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New PIB amends royalties by oil firms as Sylva clarifies position on scrapping of NNPC

The Minister has clarified that the new PIB seeks to commercialize the NNPC rather than scrap it.

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FG estimates that alternative petrol, CNG would cost N97 per litre, New PIB amends royalties by oil firms as Sylva clarifies position on scrapping of NNPC, autogas, FG to establish petroleum depot, oil and gas logistic centre in Akwa Ibom

The long-awaited new Petroleum Industry Bill (PIB), which was just submitted by President Muhammadu Buhari to the National Assembly, has taken steps to amend changes to deep water royalties made last year.

This is as the Minister of State for Petroleum Resources, Timipre Sylva, has clarified that the new PIB seeks to commercialize the Nigerian National Petroleum Corporation (NNPC) rather than scrap it.

According to Reuters, while confirming the receipt of the Petroleum Industry Bill (PIB) from the President, the Senate President, Ahmed Lawan, said that it would be officially presented on the floor of the 2 chambers of the National Assembly on Tuesday and would get quick consideration.

READ: Senate urges FG to diversify from crude oil to natural gas production 

In addition to the earlier reported creation of a new company, Nigerian National Petroleum Company Limited, to take over the assets and liabilities of NNPC and the establishment of some new regulatory bodies, a section of the bill proposes an amendment to controversial changes to deep offshore royalties made late last year. This involves reducing the royalty that oil companies pay the Federal Government for offshore fields producing less than 15,000 barrels per day from 10% to 7.5%.

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It would change a price-based royalty too so that it kicked in when oil prices climbed above $50 per barrel, rather than the initial $35.

It would also codify in law that companies cannot deduct gas flaring penalties from taxes, a practice that was the subject of a court case.

READ: FG projects $2 billion annual revenue from Escravos Gas project

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Sylva made the disclosure during an interaction with journalists at the National Assembly complex after an interactive session with the leadership of the assembly.

Sylva said, “We have heard so much noise about NNPC being scrapped but that is not being envisaged by the bill at all. NNPC will not be scrapped but commercialized in line with deregulation move being made across all the streams in the sector comprising of upstream, downstream and midstream. We have said that NNPC will be commercialized.

“But if you are talking about transforming the industry, the only new thing that we are introducing is the development of the midstream, that is the pipeline sector. So we have provided robustly for the growth of the midstream sector. Through commercialization, the required competitiveness in the sector will be achieved.

READ: NNPC signs gas development and commercialization deal with SEEPCO

Sylva also pointed out that the host communities would have the best deal from the bill.

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Nairametrics had earlier reported the scrapping of the Petroleum Product Pricing Regulatory Agency (PPPRA) and the Petroleum Equalization Fund (PEF) in the proposed new bill, in addition to the creation of a new entity, NNPC Ltd.

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The Federal Government is expected to pay cash for shares of the company, which would operate as a commercial entity without access to state funds.

READ: Board room squabble tears HealthPlus apart

The changes could make it easier for the struggling company to raise funds. However, the bill does not require the government to sell shares in the company and, unlike previous reform proposals, does not set a deadline for privatization to be completed.

Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

1 Comment

1 Comment

  1. Shakour Ogunsanya

    October 3, 2020 at 12:55 pm

    This is another good decision from the President but what about the turnaround maintenance fund on the refinery, are they going to recoup it since the refinery is not working because Nigeria cannot continue to maintain and fuel a dead vehicle.

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Energy

Power: Nigeria records transmission peak of 5,459.50MW – TCN

TCN has announced that it hit a peak transmission of 5,459.50MW on the 28th, October 2020.

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Discos, TCN suspends KEDCO, TCN suspend Kano Electricity Distribution Company, Kano Electricity Distribution Company, Transmission Company of Nigeria, Market Operator in Nigeria's power sector

The Transmission Company of Nigeria (TCN) announced that it hit a peak transmission of 5,459.50MW on the 28th, October 2020.

This was disclosed on Thursday in a statement by Ms Ndidi Mbah, General Manager, Public Affairs, TCN.

She said Nigeria hit the milestone on October 28th and surpassed the earlier record of 5,420.30MW achieved on August 18.

What you should know

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Nairametrics reported that the Minister of Power, Engineer Sale Mamman, disclosed that Nigeria’s installed grid power generation capacity has grown from 8,000MW to 13,000MW under the leadership of President Muhammadu Buhari.

The new peak surpasses the 5,420.30MW achieved on Aug. 18 by 39.20MW,” Ms Mbah said.

The Acting Managing Director, Mr Sule Ahmed Abdulaziz, commended all the players in the power sector value chain for the feat.

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He attributed the gradual but steady improvement in the quantum of power delivery to collaboration by the sector players, as well as, the unbridled effort by the Federal Government – through the Ministry of Power – in setting the right environment for seamless operations.

The Acting Managing Director said the company will continue workings towards improved power transmission across the nation.

Nairametrics reported in August that the Federal Government of Nigeria revealed that the Siemens $2 billion power deal, under the Presidential Power Initiative (PPI) will save the nation over $1 billion annually.

Structure of the PPI funding:

  • 85% from a consortium of banks guaranteed by the German government through credit insurance firm, Euler Hermes.
  • 15% of the FG’s counterpart funding.
  • 2–3 years moratorium.
  • 10–12 years repayment at concessionary interest rates.

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Energy

Exxon Mobil to cut 14,000 jobs as pandemic hit oil demand, prices

Exxon Mobil announced it will slash its global workforce by 15% over the next two years, as it struggles to preserve dividends.

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Exxon Mobil to cut 14,000 jobs as pandemic hit oil demand, prices, ExxonMobil to Divest oil fields in Nigeria, Domestic oil companies

Exxon Mobil Corp on Thursday, October 30, 2020, announced that it will reduce its global workforce by 15% by the end of 2022 – an unprecedented culling by North America’s biggest oil explorer, as the coronavirus pandemic hits energy demand, prices, and struggles to preserve dividends.

The job cuts are expected to include 1,900 U.S. jobs – mostly in Houston, the headquarters for its US oil and gas businesses – as well as layoffs previously announced in Europe and Australia and reductions in the number of contractors, some of which have already taken place.

READ: Exxon Mobil, Chevron record their worst losses in history

READ: Presco Plc projects N24.53 billion turnover in Q4 2020

This was disclosed in a statement that was released by the energy giant on Thursday, October 30, 2020.

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The staff reduction is part of the latest effort by the Chief Executive Officer, Darren Woods, to curtail spending and halt the worst string of quarterly losses since Exxon assumed its modern form with the 1999 takeover of Mobil Corp.

READ: Chevron considers divesting from Nigeria, to focus on U.S Shale Oil

What you should know

Exxon and other oil producers have been slashing costs due to a collapse in oil demand and prices, as well as ill-timed bets on new projects. The Big Oil rivals of Exxon are also cutting thousands of jobs in response to the pandemic-induced demand slump. BP Plc plans to slash 10,000 jobs, Royal Dutch Shell Plc will cut as many as 9,000 roles, and Chevron Corp. has announced around 6,000 reductions.

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Norton said that Exxon’s workforce stood at about 88,000 people, including 75,000 in-house employees and about 13,000 contractors as of year-end 2019.

READ: Why the NNPC is being dragged to US courts by Exxon Mobil, Shell

Exxon’s job cut is a sign of its weakened financial position compared to its former status as the S&P 500 Index’s biggest company less than a decade ago, and a profit powerhouse used to ride out oil-price cycles.

This year’s downturn has been particularly damaging because it also affected refining, usually a cushion in times of low oil prices. Also, it came at a time when Exxon was already increasing borrowing to fund a large expansion program. The company was forced to retreat on these plans in April, reducing capital spending by $10 billion and delaying or scaling back most of the major projects.

READ: Exxon begins talks with domestic firms to divest businesses in Nigeria

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The stock has plunged more than 50% this year. Its dividend yield is now more than 10%, indicating that investors are anticipating a cut. Exxon maintained the quarterly payout on Wednesday and is expected to post its third consecutive quarterly loss when it reports earnings tomorrow.

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What they are saying

The Company in its statement said, “These actions will improve the company’s long-term cost competitiveness and ensure the company manages through the current unprecedented market conditions.’’

Exxon’s spokesman, Casey Norton, through an email said that the total reduction means the company will reduce its workforce by about 14,000 people, split between employees and contractors from year-end 2019 levels. The cuts will come through attrition, targeted redundancy programs in 2021, and scaled-back hiring in some countries.

READ: Google fired up, post strong advertising growth

What this means

Another set of job losses in the oil sector in Nigeria is looming. Nigeria is one of Exxon’s biggest operational bases in oil and gas exploration and production globally. Also, this is another setback after Shell announced 9,000 job cuts globally, which includes Nigeria, and the announcement by Chevron that it plans to reduce its staff strength in Nigeria by 25%.

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Energy

FG to invest in the deployment of Mini-grid systems to power 5 million homes in 2021

The Minister said the government will invest in Mini-grid systems that will provide power for 5 million homes in 2021.

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Estates in Lekki increase electricity tariff to N105/kWh, Eko Electric, Ikeja and 5 others to face NERC sanction for non-compliance, CBN reveals framework for financing National Mass Metering Programme (NMMP)

In a bid to provide remote communities with clean and affordable energy, the Minister of Power, Engineer Sale Mamman has disclosed that the Government is set to invest heavily in the deployment of Mini-grid systems that will provide power for 5 million homes in 2021.

This disclosure was made by Engr. Sale Mamman in a statement released into the mainstream media via his official Twitter handle.

READ: Electricity: Nigeria now has an installed generation capacity of 13,000MW – Minister of Power

The Minister explained that it is virtually impossible for the National grid to cover every geographical point within Nigeria. He emphasized that this reality prompted the present administration to sort out alternatives, and as a result, the Government is set to invest heavily in the deployment of Mini-grid systems, which can easily get to the most remote communities and provide clean, and affordable energy in 2021.

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READ: Nigeria to fix irregular power supply in 40 years- Senate

What they are saying

The Minister, in his statement, said, “It is virtually impossible to have the National grid covering every geographical point within Nigeria, that is why the Government is investing heavily in the deployment of Mini-grid systems, which can easily get to the most remote communities and provide clean, affordable energy.

“In 2021, part of our priorities at the Ministry and two of its implementing agencies will be on providing these Mini-grid systems for communities and stand-alone home solar systems. We have a target of 5 million homes. Clean, affordable, and accessible energy for all.”

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(READ MORE:FG set to create at least 5 million jobs for youths in the power sector – Minister of Power)

What you should know

The Minister of Power, Engineer Sale Mamman, at the 2021 budget defense before the House of Representatives Committee on Power in Abuja, yesterday disclosed that Nigeria’s installed grid power generation capacity has grown from 8,000MW to 13,000MW under the leadership of President Muhammadu Buhari.

READ: UPDATED: FG appoints Eweluka as NBET MD, as finance, power ministers wrestle

The Minister also pointed out that the distribution system had the capacity to evacuate 5,500MW of power, which is a significant improvement from 4,500MW in 2015.

 

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