Electricity Distribution Companies (DisCos) have pleaded with the Federal Government to intervene in gas pricing for power generation, as this has been a major challenge in the power sector. This is to help ensure effective and efficient delivery of service to consumers.
This was disclosed in a statement by the Executive Director, Research and Advocacy, Association of Nigerian Electricity Distributors (ANED), Sunday Oduntan, on Saturday, June 27, 2020, in Abuja.
He pointed out that the cost of gas was a major determinant of the electricity tariff in Nigeria, adding that it was high time the Federal Government found a way to help bring down the price of gas in the interest of the sustainability of the power sector.
Oduntan stated, “Most of Nigeria’s power generating plants are thermal plants. They use gas as their fuel and as long as the price of gas is high, the cost of generation and the eventual tariff to the end user will also be high.”
He said, “At present, the energy generation mix is around 80% thermal and 20% hydro. More so, the cost of gas is also affected by fluctuations in Foreign Exchange (Forex). So while the cost of gas and generation will rise due to forex fluctuations, the tariff is fixed in Naira and may not account for this difference. Especially because of the absence of a commitment to adhering to periodic tariff reviews.”
It was noted that the absence of a market reflective tariff had continued to have a negative impact on the sector and had been a major contributor to the N1.5 trillion liquidity gap in the sector.
He said that a new performance driven increased tariff structure would be implemented with effect from July 1, 2020, as a step towards narrowing the liquidity gap.
Nairametrics had reported that the National Electricity Regulatory Commission (NERC), had postponed the take-off of the new electricity tariff by the DisCos, which was supposed to commence on April 1, 2020.
This was due to claims that 60% of electricity customers were unmetered nationwide, the coronavirus pandemic which has significantly impacted the ability of the DisCos to meter customers, need for network and infrastructure upgrades by the DisCos and Transmission Company of Nigeria, and so on.
NNPC quells fears over leaking Lagos pipeline
The Corporation says it was on the last stage of completing repairs which includes hydro testing.
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.
Press Release: @NNPCgroup Allays Fears of Possible Fire on Dripping Lagos Pipeline
… Says Leaking Line Contains Water, Not Petrol
— NNPC Group (@NNPCgroup) July 2, 2020
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.
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”.
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.
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.
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.
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%.
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.
Update: FG increases fuel price to N143.80 per litre
This was disclosed by Petroleum Products Pricing Regulatory Agency (PPPRA) in a circular.
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,
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.’’
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
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.