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Senate to review 2013 power privatisation, questions FG’s funding

Government should not be given free money. N1.8 trillion has been given to DISCOs maybe in their books.

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Unemployment: Senate calls for a state of emergency, President Buhari approves N37 billion for National Assembly renovation , National Assembly finally transmits Finance Bill after supremacy battle among lawmakers, VAT: Implementation won’t affect purchasing power of Nigerians, PIB: An unsurmountable obstacle, Senate passes CAMA bill, awaits presidential assent, Ban on generators: Throwing the baby with the bath water?

The Senate has asked its Committee on Power to review the agreement signed in 2013 on the privatisation of the power sector.

This was disclosed by the Senate President, Ahmad Lawan, on Monday, while declaring open an Investigative public hearing by the Senate Committee on Power.

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Lawan explained, via his Twitter handle, that the public hearing was on Power Sector Recovery Plan and the impact of COVID-19 pandemic. He further explained that the overall expectation of the Nigerian government and the citizens was that the power sector, after privatisation, would be far better, but it is disappointing that the expectation was yet far from being fulfilled.

He said: “When you have privatization, you have Share Purchase Agreement. This investigation should look at what has happened.

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“What are the responsibilities and the obligations of the Federal government in the Share Purchase Agreement. What is BPE(Bureau of Public Enterprises) supposed to do. And equally and very important, what are the successful investors who are given 11 DISCOs and Six GENCOs supposed to do and within which time framework.”

According to him, Government should not be given free money. N1.8 trillion has been given to DISCOs maybe in their books. The actual money might have been given to the GENCOs.

“N1.8 trillion is a huge amount of money. Is it part of the Share Purchase Agreement that we should be given this kind of money or what are we supposed to do as a government. What is our obligation?

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“Government cannot afford to just spend money that you hardly understand why it is given and I will advise the Executive here, next time, if there will be any next time, to give such money, bring it to the National Assembly for approval.

“We want to be very critical on how funds are given to privatized enterprises. We expect that by now, our level of generation, transmission and distribution would have been far better,” he said.

Lawan, however, said he would rather call for a review of the privatisation deal and not for an outright cancellation of the deal.

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He added, “Why I will not call for an outright reversal of the privatization that was done in 2013, I believe the time has come for us to review it.

“If those who are in charge now don’t have the financial muzzle, please let’s admit that we should look for partners who will come in with more funds.

“If government cannot fulfill its obligations because it holds 40 percent, let it divest so that we don’t hold this sector unnecessarily stagnant.”

The Senate President said Nigeria could not have made any serious, meaningful and sustainable progress without power.

Background: The Power holding Company of Nigeria was in 2013 unbundled to pave way for the emergence of six Generating Companies(GENCOs), 11 Distribution Companies(DISCOs) and one Transmission Companies of Nigeria. Both the GENCOS and DISCOs are fully privatised outfits.

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Patricia

Abiola has spent about 14 years in journalism. His career has covered some top local print media like TELL Magazine, Broad Street Journal, The Point Newspaper. The Bloomberg MEI alumni has interviewed some of the most influential figures of the IMF, G-20 Summit, Pre-G20 Central Bank Governors and Finance Ministers, Critical Communication World Conference. The multiple award winner is variously trained in business and markets journalism at Lagos Business School, and Pan-Atlantic University. You may contact him via email - [email protected]

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Energy

NNPC quells fears over leaking Lagos pipeline

The Corporation says it was on the last stage of completing repairs which includes hydro testing.

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The Nigerian National Petroleum Corporation (NNPC) urged Nigerians to ignore reports of a possible fire outbreak from a vandalized pipeline at Aboru Canal in Alimosho Local Government Area of Lagos state. 

“There is no such hazard as the line in question has since been shut down for repairs and presently contains only water,” NNPC said. 

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READ ALSO: Abule-Ado explosion: Lagos State Government presents cheques to survivors

NNPC said that the Atlas Cove-Mosimi stretch of the system 2B pipeline was shut down on June 25, 2020, to enable the comprehensive maintenance of some segment of the pipeline. 

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READ MORE: NNPC states why it failed to fix refineries, to build 200,000 capacity refinery

The Corporation says it was on the last stage of completing repairs which includes hydro testing (a process of pumping water through the entire pipeline to leak detection and for integrity tests). 

Revealing that they stopped pumping water 9:27 am Thursday morning to enable necessary repairs after patrol team made a report about leakage at a point in the Aboru Canal. 

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NNPC urges residents of the community to remain calm “as there is no possibility of a fire erupting from the leakage point”. 

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Energy

Nigerian LNG to increase exports, returns profits despite weak gas prices 

The gas firm has been able to sell the excess supply at a discount in the spot market. 

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Nigeria will most likely increase the export of its Liquefied Natural Gas (LNG) in August and September to the global market if the demand of the commodity goes up despite the crash in prices which is near record lows. 

However, in the meantime, the government-owned Nigeria Liquefied Natural Gas (NLNG) company has concluded plans to maintain its current supply level to the global market. This is contrary to what some other exporters like the United States and Australia seem to be doing following low prices. 

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According to a report from Bloomberg, Nigeria exported over 1.8 million tons in the month of June, which is more than last year’s monthly average of 1.7 million tons. 

Some of the country’s buyers have effected clauses in their long-term which allows them to take fewer shipments than was originally agreed. The gas firm has been able to sell the excess supply at a discount in the spot market. Over 50% of Nigeria’s exports in May were sold in Asia as against the about 30% that was sold last year. 

Natural gas exports have slowed in June as the coronavirus pandemic has negatively affected global demand. Most of the multibillion-dollar projects in natural gas export terminals have been either halted or delayed as a result of the disruptions by the pandemic. 

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The damage to the gas trade goes well beyond the Middle East as it is affecting similar businesses in Australia, which is reputed to be the world’s largest exporter of LNG and the United States. With the global exports down by 6.3% from the previous year, only a few exporting countries like Qatar and Algeria, have been able to increase output. 

The positive for Nigeria is that the production cost at its LNG facility in Bonny island is so low that it can still turn a profit despite the weak spot prices. The facility has been about the lowest costs when compared to similar projects around the world. 

Nairametrics had reported that the NLNG just signed the engineering, procurement and construction contract for its train 7 project, which is a major gas expansion plan. The project is expected to boost the country’s LNG output by more than 30%. 

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The NLNG is a consortium between the Nigerian National Petroleum Corporation (NNPC), Royal Dutch Shell, Total and Eni. The project is coming at a difficult time when LNG prices in Asia and gas prices in Europe have hit a record low due to the coronavirus pandemic which has weakened demand.   

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Energy

Update: FG increases fuel price to N143.80 per litre

This was disclosed by Petroleum Products Pricing Regulatory Agency (PPPRA) in a circular.

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The Federal Government has announced an increase in the new pump price of Premium Motor Spirit, otherwise known as Petrol, to N143.80 per litre.

According to a monitored report, this was disclosed by Executive Secretary of Petroleum Products Pricing Regulatory Agency (PPPRA), Abdulkadir Saidu, in a circular dated Wednesday, July 1, 2020, to oil marketers,

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The statement from the circular says, ‘’After a review of the prevailing market fundamentals in the month of June and considering marketers’ realistic operating costs, as much as practicable, we wish to advise a new PMS pump price band of N140.80-N143.80 per litre for the month of July 2020.’’

‘’All marketers are advised to operate within the indicative prices by the PPPRA.’’

READ ALSO: Nigerian Treasury Bills plunge to 3.39% per annum

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He also pointed out that the ex-depot for collection include the statutory charges of bridging fund, maritime transport average, National Transport Allowance and administrative charges.

The federal government had a few months ago announced its plans to stop the subsidy payment regime as they said that the downstream sector of the oil industry will be fully deregulated. The government said that the prices of all petroleum products which includes fuel would be fully determined by market forces, following the removal of the existing cap on fuel prices.

READ ALSO: Subsidy economics

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PPPRA had stated that it arrived at the new price regime after taking into consideration the operating costs of the oil marketers.

It can be recalled that at the beginning of the month of June, there was a minor adjustment of fuel price as it was fixed at N121.50 per litre from N123.50 per litre in May. The new price in July represents an over N20 per litre increase when compared to the price last month.

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