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.
Nigerian firm set to raise $1.2 billion to purchase electricity meters
MAPCo plans to raise N480 billion to purchase electricity meters and to help the DISCOs plug revenue gaps in their operations.
A Nigerian firm, Meter Assets Finance and Management Company (MAPCo), has concluded plans to raise N480 billion ($1.2 billion) over the next 3 years, to purchase electricity meters and help the electricity distribution companies (DISCOs) plug revenue gaps in their operations.
This is also in line with the Federal Government’s initiative to ensure that all electricity consumers are metered, which will put an end to estimated billing by the DISCOs.
According to a report from PricewaterhouseCoopers, less than one-tenth of Nigeria’s 41 million households have their electricity consumption metered, and half of those are faulty. As a result, distribution companies have to estimate bills, resulting in constant conflict with the consumers that delay payments.
The Chief Executive Officer of New Hampshire Capital, Onion Omonforma, said the Meter Assets Finance and Management Co. hopes to end the practice of estimated billings by raising funds to purchase and supply meters to consumers.
New Hampshire Capital, FBNQuest and Kairos Investments Africa are helping to package and structure the venture, known as MAPCo, for investors to either buy equity or inject debt into the company.
What they are saying
Omonformaa said, “The electricity distribution firms will then have the money to go back and buy more meters and the cycle continues, paving the way to close the metering gap. MAPCo will collect the cost of the meters from consumers at a premium over the next 10 years. The meters will be handed over to the power-distribution companies once paid off.’’
While disclosing that MAPCo plans to issue a N100 billion bond in the next year, Omonforma also pointed out that roadshows have been planned for the U.S. and Europe, and will include local institutional investors.
He said, “We envisage that a lot of people who are looking for a long-term instrument will key into it,”
It can be recalled that apart from repealing the estimated billing methodology in determining tariffs for electricity consumers; the Federal Government had insisted that all consumers must be metered, as part of the condition for a tariff increase.
Also, as part of the agreement reached with the organized labor in respect of the tariff increase; the Federal Government disclosed that the National Mass Metering Programme will be accelerated, with the distribution of 6 million meters to Nigerians for free.
What this means
A huge number of electricity consumers across the 36 states and the FCT are still unmetered by their respective DISCOs. This initiative by MAPCo will help bridge the existing gap, with more electricity consumers acquiring a prepaid meter and doing away with the controversial estimated billing.
N1.5trillion accumulated losses of NNPC, a serious going-concern risk – PWC, SIAO Partners
The auditors of NNPC have raised doubts over the inability of the Corporation to continue as a going concern following rising and humongous losses.
According to the recently published 2019 Audited Financial Statements, the Nigerian National Petroleum Corporation (NNPC) Group and Corporation had an accumulated loss of N1.9 trillion and N474 billion respectively. The Auditors of NNPC, made up of Pricewaterhouse Coopers, SIAO Partners, and Muhtari Dangana & Co. have raised serious doubts over the inability of NNPC to continue as a going concern following rising and humongous losses, resulting in the negative capital base.
In their report, the auditors disclosed that there is an existing material uncertainty that casts significant doubts on the ability of the NNPC to escape bankruptcy – as there are serious impairments on the company’s ability to generating sufficient revenues to meet its immediate obligations as at when due.
What you should know
- In its joint report to the stakeholders, the auditors gave an unmodified opinion and drew attention to the fact that the NNPC Group and Corporation recorded net losses of N1.8 billion and N107.8 billion respectively in 2019, compared to N803.1 billion and N254 billion in 2018 respectively. While its current liabilities exceed its current assets by N4.4 trillion and N1.1 trillion for the Group and Corporation respectively, compared to N3.3 trillion and N968.7 billion in 2018 respectively.
- NNPC Group and Corporation’s current assets, according to the financial statements, stood at N5.3 trillion and N4.5 trillion in 2019, while total current liabilities stood at N9.7 trillion and N5.6 trillion respectively.
- In 2018, NNPC Group and Corporation’s total current assets stood at N5.4 trillion and N4.8 trillion respectively, while total current liabilities stood at N8.7 trillion and N5.7 trillion respectively.
- The accumulated losses according to the financial statement are approximately N1.5 trillion and N474 billion, compared to N1.6 trillion and N490.7 billion for the Group and Corporation in 2018 respectively.
Explore Data on the Nairametrics Research Website
Download the Nairametrics News App
What to expect
- The Management of the corporation is currently executing robust mitigation procedures, as it is receiving the requisite support from the Federal Government to ensure that the Group and Corporation have adequate resources to continue in operational existence for the foreseeable future.
- To make the Group and Corporation commercially viable, the Federal Government had commenced the elimination of cost drivers responsible for the accumulation of the shortfalls in settling Domestic Crude Obligation; and the introduction of the Price Modulator mechanism in the Petroleum Products Pricing Regulatory Agency (PPPRA) template, designed to eliminate the major cause of the losses.
- The Federal Government is also minimizing breaches to the country’s pipeline networks; pursuing the passage of the Petroleum Industry Bill, PIB, and its implementation, which would restructure the petroleum industry, improve transparency and governance, and also give the NNPC the autonomy to operate profitably.
- The NNPC Management further revealed the plans to recapitalize the NNPC with steps to resolving all the outstanding related party payables and receivables and enable a clean slate start prior to recapitalization.
FG to inject over N198 billion on capital projects in power sector in 2021
The Federal Government plans to inject N198.27 billion on various capital projects in the power sector across Nigeria in 2021.
The Federal Government plans to inject N198.27billion on various capital projects in the power sector across Nigeria in 2021.
This was disclosed in the 2021 Appropriation Bill, which President Muhammadu Buhari presented to the National Assembly recently.
* National rural electrification, managed by the Rural Electrification Agency, will invest a total of N17.86billion on power infrastructure development in rural communities.
* The Nigerian Electricity Regulatory Commission plans to invest N294.1million on capital projects, while capital projects to be handled by the Nigerian Electricity Management Services Agency will gulp N441.1million.
* The allocation for capital projects to be handled by the Transmission Company of Nigeria, as contained in the proposed budget, is N4.69billion.
* The capital outlay projected for 2021 by the Nigeria Electricity Liability Management Limited is N914.87million, while the National Power Training Institute targets to invest N294.1million.
* The total overhead for the entire ministry and its agencies was N1.16billion.
* The amount budgeted for personnel in the power ministry and its agencies is N4.9billion.