Author: Sasforde

Despite deregulation, Pinnacle Oil and Gas Limited, an indigenous oil and gas company active across the entire downstream value chain, has disclosed that Nigeria is currently paying about N1 trillion monthly as petrol subsidy.
The Managing Director/CEO of the company, Mr. Robert Dickerman, disclosed this while speaking during a panel session six, on Nigeria’s Downstream Forum at the just-concluded Nigeria International Energy Summit (NIES) in Abuja.

He said there is still a massive subsidy, which explains why the product remains cheap, thus encouraging smuggling to neighboring countries.

He said: “Nigeria has a long history of allocating resources to oil and gas production at the expense of most other economic and social programs. To balance this, there has been a long-standing policy to mitigate consumer costs via palliatives such as fuel and food subsidies.

“But one of the net effects of oil money is underinvestment in local production, manufacturing and other value-added activities that could generate foreign currency through exports. There has also been a large under investment in the maintenance and upgrade of existing infrastructure including electricity, roads, health care, water, waste, education and financial infrastructure such as consumer credit.

“As a result, we have a huge negative trade deficit, except for crude oil and LNG, and our banks are not sufficiently capitalized to support significant new capital programs.

“With legacy monetary policymaking currency exchange difficult, we desperately need Foreign Investment. This is a reality. So the best policy during this time of crisis is a national policy to transform our economy/regulations/laws to accommodate and encourage FDI.

“Foreign investors, foreign lenders and government-run DFIs have been very clear about what they want to see: Conservative fiscal policy, tackling corruption, enabling competitive markets, and enforcement of fairness in markets through policy, regulation and the ability to enforce contracts. Keeping that context in mind, I want to point out that there is still a massive subsidy in PMS, albeit in the FX portion of PMS Price, not the global price in dollars.

“The consequences of this subsidy are: The cost of gasoline in Nigeria is the lowest in Africa by far, which encourages smuggling out, further depriving Nigeria of value. Smuggling causes Nigeria to subsidize neighboring countries even while our economy struggles. The cost is hurting the entire budget, Federal and State, as critical programs cannot be funded to pay this subsidy. It is currently calculated to be about 1 trillion Naira/month.

“Also, with this subsidy in place, ceasing subsidy payments would result in no petrol supply, if there are no refineries producing gasoline. All supplies come from the international market which will only sell at market prices.

There is no competition in bulk supply, as only the national champion owned by the government can import. Wholesale and retail prices are set based on their subsidized cost and they determine who gets supply. Without a competitive market, foreign investors are discouraged from investing in this sector in Nigeria.

The Nigerian Navy, through its Forward Operating Base (FOB) Formoso in Brass Local Government Area of Bayelsa State has destroyed three illegal refining sites (IRS) and a large wooden boat conveying about 160,000 litres of products suspected to be stolen crude oil.
The naval authorities said the operation was in continuation of its fight against crude oil theft and illegal bunkering in the Niger Delta.

The operation was said to be in line with the recently launched Nigerian Navy ‘Operation Delta Sanity’, aimed at ridding illegal oil theft and bunkering activities within the region’s maritime domain.

The Commanding Officer, FOB Formoso, Captain Murtala Aminu Rogo, made this known in an interactive session with reporters at the Naval Base in Brass, yesterday.

He said operatives achieved the feat while carrying out patrols along the Brass River and Akassa general area.

Rogo said during the patrol, two illegal refineries with about 85,000 litres of products suspected to be stolen crude oil and a pumping machine were uncovered at Elepa and Abonuwa areas of Brass LGA.

“While combing other adjoining creeks, the team located the third illegal refining site and a large wooden boat laden with about 75,000 litres of suspected stolen crude oil were discovered around Tuluama area of Brass.

“Accordingly, the three illegal refining sites and one large wooden boat were appropriately destroyed.

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Rogo indicated that the operation was geared towards combing and clearing creeks and channels as well as other places within their area of operations.

He said further investigations into the criminal networks associated with the illegal refinery sites were ongoing.

Rogo asserted that the operation marked a significant step in actualising the objectives of ODS meant to combat crude oil theft and illegal oil bunkering.

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He enjoined the public to cooperate with the Nigerian Navy by providing relevant information that would aid in the ongoing efforts to dismantle the criminal networks.

He emphasized that ODS under the purview of Rear Admiral S.J Bura, the Flag Officer Commanding, Central Naval Command, was resolutely committed to eradicating the scourge of crude oil theft, illegal oil bunkering and other criminal activities within Nigerian waters.

Rogo said: “The Nigerian Navy, under the leadership of Vice Admiral Emmanuel Ikechukwu Ogalla, Chief of Naval Staff (CNS), is committed to maintaining the security and safety of the Nigerian maritime domain, facilitating a conducive environment for legitimate businesses to flourish and contribute to the nation’s strength.”

Shell Petroleum Development Company of Nigeria Limited (SPDC) has concluded plans to supply gas to Dangote Fertiliser and Petrochemical Plant in Lekki for 10 years.

The final investment decision involves SPDC and its joint venture partners – Nigerian National Petroleum Company
Limited, TotalEnergies EP Nigeria Limited, and Nigerian Agip Oil Company.

“This investment decision is a critical step in pursuing the development of the gas-rich Iseni field, which is part of the Okpokunou Cluster in Oil Mining Lease 35 located in Sagbama Local Government Area of Bayelsa
State,” said the managing director of SPDC, operator of the joint venture, Osagie Okunbor.

Okunbor added that SPDC and its joint venture partners remained committed to Nigeria’s ‘Decade of Gas’ ambition and,
particularly, the domestic gas agenda.

According to Okunbor, increasing the delivery of natural gas to the domestic market is key to accelerated industrialization and economic development in Nigeria.

The FID signals a positive step towards the construction of the required infrastructure for the project that is expected to create jobs through direct and indirect employment.

Dangote boasts Africa’s largest granulated urea fertiliser complex and produces around 65 percent of Nigeria’s domestic fertiliser requirements.

The project will supply gas which will enhance the Dangote Fertiliser and Petrochemical Plant’s ability to deliver on its promise to the Nigerian people and government.

OPEC Secretary General, Haitham Al Ghais, has criticised the International Energy Agency (IEA) for its recent statement, stating that it overly focuses on specific issues and unfairly blames the oil and gas industry for the climate crisis.

Al Ghais expressed concern about the IEA’s proposed framework, suggesting it could limit the choices of oil and gas-producing developing countries.
He argued that the IEA’s approach contradicts the Paris Agreement and may lead to reduced investment and harm the security of energy supplies.

Al Ghais defended technologies like carbon capture utilization and storage (CCUS), dismissed by the IEA, and highlighted the industry’s commitment to renewables and emissions reduction.

Al Ghais emphasized the complexity of energy challenges and the need for a collaborative approach to address emissions, energy security, access, and affordability.

He urged a focus on reducing emissions without favoring specific energy sources and stressed the importance of balancing economic growth, social well-being, and emissions reduction.

Al Ghais called for constructive dialogue, collaboration, and inclusive decision-making in addressing energy transition pathways and ensuring that all perspectives are considered. He highlighted the need for energy transitions to align with economic growth and social well-being while reducing emissions.

The Minister of Power, Adebayo Adelabu, has unveiled a comprehensive bottom-to-top strategy aimed at addressing the long-standing challenges in the power sector.

Speaking at the Annual Roundtable organised by the Nigerian Electricity Management Services Agency (NEMSA), Adelabu outlined a transformative approach that prioritizes the needs of electricity consumers over a singular focus on power generation.

In this strategic shift, Adelabu emphasised that fostering a robust connection with electricity consumers would be pivotal in resolving liquidity issues that have plagued the sector since its privatization. By emphasizing various models for electricity generation that consumers are willing to pay for, the minister envisions a more sustainable and economically viable power sector.

While acknowledging the importance of the power generation aspect, Adelabu underscored the critical need for meticulous attention to the distribution and transmission segments. He stressed that the effectiveness of power generation is rendered futile if it does not reach end-users, comparing it to working in the dark where consumers are unaware of the ongoing efforts.

“In transforming this sector, our top agenda is a bottom-to-top approach,” Adelabu declared, signaling a shift from conventional methods. “We will start from the customers, down to the distribution infrastructure to transmission,” he explained, outlining a strategic roadmap that targets key components like transmission, distribution, and metering.

The minister emphasized the significance of infrastructure improvement and highlighted the essential role of NEMSA in providing the necessary expertise. Adelabu also pointed out that high-quality materials are pivotal in updating infrastructures to meet global standards, a task where the expertise of NEMSA becomes crucial.

With the recent electricity law designating NEMSA as the lead enforcer of statutory technical and regulatory standards, the agency’s role in ensuring the safety of lives and property within the power sector has been further solidified.

This underscores the commitment to maintaining global standards and ensuring the reliability of the power supply. Chairman of NEMSA’s Governing Board, Suleiman Yahaya, appealed for increased government funding to empower the agency in fulfilling its mandate of enforcing technical standards. He recommended that NEMSA should also explore raising charges and rates to enhance its internally generated revenues, providing a sustainable means to support the power sector.

In his remarks, Managing Director of NEMSA, Aliyu Tukur Tahir, shed light on the agency’s foundation, established by the NEMSA Act of 2015 (now the Electricity Act of 2023).

Tahir said that technical standards and regulations help to ensure that all electrical installations deployed in the NESI meet the required technical standards, regulations and specifications.

“This is to ensure that such systems are capable of delivering a safe, reliable and sustainable electricity supply as well as guaranteeing the safety of lives and property.”

Tahir said that to effectively achieve its core mandate of enforcement, NEMSA had 19 Inspectorate Field Offices (IFO), six national metre test stations, and one engineering and chemical laboratory.

According to him, those offices are manned by qualified, well-trained, skilled and well-motivated engineers, technical officers and other professionals.

The act empowers NEMSA to enforce technical standards and regulations, conduct technical inspections, and certify all categories of electrical installations.

Chairman of the House Committee on Power, Victor Okolo, emphasized the critical importance of ensuring that all electrical installations within the Nigerian Electricity Supply Industry (NESI) meet required technical standards, regulations, and specifications.

Represented by house member, Rodney Ambaiowei, Okolo pledged legislative support, assuring that NEMSA would receive adequate funding and other essential support to effectively discharge its responsibilities.

Former Chairman of NEMSA’s Governing Board, Suleman Yahaya appealed for adequate funding as he stressed on the pivotal role that good technical standards, regulations, and certification enforcement play in establishing a stable and reliable electricity market.

He underscored the necessity of a well-rounded framework, including active collaborations with the legislative and judicial arms of government, to support NEMSA’s mandate and contribute to the overall development of the power sector.”