Energy
Discos call for sanctions on perpetrators of electricity theft
Chunk of monthly loss of over N30 billion incurred from the large number of customers engaged in energy theft.
The Electricity Distribution Companies (DisCos) have decried a monthly loss of over N30 billion revenue to electricity theft, and called for appropriate legislation to check the act.
According to a statement issued by Mr Sunday Oduntan, Executive Secretary, Research and Advocacy, Association of Nigerian Electricity Distributors (ANED), the losses results from the large number of customers, engaged in energy theft, meter bypass, vandalism and unpaid electricity bills.
Oduntan explained that over 40% of electricity consumers do not pay their electricity bills, as they indulge in illegal connection of electricity.
READ ALSO: DisCos respond to NERC’s threat to revoke operators’ licenses
According to NAN, DisCo operators attributed the challenges to form the major part of the DisCos’ Aggregate Technical, Commercial and Collection (ATC&C) losses, and called for effective legislation against them.
“There is need for effective legislation by the National Assembly to checkmate energy theft in the country as the practice is costing the power sector billions of naira monthly.
“The power sector is currently grappling with a liquidity shortfall of over N1.5 trillion occasioned by a combination of adverse conditions among which is the high rate of energy theft,” he said.
Oduntan said that in the presentation by the Discos during, they showed an instance where out of N27.7 billion that was billed for energy consumed in 2019 by unmetered customers, only N5.2 billion was recovered.
(READ MORE:DisCos earn N473 billion in 2019, reveal reason for metering gap)
With each Disco losing an approximate of N3 billion monthly, the total loss from 11 Discos puts the loss at over N33 billion, he explained.
“The sector cannot continue like this. There is no sector in the world where criminal acts affecting critical sectors are not given special treatment. Until people know that there are penalties for the specific crime of energy theft, this is not going to stop, “Oduntan said.
To reduce these incidences and ensure greater transparency, the companies are working hard to ensure availability of meters. However, this move has to be complemented by specific legislation because of incidences of meter bypass.
“There is a mindset that stealing electricity is okay and that needs to be corrected through the enactment of appropriate legislation,” Oduntan said.
The DisCos were collaborating with security agencies and the judiciary toward enforcing actions that could deter energy theft.
Business
NNPC says NO to petrol pump price hike in May
There would be no increase in the ex-depot price of Premium Motor Spirit in the month of May 2021.
The Nigerian National Petroleum Corporation (NNPC) has assured Nigerians that there would be no increase in the ex-depot price of Premium Motor Spirit, popularly known as Petrol in May.
This was disclosed by the Group Managing Director of NNPC, Mele Kyari, on Monday via the Corporation’s Twitter handle.
It tweeted, “There would be no increase in the ex-depot price of Premium Motor Spirit in the month of May 2021.”
Ex-depot price is the cost of petrol at depots, from where filling stations purchase the commodity before dispensing to final consumers.
READ: Nigerian automaker raises $9 million despite protest against electric car in Nigeria
Also, the GMD announced that there would be no increase in the ex-depot price of Premium Motor Spirit (PMS) in the month of May 2021.
— NNPC Group (@NNPCgroup) April 19, 2021
Kyari also added that Petroleum Tanker Drivers had suspended their proposed strike after the intervention of NNPC in the impasse between the PTD and the National Association of Road Transport Owners.
“We have given our commitment to both NARTO and PTD that we will resolve the underlining issue between them and come back to the table within a week so that we’ll have a total closure of the dispute,” he added.
READ: Oil marketers give conditions to resume fuel importation
What you should know
- NNPC has maintained an ex-depot price of N148/litre since February despite the hike in the actual cost of the commodity, hence incurring subsidy of over N120bn monthly.
- Also in March, the NNPC said it would maintain its ex-depot price for petrol until the conclusion of ongoing engagement with the organised labour and other stakeholders.
Energy
NCDMB’s Oil and Gas Parks and their many adversaries
New businesses within the NOGAPS will face intense competition from foreign OEMs that do not have to battle with tariffs, a harsh business terrain and different tax treatment.
In 2018 the Nigerian Content Development and Monitoring Board (NCDMB), the body saddled with driving the development of Nigerian content in the Nigerian oil and gas sector, did a groundbreaking of the Nigerian Oil and Gas Park Scheme (NOGAPS), a scheme that involves the construction of sprawling oil and gas parks in Bayelsa, Imo and Cross Rivers State.
In a visit last week to one of the parks currently under construction in Emeya 1, Ogbia, Bayelsa State, the Minister of Petroleum for State, Chief Timipre Sylva, expressed delight at how the project was quickly progressing and was now at 70% completion. Mr Simbi Wabote, Executive Secretary of the NCDMB, during the visit also noted that the Oil and Gas Park project “is in line with the Federal Government’s mandate to develop indigenous capacities for the oil and gas industry.”
READ: NCDMB, BOI, won’t relax conditions to access $200 million NCI Fund despite complaint
While this is highly commendable, as the project will indeed reduce Nigeria’s dependence on import of oil and gas equipment and provide jobs for local indigenes -which would likely reduce restiveness in the area-, there exist significant challenges to this project achieving its goals.
Perhaps one of the biggest of them is the African Continental Free Trade Area (AfCFTA) regime which is expected to open Nigeria’s borders to an influx of imports from other countries within Africa. Beyond opening the borders, however, the tax treatment given to domestically produced items will be no different from similar products imported, and the typical tariffs for imported items will be removed.
READ: Aiteo accuses Shell of theft of 16 million barrel of crude oil
This essentially means that large and established original equipment manufacturers (OEMs) from other African countries may on the basis of their economies of scale be able to supply the same products produced in the oil and gas parks at lower rates. A report by Dun & Bradstreet reveals that in Africa, countries like Guinea, Gabon, Burkina Faso and Ghana that flank Nigeria play host to various oil and gas OEMs.
With the large oil and gas market Nigeria has, these companies will seek to make inroads into Nigeria under the AfCFTA regime. This will mean that the new businesses within the NOGAPS will face intense competition from foreign players that do not have to battle with tariffs and different tax treatment. Additionally, the Nigerian culture of preferring imported products over domestically manufactured ones might play a role in this, particularly if the prices of the imported ones even up with domestically produced ones or only have a slim margin.
READ: NNPC says local operators must improve capacity to achieve low cost of oil production
If the patronage for Innoson vehicles is anything to go by, in a market where there is no real difference in price between that and the domestically produced ones, we will see a preference for imported products.
All of this will be further aggravated by Nigeria’s doing business difficulties. Things like delays in obtaining permits, approvals and licenses, the corruption that accompanies these processes, weak currency and dual exchange rates, poor infrastructure and lack of power supply abound. While the Nigerian businesses struggle with this, their foreign counterparts get to produce under more convenient conditions and are thus able to deliver within time and without the additional costs passed to consumers through these poor doing business practices.
While Mr Wabote has promised that the park in Ogbia will have dedicated power supply, it is hard to imagine that this power will not significantly cost the businesses if they are served at maximum capacity. At number 131 on the World Bank’s Ease of Doing Business Ranking, a park would not solve Nigeria’s problems, only a positive commitment to fix these doing business issues will.
READ: Seplat incurs N41.1 billion loss from OML 55, blames fall in oil prices
The christening of a park as an “oil and gas park” in the 21st century, where countries of the world –and indeed private companies- are working towards achieving increased use of cleaner energy sources, is counterintuitive. The park should be an energy park that integrates significant research and development in its function as well as innovation and production of renewable energy equipment, both adapted to benefit from local conditions and standardized for export purposes.
It seems too, that not much consideration has been given to export of these equipment, as the parks earmarked so far are in landlocked Imo, port-less Bayelsa and Cross River that feeds into Cameroon, which is not a very prime market, although the DRC on the other end could attempt to compensate for this. It might be worth considering, the setting up of a park in Lagos – perhaps in the same vicinity as the Dangote refinery.
The park would benefit from being able to supply equipment to the refinery (especially as the refinery starts production in early 2023). It will also be able to tap into the global market through export via the Lekki port. This might also be a good time for the Agge deep sea port mulled by the Bayelsa State government to come onstream to open up the Ogbia park to a global market.
