Energy Archives — Page 4 of 5 — Business Bells

Category: Energy

Dangote Wants Only Refinery Licence Holders To Import Fuel

Dangote Group has suggested for inclusion in the Petroleum Industry Bill a provision that the licence to import petroleum products should be assigned only to companies with active refining licences.

The company, which is building a 650,000-barrels-per-day refinery in Lagos, said this would encourage investment in local refining.

The Chief Strategy Officer, Dangote Group, Aliyu Suleiman, in a presentation during a visit by members of the National Assembly’s Joint committee on PIB to the project site, highlighted several recommendations by the company.

He said, “Nigeria is exceptional in being a major oil producer with near zero refining capacity.

“Though the Dangote Refinery will help address this, there could be periods when petroleum products may need to be imported, such as when the refinery is undergoing turnaround maintenance or if demand grows to exceed capacity.”

The company recommended that the backward integration policy should be applied in the downstream petroleum sector to encourage investment in local refining.

“To support this, licence to import any product shortfalls should be assigned only to companies with active refining licences. Import volume to be allocated between participants based on their respective production in the preceding quarter. Such import will be done under the DSDP scheme,” he said.

According to Dangote Group, fuel imports into Nigeria are of very low quality, and this has harmful effect on health.

“It also impacts performance and durability of vehicles, especially high performance cars. ECOWAS members (including Nigeria) signed a declaration in February 2020 to adopt cleaner fuels,” it said.

The company suggested that to safeguard the health of Nigerians, imported petroleum products must conform to the Afri-5 specification (50 ppm sulphur) in line with the ECOWAS declaration of February 2020 on adoption of the Afri-Fuels Roadmap.

The company described the provision in the PIB for third-party access to pipelines as a source of concern

“Section 113(3) mandates the regulator to ensure third party access to facilities and pipelines for midstream and downstream petroleum operations. It is not clear how this would work but it means that a third party could potentially request to use any excess capacity at the refinery, fertiliser or trading facilities,” it said.

The company recommended that if this must be retained, the provision should be for tariffs to be on a willing-buyer, willing-seller basis, adding, “Bill currently attempts to provide a formula for calculating this.”

1 March 2021
Electricity Consumers Get 611,231 Meters Under MAP Scheme

A total of 611,231 meters have been deployed as at January 31, 2021 under the Meter Asset Provider initiative since its full operation despite the COVID-19 pandemic and other extraneous factors, the Nigerian Electricity Regulatory Commission, NERC has said.

NERC disclosed this in a consultation paper on the review of the MAP Regulations.

The proposed review of the MAP scheme is coming nearly four months after the Federal Government launched a new initiative called National Mass Metering Programme aimed at distributing six million meters to consumers free of charge.

“The existence of a huge metering gap and the need to ensure successful implementation of the MYTO 2020 Service-Based Tariff resulted in the approval of the NMMP, a policy of the Federal Government anchored on the provision of long-term low interest financing to the Discos,” NERC said.

The commission had in March 2018 approved the MAP Regulations with the aim of fast-tracking the closure of the metering gap in the sector through the engagement of third-party investors (called meter asset providers) for the financing, procurement, supply, installation and maintenance of meters.

It set a target of providing meters to all customers within three years, and directed the Discos and the approved MAPs to commence the rollout of meters not later than May 1, 2019.

But in February 2020, NERC said several constraints, including changes in fiscal policy and the limited availability of long-term funding, had led to limited success in meter rollout.

NERC, in the consultation paper, highlighted three proposed options for metering implementation going forward.

The first option is to allow the implementation of both the NMMP and MAP metering frameworks to run concurrently; the second is to continue with the current MAP framework with meters procured under the NMMP supplied only through MAPs (by being off-takers from the local manufacturers/assemblers).

The third option is to wind down the MAP framework and allow the Discos to procure meters directly from local manufacturers/assemblers (or as procured by the World Bank), and enter into new contracts for the installation and maintenance of such meters.

“Customers who choose not to wait to receive meters based on the deployment schedule of the NMMP shall continue to have the option of making upfront payments for meters which will be installed within a maximum period of 10 working days,” NERC said.

The regulator said such customers would be refunded by the Discos through energy credits, adding that there would be no option for meter acquisition through the payment of a monthly meter service charge.

“Where meters have already been deployed under the meter service charge option, Discos shall make one-off repayment to affected customers and associated MAPs. Such meters shall be recognised in the rate base of the Discos,” it added.

NERC urged stakeholders to provide comments, objections, and representations on the proposed amendments within 21 days of the publication of the consultation paper.

26 February 2021
Nigeria Loses N151.78bn Crude Oil Monthly – NNPC

Nigeria is currently losing an average of 200,000 barrels of crude oil daily, the Nigerian National Petroleum Corporation stated on Wednesday.

Brent, the oil against which Nigeria’s crude is priced, was $66.75 per barrel on Wednesday, while the official exchange rate of the dollar stood at 379/$.

From the above figures, it showed that the country was losing about N151.79bn in 30 days, going by the 200,000 barrels of crude oil being lost daily, as revealed by NNPC.

Group Managing Director, NNPC, Mele Kyari, disclosed the volume of crude oil lost daily in Nigeria while speaking at a meeting with the Chief of Defence Staff, Major General Lucky Irabor.

The NNPC boss was quoted in a statement issued in Abuja by the corporation’s spokesperson, Kennie Obateru, as saying, “We have two sets of losses, one coming from our products and the other coming from crude oil.

“In terms of crude losses, it is still going on. On the average, we are losing 200,000 barrels of crude every day.”

On his part, Irabor promised to galvanise the military to provide maximum security for the nation’s oil and gas assets.

He said, “I am delighted that you made this effort, and I tell you that the Armed Forces of Nigeria will collaborate with you to protect NNPC’s assets.”

Irabor acknowledged the role of the oil and gas sector to the economy and stated that there was need for collaboration between the NNPC and the Armed Forces to protect oil and gas facilities.

“It is my intention to cooperate maximally with you and to give necessary instructions to all officers in the Armed Forces,” he said.

In a related development, a professor of law at the University of Lagos, Dayo Ayoade, has said the Federal Government was losing huge revenue in the upstream sector through the inadequacy of the measurement infrastructure.

Between 2009 and 2019, the lecturer said, the nation lost 500 million barrels of crude oil valued at $44.7bn which was not assessed for royalty and tax.

Disclosing this at a virtual meeting on illicit financial flows organised by the Independent Corrupt Practices and Other Related Offences Commission in Abuja on Wednesday, Ayoade pointed out that Nigeria currently relied on crude oil producers for determination of crude oil volumes.

He said, “Nigeria currently relies on holders and producers of crude oil for determination of volumes of crude oil.

25 February 2021
Businesses Groan As Diesel Price Soars To N250/Litre

This is not the best of times for most firms who depend largely on Automotive Gas Oil, also known as diesel to power their generating sets as its price has risen to a high of N250 per litre.

Visits to some filling stations in Lagos show that price of the product had been increased to N250 per litre, while many others sold it at between N220-N245.

Northwest Petroleum along the Oshodi-Apapa road increased the pump price of diesel to N250 per litre; AP (Ardova Plc), along Airport road, Ikeja, N248; and Oando, along Acme Road, N240.

The National Bureau of Statistics, in its AGO price report on Tuesday, said the average price paid by consumers for diesel increased by 0.22 per cent to N224.86 per litre in January 2021 from to N224.37 in December 2020.

It said states with the highest average price of diesel were Adamawa (N268.33), Zamfara (N262.78) and Kebbi (N257.50).

“States with the lowest average price of diesel were Osun (N194.60), Anambra (N195.83) and Enugu (N198.24),” the NBS added.

Crude oil price accounts for a large chunk of the final cost of petroleum products, and the deregulation of the downstream oil sector by the Federal Government means that the pump prices of the products will reflect changes in the international oil market.

The international oil benchmark, Brent crude, has risen by more than 25 per cent this year from the $51.22 per barrel at which it closed last year. It rose to $65.25 per barrel as of 6:30pm Nigerian time on Tuesday.

Diesel is mostly used by businesses to power their generators amid a lack of reliable power supply from the national grid.

The President, Association of Small Business Owners of Nigeria, Mr Femi Egbesola, lamented that the recent increase in the price of diesel was taking a heavy toll on businesses, especially Small and Medium Enterprises.

“The cost of diesel and raw material is giving us a nightmare. The price of diesel has been skyrocketing in a way that creates fear in particularly manufacturers,” he told our correspondent on Tuesday.

According to him, it is difficult for businesses to factor all the increase in diesel price in their final product prices.

Egbesola said, “That is why a lot of companies are downsizing and are making sure that they only produce products that they are so sure will sell in the market.

“Many companies have reduced their product lines significantly just to be able to cope. And that is not good for us because by the time this goes on, unemployment will increase. I believe government should be able to do something about this.”

He said although the downstream petroleum sector had been deregulated, there should be checks and balances.

Egbesola said many small businesses’ savings had been eroded already because ‘we keep spending our savings to make sure we don’t close shop’.

He said, “If things continue this way, there is no way we are not going to close shop. We are still struggling with the recent increase in electricity tariff.

“Many small businesses still depend so much on diesel generators because there is no alternative power supply. It is only the big players that have the facilities to use gas. And we cannot use solar installation because it is very expensive.”

Nigeria, Africa’s largest oil producer, relies largely on importation for petrol and other refined products as its refineries have remained in a state of disrepair for many years.

24 February 2021
No Plans to Hike Petrol Pump Price in February, NNPC Assures Nigerians

The Nigerian National Petroleum Corporation (NNPC) has assured organised labour and Nigerians that there is no plan to increase the price of Premium Motor Spirit (PMS) otherwise known as petrol in the month of February.

This follows the reported rumour of plans to increase the price of petrol due to the continuous increase in the global price of crude oil and the reported hoarding of the product by some depot owners and marketers.

The assurance was contained in a statement issued by the NNPC and signed by the Group General Manager, Group Public Affairs Division, Dr Kennie Obateru, on Thursday in Abuja.

Obateru, in the statement, said, “In spite of the rise in the price of crude oil in the international market, NNPC has ruled out any increment in the ex-depot price of PMS in February 2021.’’

Obateru explained that the decision was to allow ongoing engagements with organised labour and other stakeholders on an acceptable framework that would not expose the ordinary Nigerian to any hardship.

While giving assurances that the corporation had enough stockpile of petrol to keep the nation well supplied for about 40 days, he urged petroleum products marketers not to engage in the hoarding of PMS in order not to create artificial scarcity and unnecessary hardship for Nigerians.

Obateru also called on relevant regulatory authorities to step up monitoring of the activities of marketers with a view to sanctioning those involved in products hoarding or arbitrary increase of pump price.

Note:

Recall that the Minister of State for Petroleum Resources, Chief Timipre Sylva, had in March 2020 announced the deregulation of the downstream sector of the oil industry and the subsequent removal of the petrol subsidy.

He said that subsequently, the prices of petroleum products would be determined by prevailing market forces.

With the increase in the oil price to about $65 per barrel, oil marketers and other stakeholders have insisted that the current petrol price is not sustainable unless the Federal Government would return back to the subsidy regime, which has no provision in the 2021 budget.

The ex-depot price is the price at which oil marketers buy products from the depot and the price determines the price at which they sell to motorists at their various petrol stations.

18 February 2021
Marketers Raise Petrol Price To N170 As Depots Suffer Shortage

Fuel marketers have started adjusting their petrol pump prices amid the supply shortage facing private depots in Apapa.

Investigations showed that some filling stations in Lagos and Ogun states increased the pump price of petrol to N170 per litre on Tuesday from N162 per litre.

Some of the stations were Capital Oil and Gas, Fatgbems and Amo Oil, all along the Lagos-Ibadan Expressway. Another station, Enyo Retail, adjusted its pump price to N165 per litre from N162.

The National Operation Controller, Independent Petroleum Marketers Association of Nigeria, Mr Mike Osatuyi, told our correspondent that members of his association had to increase the pump price because they bought the product at N160-N161 from depot owners.

Last Thursday, there were reports that IPMAN members disrupted loading of petroleum products at private depots in Apapa on Wednesday as well as Ibadan, Ejigbo and Mosimi depots belonging to the Nigerian National Petroleum Corporation.

They picketed the facilities to protest their inability to get products due to a new payment method introduced by the Petroleum Products Marketing Company, a subsidiary of the NNPC.

“My members buying from DAPPMAN members are buying at N160-N161, and they will have to add their transportation costs to it. So, at what price do you want them to sell? Even that N170 is still very cheap,” Osatuyi said on Tuesday.

He said the PPMC had told marketers to register under the new payment method, called ‘PPMC Customer Express’, before they could buy products from it.

“Right now, PPMC has said that the era of ATP (Authority to Pay) has gone. It means that payment has to be made online. So, my members are now in the process of doing that, and without doing it, we cannot lift products,” he added.

The NNPC, which has been the sole importer of petrol into the country in recent years, is still being relied upon by depots and marketers for the supply of the product despite the deregulation of the downstream petroleum sector.

Our correspondent also gathered that many private depots in Apapa, Lagos, from where many marketers get petroleum products for distribution to other states, were running dry of petrol due to supply shortage.

When contacted, the Group General Manager, Group Public Affairs Division of the Corporation, Dr Kennie Obateru, told our correspondent that there was no shortage of petrol supply from the NNPC.

He said, “We have 1.7 billion litres of product as at today, which will give us about 40 days’ sufficiency. Even some more vessels are on the programme.

“And we have not increased our ex-depot price; even though we know some of them (marketers) are sort of slowing down because they are expecting that we will react to the crude oil price increase. But for now, we haven’t done that.”

One of the major private depots told marketers to stop payment for the petrol because of the supply shortage and the uncertainty over when it would get the product.

A top official of a Lagos-based oil marketing company told our correspondent on condition of anonymity that there had been erratic supply of petrol to private depots in Apapa since last week.

17 February 2021
Fuel Scarcity Looms As Marketers Disrupt Fuel Loading

Members of the Independent Petroleum Marketers Association of Nigeria on Wednesday disrupted loading of petroleum products at private depots in Apapa as well as Ibadan, Ejigbo and Mosimi depots belonging to the Nigerian National Petroleum Corporation.

It was learnt that the marketers picketed the facilities to protest their inability to get products due to a new payment method introduced by the Petroleum Products Marketing Company, a subsidiary of the NNPC.

The PUNCH reports that Chairman, IPMAN, Ore Depot, Mr Shina Amoo, confirmed the development in an interview in Ibadan on Wednesday.

He said the members of the association blocked the depots with tankers to protest the new payment method.

Amoo said independent marketers were angry because the new payment method, called ‘PPMC Customer Express’, was foisted on them suddenly and the NNPC expected compliance immediately without considering the business interests of many members of the association.

He explained that with the new arrangement, major marketers and very few independent marketers with huge funds could pay for 200 trucks and load them while those who had paid for one or two trucks would be on queue for many months unattended to.

He said, “They must return to the old way of payment, which is also an online payment through Remita. IPMAN members held a meeting last night and decided to block loading depots in Ibadan, Ejigbo, Mosimi and private depots in Apapa.

“IPMAN members blocked the depots this morning with their trucks to protest the new payment method.”

According to Amoo, the picketing will continue until the PPMC reverts to the previous payment method.

He said, “The new payment requires various prerequisite documents like renewal of bulk purchase, renewal of licence and several other documents that are not readily available.

“Within few days of this new payment method, some northern big marketers have used the situation to shortchange independent marketers in the South-West. With this, fuel scarcity is imminent.

“PPMC Customer Express mode of payment was introduced without consideration for billions of naira worth of tickets which IPMAN members already tied down in NNPC system.”

Amoo said the new payment method was introduced by the PPMC on February 4, adding that since then, no independent marketer had been able to load.

The NNPC, which has been the sole importer of petrol into the country in recent years, is still being relied upon by marketers for the supply of the product despite the deregulation of the downstream petroleum sector.

Private oil marketing companies have continued to lament that their inability to access foreign exchange at the official rates has hampered efforts to resume petrol importation.

11 February 2021
TUC Tackles Petroleum Minister As FG Says Nigerians Should Prepare For Fuel Hike Pains

The Trade Union Congress on Tuesday took a swipe at the Minister of State for Petroleum Resources, Chief Timipre Sylva, who told Nigerians to prepare for the pain associated with the increase in crude oil price.

Also, the Manufacturers’ Association of Nigeria, the Lagos Chamber of Commerce and Industry and other stakeholders on Tuesday advised the Federal Government to use rising revenue from crude oil to tackle poverty and drive an all-inclusive growth.

The groups stated this in separate interviews with The PUNCH while reacting to a statement by Sylva, who earlier on Tuesday warned Nigerians to expect benefits and pain from the rising price of crude oil in the world market.

For Nigeria, which relies on crude oil for about 50 per cent of government revenues and over 90 per cent of export earnings, rising oil price means increased revenue.

On the other hand, rising oil price also translates to increased cost of petroleum products as the country depends heavily on imports due to a lack of domestic refining.

Sylva, who spoke at the launch of the Nigerian Upstream Cost Optimisation Programme in Abuja, said, “Since we are optimising everything, NNPC (Nigerian National Petroleum Corporation) needs to also think about the optimisation of product cost because as we all know oil prices are where they are today: $60.

“As desirable as this is, this has serious consequences as well on product prices. So we want to take the pleasure and we should as a country be ready to take the pain.”

He added, “Today, the NNPC is taking a big hit from this. We all know that there is no provision in the budget for subsidy. So, somewhere down the line, I believe that the NNPC cannot continue to take this blow. There is no way because there is no provision for it.

“As a country, let us take the benefits of the higher crude oil prices and I hope we will also be ready to take a little pain on the side of higher product prices.”

The PUNCH had reported exclusively on Tuesday that the landing cost of Premium Motor Spirit (petrol) imported into the country had risen by 13.34 per cent in one month to about N180 per litre on the back of the increase in global oil prices.

The international oil benchmark, Brent crude, which rose to $59.34 per barrel on Friday from $53.70 per barrel on January 7, crossed the $60 per barrel mark on Tuesday for the first time in over 12 months.

Crude oil price accounts for a large chunk of the final cost of petrol, and the deregulation of petrol price by the Federal Government last year means that the pump price of the product will reflect changes in the international oil market.

Since November 13, 2020 when the pump prices of PMS were last increased in the country, the oil price has increased by over 45 per cent.

Going by the petrol pricing template of the Petroleum Products Pricing Regulatory Agency, the landing cost of petrol rose to N179.67 per litre last Friday from N158.53 per litre on January 7, with the expected open market price (pump price) of the product increasing to N202.67 per litre from N181.53 per litre.

The rising price of crude oil pushed the cost of petrol quoted on Platts to $543.25 per metric tonne (N157.99 per litre, using N390/$1) last Friday from $480.25 per MT (N139.67 per litre) on January 7.

The NNPC, which has been the sole importer of petrol into the country in recent years, is still being relied upon by marketers for the supply of the product despite the deregulation of the downstream petroleum sector.

The Federal Government removed petrol subsidy in March 2020 after reducing the pump price of the product to N125 per litre from N145 on the back of the sharp drop in crude oil prices. The price reduction lasted till June.

Nigerians saw increases in the pump prices of petrol in four months, rising from N121.50–N123.50 per litre in June to N140.80-N143.80 in July, N148-N150 in August, N158-N162 in September and N163-N170 in November.

There is no honour in your statement, Congress lambasts minister

Reacting to the minister’s statement, the TUC wondered why the government was always quick to announce increase in fuel pump prices but slow to implement agreements reached with the organized labour.

The TUC President, Quadri Olaleye, who stated this when asked by The PUNCH to react to the minister’s statement, noted that there was nothing honourable about what the minister said.

The union leader stated, “The question is why is government always quick to tell us about the rise in the price of crude oil in the international market and the need to increase the price of PMS (Premium Motor Spirit) here but it always takes them weeks, if not months to implement agreements reached with the organised labour? It all points to one thing: they have no mercy on the poor people of this country.”

Olaleye noted that the carefree attitude of the government to the plight of workers and other Nigerians showed that they do not care.

He further argued that they also seemed unconcerned about the poverty, insecurity, and other social plaques their policies had caused.

The TUC leader added, “ In every move and statement by government officials, you could see and feel their care-free attitude and indifference to our plight.

“It appears they are not disturbed by the poverty-ridden plight of Nigerians and the unemployment/insecurity situation that their obnoxious policies have created in the country. There is nothing honourable about what the minister has said.”

Commenting on the minister’s statement, The Director-General of MAN, Mr Segun Ajayi-Kadir, said the expected increase in revenue should benefit all through an all-inclusive economic growth, which should include massive job creation.

He noted that the positive side of increased national revenue from the rising crude oil prices in the international market “is now threatening to bring forth the negative side for us.”

He said, “Even though the economics of it looks straightforward, any possible increase in fuel prices in Nigeria will have to be considered carefully. This is because of its potential negative impact on the fragile economic and security situation of the country at this time.

“Besides, we are just witnessing some measure of industrial stability and merely hanging on to an open economic and social life under the ravaging COVID-19 pandemic. I am not sure that we are ready for a fuel-induced inflation. This is quite apart from the heavy cost implication it portends for companies that are already forced to generate their own electricity for long hours due to poor supply inadequacy.

Increased revenue from crude oil should have multiplier effects, says MAN

“Also, for those who may want to rationalise the possible increase, the question to ask is what is government going to do with the corresponding increased revenue from crude oil sales in the international market? It should normally countermand the rise in pains arising from the rise in the price of fuel. Are we poised to translate this windfall, if I may use the word, to inclusive economic growth and harvest its inherent multiplier effect? Will it fund productivity, job creation and increased investments?”

Nigeria faces a dilemma, says LCCI

The Director-General of the LCCI, Dr Muda Yusuf, said the country must find a balance between social considerations and the commercial and economic considerations

According to him, the deregulation policy of the downstream sector of the petroleum industry posed a dilemma at a time like this.

He stated, “From a purely economic and commercial point of view, it is a policy that we need to sustain irrespective of what the oil price is because the capacity to be able to continue with fuel subsidy and its problems is not there, and it is also not in the interest of the economy for us to continue along that route,” he said.

According to him, the subsidy regime comes with a lot of fiscal pressure on government finances, the problem of corruption, and the problem of diversion of petroleum products to neighbouring countries, among others.

Yusuf said, “But the dilemma is the implications for the welfare and social conditions of the people because we are dealing with a situation of a great deal of extreme poverty among the majority of Nigerians.

“We are dealing with an economic recession, cost of production and transportation that is already high, and a populace that is already on edge because of the challenges of the environment. We are dealing with a population that is characterised by high income inequality.

“So, it is important that we have a balance because not deregulating the sector is not really an option; so we have to find a model that will work – like a balance between the social considerations and the commercial and economic considerations.”

10 February 2021
Petrol Price May Hit N190 As Oil Nears $60

Marketers have said with the current realities in the global crude oil markets, the price of Premium Motor Spirit (petrol) in Nigeria should be between N185 and N200 per litre, unless the government wants to subsidise the product.

The upturn in global oil prices last week has again brought to the fore marketers’ concerns over the non-implementation of the full deregulation of the downstream petroleum sector as the pump prices of petrol have been left unchanged for more than two months.

Top officials of two major marketers’ associations who spoke with our correspondents on Saturday said the continued increase in oil prices had brought back petrol subsidy.

The PUNCH had reported on January 11 that the sustained increase in global crude oil prices had pushed up the landing cost of imported petrol closer to the current pump prices of the product in Nigeria, and appeared to have triggered a return to petrol subsidy era.

Since November 13, 2020 when the pump prices of PMS were last increased in the country, the price of the international oil benchmark, Brent crude, has increased by 43 per cent, rising from $41.51 per barrel to $59.34 per barrel on Friday.

Fuel marketers had in December expected another upward adjustment of PMS prices to reflect the further rise in crude oil prices, which closed at $51.22 per barrel on December 31.

However, a N5 reduction in petrol price, effective December 14, was announced by the Federal Government – a development that left them reeling in shock and questioning the deregulation of petrol price.

Crude oil price accounts for a large chunk of the final cost of petrol, and the country has continued to spend so much on petrol imports for many years amid low domestic refining capacity.

According to the marketers, the pump price of petrol should be between N185 and N200 per litre.

The product is currently sold at between N160 and N165 per litre at many filling stations in Lagos.

The Executive Secretary/Chief Executive Officer, Major Oil Marketers Association of Nigeria, Mr Clement Isong, said, “Members of my association are operating in Nigeria and care about the long-term sustainability of the industry as well as the country itself.

“So, we know that depending on what exchange rate you use, the pump price should be between N185 and N200 per litre.

“For as long as we continue to sell the product at what we are currently selling it, then somebody is bearing the cost of subsidy, and the country really cannot afford subsidy at this time.”

He said the demand for petrol had increased significantly in the country, adding that the security of supply had been threatened.

Isong said smuggling might have resumed because of the significantly different prices across the borders, which were recently opened.

“So, we need to completely restructure our entire supply chain. We need to reach a place where, if deregulation takes effect, refining will resume in Nigeria. We need to find a way of making sure that Nigerians benefit from deregulation. That, I believe, is what the discussion must be.”

The Nigerian National Petroleum Corporation, which has been the sole importer of petrol into the country in recent years, is still being relied upon by marketers for the supply of the product despite the deregulation of the downstream petroleum sector.

Private oil marketing companies have continued to lament that their inability to access foreign exchange at the official rates has hampered efforts to resume petrol importation.

The PUNCH reported on Friday that the Federal Government had announced the commencement of discussions with representatives of the labour movement on how to raise the freight rate from N7.51 per litre to N9.11 per litre.

Freight is one of the elements that make up the landing cost of the petrol imported into the country.

The National Operation Controller, Independent Petroleum Marketers Association of Nigeria, Mr Mike Osatuyi, told our correspondent that the implementation of the new freight rate would lead to petrol price increase.

He said, “Already, we are back to subsidy, and from the information I have which is confirmed, the Federal Government is subsidising about N1.8bn per day because 70 million litres are being pumped out every day now because the borders have been opened; I don’t know where the fuel is going.

“Government cannot afford subsidy, and there is no subsidy in the budget. So, the market fundamentals have to come to force now.

“Based on $56 per barrel of crude oil, our pump price should be about N186 to N190. But now that oil price has even gone to $59, then pump price should not be less than N200 per litre. There is no way Nigerians can avoid petrol price increase.”

Osatuyi said the increase in oil prices had already pushed up the pump prices of diesel and kerosene in the country.

The Minister of State for Petroleum Resources, Timipre Sylva, had said in September last year that the Federal Government had stepped back in fixing the price of petrol, adding that market forces and crude oil price would determine the cost of the product.

The Federal Government removed petrol subsidy in March 2020 after reducing the pump price of the product to N125 per litre from N145 on the back of the sharp drop in crude oil prices. The price reduction lasted till June.

Nigerians saw increases in the pump prices of petrol in four months, rising from N121.50-N123.50 per litre in June to N140.80-N143.80 in July, N148-N150 in August, N158-N162 in September and N163-N170 in November.

Apart from the increase in global oil prices, the devaluation of the naira last year also led to a significant rise in the cost of imported petrol.

If the pump price of petrol is left unchanged amid the rise in oil prices, it means the NNPC would again bear the latest subsidy cost on behalf of the government as it did for several years before its removal last year.

In July 2020, Sylva said in a statement that the Federal Government had reached a conclusion that it could no longer bear the burden of petrol subsidy.

“After a thorough examination of the economics of subsidising PMS for domestic consumption, the Federal Government concluded that it was unrealistic to continue with the burden of subsidising PMS to the tune of trillions of naira every year, more so when this subsidy was benefiting in large part the rich, rather than the poor and ordinary Nigerians,” he said.

According to him, deregulation means that the government will no longer continue to be the main supplier of petroleum products but will encourage the private sector to take over the role of supplier of the products.

8 February 2021
World Bank Approves $500m To Boost Nigeria’s Electricity Sector

World Bank has approved $500 million to support Nigeria to improve its electricity distribution sector.

The bank, in a statement on Friday, said that the project will help boost electricity access by improving the performance of the Electricity Distribution Companies (DISCOs) through a large scale metering program desired by Nigerians for a long time.

It explained that financial support would be provided to private distribution companies only on achievement of result in terms of access connections, improved financial management and network expansion.

According to the bank, 85 million Nigerians do not have access to grid electricity.

“This represents 43 per cent of the country’s population and makes Nigeria the country with the largest energy access deficit in the world,” the statement said.

“The lack of reliable power is a significant constraint for citizens and businesses resulting on annual economic losses estimated at $26.2 billion (N10.1 trillion) which is equivalent to about 2 per cent of GDP.”

The statement quoted Shubham Chaudhuri, World Bank Country Director for Nigeria, as saying that “Improving access and reliability of power is key to reduce poverty and unlocking economic growth in the aftermath of the global COVID-19 pandemic.”

“The operation will help improve the financial viability of the DISCOs and increase revenues for the whole Nigerian power sector which is critical to save scarce fiscal resources and create jobs by increasing the productivity of private and public enterprises,” it said.

The bank said the Nigeria Distribution Sector Recovery Program (DISREP) will help improve service quality as well as the financial and technical performance of distribution companies by providing financing based on performance and reduction of losses.

It further explained that the project complements the support provided under the Power Sector Recovery Operation (PSRO) approved in June 2020.

“Specifically it will ensure that distribution companies make necessary investments to rehabilitate networks, install electric meters for more accurate customer billing and to improve quality of service for those already connected to the grid.

“It will also help strengthen the financial and technical management of DISCOs to improve the transparency and accountability of the distribution sector,” the statement said.

The statement also quoted Nataliya Kulichenko, World Bank task team leader for the project, as saying “The program will only be eligible to those DISCOs that transparently declare their performance reports to public with actual flow of funds based on strict verification of achieved performance targets by an independent third party.

“The program would also make meters available at affordable prices to all consumers in Nigeria a long pending demand of Nigerians,” World Bank said.

The statement added that the programme will reduce the CO2 emissions of the Nigerian power sector by reducing technical losses, increasing energy efficiency, replacing diesel and biomass with grid-electricity and investing more in on and off-grid renewable energy.

“DISREP supports the development of regulatory guidance on climate-resilient infrastructure and facilitates inclusion of climate risk in decision making,” the statement reads.

6 February 2021