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NBET owes GenCos N144 billion in Q3 2020

NBET failed to pay GenCos for the electricity produced and fed into the national grid in the third quarter of this year.

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The Nigerian Electricity Regulatory Commission (NERC), National electricity grid collapses again, as NUEE suspends strike action , FG to increase electricity tariffs in order to improve power supply, Power: Liquidity crisis-same old story in 2020?, GenCos urges NBET to pay up N1 trillion debt, Electricity Tariff: FG, electricity stakeholders to work on equitable rate , Power: NERC applies "brakes" on hike in tariffs, NERC to sanction 7 DisCos over uncapped estimated billing

The Nigeria Bulk Electricity Trading Plc (NBET) is reportedly owing Generation Companies (GenCos) a total of N143.82 billion in the third quarter of 2020, for the electricity produced and fed into the national grid.

Of the total invoice of N193.26 billion NBET received from GenCos in the three-month period, it only paid N49.44 billion, representing 25.58% of the invoice.

READ: Reasons Total, Shell Petroleum shutdown four GenCos

  • The N193.26 billion invoice comprises of a total invoice of N64.13 billion in July, N67.83 billion in August and N61.30 billion in September.
  • The N49.44 billion payment made to the GenCos by the bulk trader in July was N12.22 billion, representing 19.05%; N13.49 billion in August, representing 19.90%; and N23.73 billion in September, representing 38.72%.

READ: NERC says Discos will compensate electricity consumers for power delivery failure

Further checks indicate that remittances by electricity distribution companies (DisCos) partly contributed to NBET’s debt.

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In this context, DisCos remitted only N50.68 billion to NBET in the third quarter of 2020, out of a total invoice of N189.05 billion received from NBET.

  • The DisCos received a total invoice of N66.33 billion in July; N63.62 billion in August; and N59.10 billion in September.
  • But the DisCos only paid NBET N12.91 billion in July; N14.89 billion in August, and N22.88 billion in September.

READ: GenCos to shut down over NBET’s administrative charge  

What to expect

It is clear from the above that NBET partly relies on payments by DisCos to settle GenCos. Thus, all things being equal, NBET may continue to owe GenCos in the future, considering that DisCos are not really efficient in collecting electricity tariffs due from customers.

In this regard, Nairametrics reported on 8th December that DisCos recorded loss of N58billion in unpaid electricity dues in Q2 2020 – indicating a collection efficiency of only 64.4%.

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Nairametrics also reported in January that NBET owed GenCos in the country about N1 trillion. This appear to further uphold claims that the current arrangement between GenCos, NBET and DisCos is not really sustainable; and may require revision.

READ: Reasons REA, NBET bosses were sacked, Minister’s aide reveals

What you should know

  • Data obtained from the Nigerian Electricity System Operator revealed that the total power generation stood at 4,631.60 megawatts as of 6am on Thursday.
  • The nation generates most of its electricity from gas-fired power plants, while output from hydropower plants makes up about 30 per cent of the total generation.
  • The amount of available generation capability left unused on Thursday stood at 1,591.1MW as a result of gas constraints, according to the system operator.
  • The system operator put the nation’s installed generation capacity at 12,954.40MW, available capacity at 7,652.60MW, transmission wheeling capacity at 7,300MW and the peak generation ever attained at 5520.4MW.

READ: Buhari moves against DISCOs that collect money for prepaid meters

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Adeyemi holds a PhD in Accounting Sciences. He has worked in the Educational Sector and as an Independent Consultant.

1 Comment

1 Comment

  1. Stanley

    December 26, 2020 at 9:31 pm

    Maybe the failure of the Discos to collect tariffs efficiently have led some of them to resort to ripping off compliant customers. The electricity distribution company covering Enugu state- EEDC has not only increased prepaid tariffs by 100% for households, but have also illegally increased the meter reading rate by 200% for some homes. While my regular daily consumption has been a steady 4 to 5kwhr for more than a year now, over the past 3 weeks, my daily consumption has mysteriously shot up to over 15kwhr, without any marked increase in electricity supply. The highest energy consumer I have is a medium sized fridge which I turn on for less than 12hours daily for the past 2years. I even stopped using electric jug since the implementation of the new tariff. And yet my daily consumption has trippped, with some of my neighbors also having a similar experience. In my opinion, the entire electricity distribution system operated in this country is fundamentally flawed with so much loopholes for exploiting law abiding tariffs paying customers. Such anomalies may only serve to discourage more people from opting for prepaid meters while encouraging the unscrupulous to bypass these meters thereby reducing collections by the Discos even more.

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Energy

Nigeria’s Qua Iboe crude exports resume as ExxonMobil lifts force majeure

ExxonMobil has lifted a force majeure on Nigeria’s Qua Iboe crude oil exports as production resumes.

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Nigeria's Qua Iboe crude exports resume as ExxonMobil lifts force majeure

ExxonMobil has lifted a force majeure on Nigeria’s Qua Iboe crude oil export terminal, as crude exports resume for the first time in almost six weeks after a fire at the terminal halted operations.

This is according to a company spokesman yesterday, who confirmed the company had lifted force majeure on Qua Iboe crude loadings.

Qua Iboe production started to ramp up to normal levels of 200,000 b/d in the past week, according to sources, with the release of both the February and March loading programs.

READ: Shell declares force majeure, to stop Bonny Light crude oil export 

The VLCC Dalia was also in the process of loading a 1-million-barrel stem at the Qua terminal since January 21, 2021, according to data intelligence firm Kpler. This will be the first export of Qua Iboe since December 15, 2020, after a fire hit the facility and injured two workers.

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The company has been under pressure since the closure and prices have taken a hit as a result of the disruption. S&P Global Platts last assessed the grade at a discount to Dated Brent of 50 cents/b, down from a premium against the benchmark in December.

Bonny Light, a mainstay Nigerian crude which typically trades at roughly the same level as Qua Iboe, was last assessed 30 cents/b higher.

READ: Nigeria’s crude oil export suffers due to force majeure declared by Shell, others

What they are saying

One trader said: “If you get a cargo of Qua now it could be 50 cents to a dollar below Bonny even – a January cargo is completely out of cycle and the reliability issues mean people won’t touch it.”

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Another trader stated that: “[The return of Qua Iboe] is not what West African crude assessments (WAF) differentials needed.”

READ: Nigeria faces breaking point as India’s global crude oil demand drops by 70%

What you should know

  • Qua Iboe is one of Nigeria’s largest export grades, and is very popular among global refiners, with India, the US, Canada, Italy, Spain, Indonesia, and the Netherlands being key buyers.
  • Qua Iboe is light sweet crude, which has a gravity of 36 API and sulfur content of 0.13%. The crude, produced from fields 20-40 miles off the coast of southeast Nigeria, is brought to shore at the Qua Iboe terminal via a seabed pipeline system.
  • Indian demand has steadied following a buying spree late last year, and European demand has been hit by renewed coronavirus lockdowns in the region.
  • Prices for Nigerian crude have suffered in recent weeks, even with lower supply due to the outage.
  • February and March loading programs have been issued for Qua Iboe averaging 169,643 b/d and 153,226 b/d respectively.
  • Production of this key grade ranged between 180,000-220,000 b/d in 2020, according to S&P Global Platts estimates.

READ: GenCos to halt supply if NBET insists on new service charge 

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Business

Malabu Oil Scandal: Prosecutors demand JPMorgan documents

U.S bank, JPMorgan has been ordered by a court to present documents of a transaction regarding the $1.3 billion Malabu oil field sale.

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Oil, DPR, FG announces commencement of bids for marginal oilfields despite court injunction

Prosecutors at the Milan Court holding a trial for the $1.3 billion Malabu oil field sale have demanded that U.S bank JPMorgan present documents of a transaction as part of the corruption case regarding the sale of the oilfield.

This was revealed in a report by Reuters, as the court case over the sale of the oil field continues. Prosecutors claim that nearly $1.1 billion was stolen by Nigerian politicians and middlemen, with former oil minister, Dan Etete, keeping half.

Prosecutors demanded that the Milan court accept emails sent by UK authorities, coming from a separate case launched by the Nigerian government against the bank for its role in the controversial deal.

READ: FG’s plan for N350 billion revenue from oil field licensing suffers setback

The emails include a transaction between Nigerian Attorney General Mohammed Adoke Bello and JPMorgan using the address of a company owned by another Nigerian named Aliyu Abubakar. Prosecutors allege that he paid $500 million in cash as part of a bribe.

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Both men have also been charged for corruption relating to the deal, with both pleading not guilty.

READ: FG seizes Dan Etete’s luxury private jet linked to Malabu oil deal

The second email includes two JPMorgan executives expressing views on whether to transfer $1.1 billion to accounts related to Nigerian banks. The Milan prosecutors said the emails were valid, stating that a Swiss and Lebanese bank had also expressed doubts over the transaction.

The Milan court said it would make a decision over the emails on the 3rd of February. The verdict of the court case is expected to be announced in March 2020.

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READ: Shell faces Dutch prosecution over Nigeria license

What you should know 

  • Nairametrics reported that Dan Etete, former Nigerian Minister of Petroleum, said that the $1.3 billion sales of Malabu oil field to Shell and Eni in 2021 was legally perfect, with zero traces of corruption in the deal.
  • Royal Dutch Shell announced that it would write down its investment in the controversial Malabu OPL 245 offshore field in Nigeria.
  • Malcolm Brinded, an ex-Upstream Chief of Shell Petroleum, told international prosecutors that the sum of $1.3 billion paid by Shell and Eni in 2011 to acquire OPL 245 offshore field was lawful, and he had no reason to think it was illegal.
  • A lawsuit filed by the Nigerian government against US bank JPMorgan Chase, claiming over $1.7 billion for its role in a disputed 2011 Malabu oil deal, will proceed to trial. The six-week trial in London is expected to commence on the first available date after November 1 2021, meaning that proceedings may not begin until 2022.

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Energy

First cargo of Nigeria’s newest crude grade, Ayala, to arrive Europe

The first export cargo of Nigeria’s newest crude grade, Anyala, is reported to be on its way to Northwest Europe.

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Oil tanker volumes dropped by 18.6% Year-Over-Year in July - Lloyd’s List Intelligence, First cargo of Nigeria’s newest crude grade, Ayala, to arrive Europe

The first export cargo of Nigeria’s newest crude grade, Anyala, is reported to be on its way to Northwest Europe.

According to a report from S&P Global Platts, while quoting trading and shipping sources, the cargo is likely to travel from Fos-sur-Mer to the Cressier refinery in Switzerland through the SPSE pipeline.

It reported that Data Intelligence firm, Kpler, said the Aframax Minerva Clara loaded a 700,000 barrel stem of Anyala crude from the Abigail-Joseph floating production, storage, and offloading vessel on January 10 with the tanker on its way to the Fos-sur-Mer terminal, located at France’s Mediterranean port of Marseille.

The report also said that trading house Vitol had chartered this tanker, as it has a stake in indigenous producer FIRST E&P, which is the operator of the Anyala West oil fields, located in the shallow waters of the Niger Delta.

This is as a market source said the cargo is likely to travel from Fos-sur-Mer to the 68,000 b/d Cressier refinery in Switzerland, which is operated by Varo Energy, through the SPSE pipeline.

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Varo Energy is a joint venture between Vitol, private equity fund, the Carlyle Group, and private investment fund Reggeborgh.

What you should know

  • The new crude is from Nigeria’s shallow-water Anyala West oil fields in the Niger Delta, which struck first oil in November. Anyala is the country’s newest oil development since the start-up of the giant Egina field in late-2018.
  • Anyala has been labeled a medium sweet crude grade, similar in quality to Nigeria’s flagship crude Bonny Light and when refined, Anyala will produce a high yield of middle distillates, making it attractive to both simple and complex refineries.
  • It is also reported that a second cargo will load in March, with some Asian refiners already showing buying interest.

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