducing poverty by 100
million by 2030 or even getting this
economy to grow at a rate that is
greater than the growth rate of the
population”.
He further stated that Nigeria
needs to do whatever it takes to fix
the sector, adding “we cannot be
celebrating this, a country of over
206 million producing 5,600MW is
not something we should be
celebrating at all, and rather we
should address the challenges”.
Conclusion
He added: “I think also that the
DisCos (Electricity Distribution
Companies) are not investing
enough."