Category: Power

Seplat Energy Plc has been honoured with the Social Impact and Sustainability Awards (SISA) Corporate Social Responsibility (CSR) award for empowerment. Member of Trustees at Sustainability Professionals Institute of Nigeria and President of the International Network for Corporate Social Responsibility, Eustace Onuegbu, highlighted the significance of these awards in recognizing transformative efforts in Nigerian society.

The award specifically acknowledges organizations that have embraced globally recognized sustainability standards such as ISO 37101 Management Standards on Sustainable Development, ISO 26000 Social Responsibility, ISO 14001 Environmental Management, ISO 9001 Quality Management, ISO 20400 Sustainable Supply Chain Management, ISO 45001 Occupational Health and Safety Management Standards, among others.

The recognition extends to adherence to best reporting standards like GRI and IIRC Standards, as well as initiatives aligned with the UN’s 17 Sustainable Development Goals (SDGs) and philanthropic contributions.

Seplat Energy’s commitment to educational advancement and stakeholder engagement received a commendation from the award organizers. The company’s notable educational CSR initiatives, including the Seplat Pearl’s Quiz, National Undergraduate Scholarship, SEPLAT Teachers Empowerment Programme (STEP), and Seplat Innovators programme, were highlighted.

Director of External Affairs and Social Performance, Chioma Afe, expressed gratitude for the recognition, emphasizing the company’s dedication to global best practices in social development programs, particularly in host communities.

Afe stressed that Seplat’s educational CSR initiatives align with the company’s seven Principles of Corporate Strategy, emphasizing accountability, transparency, ethical behavior, respect for stakeholders’ interests, adherence to the rule of law, compliance with international norms, and respect for human rights.

Although about $490 billion is being invested this year to boost crude oil production and plug the supply gap, there are indications that supply shortfall may persist.

The development, which kept the oil price at about $84 per barrel, yesterday, is expected to increase the oil price to $100 per barrel, thereby compounding the current global energy crisis with the inflationary implications.

Coming at a time when Nigeria’s oil production is shrinking following 400, 000 barrels daily loss to theft, the prevailing situation may further worsen the pump prices of petroleum products, escalate the foreign exchange crisis and expand fiscal deficit.

Wood Mackenzie analysts, in a new report on upstream investment, have noted that the oil and gas industry is currently in the third year of an upcycle, with investment in production at $490 billion.

The funding, though significantly higher than the $370 billion low recorded in 2020, upstream analysts at Wood Mackenzie, Fraser McKay and Ian Thom, said much would still be needed to balance supply in the market.

The analysts were specifically worried about the lack of a spare production capacity, which could be viewed as a side effect of newly-found discipline with spending and focus on efficiency while adjusting to a world in transition.

“We expect companies to go for margin rather than market share; and upstream supply chain capacity to creep rather than leap, which has been the traditional response in an upcycle,” McKay and Thom said.

According to them, restraint could lead to a tighter supply chain than the industry has been used to. In Nigeria, the development is worsened by continuous divestment in the industry. Although the country conducted a bid round last year, most international companies are holding back their capital as Nigeria has repeatedly failed to meet its three million barrels daily target.

Amidst the stranded sale of ExxonMobil assets to Seplat, international oil companies have reported divesting assets worth over N20.8 trillion. For instance, Shell plans to divest about $2.3 billion in assets, Eni’s asset divestment is around $5 billion and ExxonMobil would offload $15 billion in assets.

Rystad Energy had initially estimated that Total and ConocoPhillips would divest assets close to $27.5 billion. With dwindling crude oil reserves, now hovering around 37 billion barrels instead of the projected 40 billion barrels, Nigeria’s spending on exploration has been in inland basins in northern states.

Earlier, stakeholders disclosed that Nigeria may see the coming onstream of over $32.5 billion worth of oil and gas projects as the Nigeria National Petroleum Company Limited and International Oil Companies operating in the country yesterday show readiness to sign final investment decisions (FIDs) on some projects.

The development came on the backdrop of the payment of $3.8 billion to oil operators in the country to clear all outstanding Joint Venture (JV) cash-call debts, which may see Shell alone decide on $19 billion worth of projects in the next 10 years, Managing Director of Shell, Osagie Okunbor said.

• Demand speedy implementation of PIA, African Energy Bank
Stakeholders at the Nigeria Association for Energy Economics (NAEE) said funding for the exploration of hydrocarbon deposits across Africa should come from the continent instead of looking up to Europe and America for help.

NAEE in a communique signed by its President, Prof. Yinka Omorogbe and Vice- President (Conferences and Publications), Prof Ben Obi, noted that in light of decreased global funding for hydrocarbon activities, Africa needs to realise that funding of non-renewable energy resources needs to come from within.

While most African countries depend heavily on revenue from hydrocarbons, the huge oil and gas reserves may remain untapped due to climate change concerns and reluctance to fund non-renewable energy.

As of December 2020, total private wealth in Africa without the addition of Africans in the diaspora was approximately $2 trillion

The stakeholders lauded the initiative between Africa Petroleum Producers Organisation (APPO) and the AfreximBank to establish the African Energy Bank, which would provide funds for oil, natural gas and other energy projects.

They also agreed that there is an urgent need to implement Nigeria’s roadmap for energy transition, particularly as domestic natural gas consumption expands.

NAEE said gas must become an integral part of the future energy mix, insisting that delays could negatively impact Nigeria’s economic development.

The players stated that the Nigerian oil and gas sector would play a pivotal role in Nigeria’s Energy Transition Plan, and that partnership with the renewable energy sector to jointly drive the implementation would increase the success rate.

The stakeholders, while acknowledging and emphasizing the need for a functional electricity sector with a sustainable, available and affordable electricity supply, said industrialisation would not be possible without a regular power supply.

“Political stability is essential, as are the continuity of government reform and development programmes, which prioritise economic prosperity and the need for meaningful sustainable economic and national development,” the communique said.

The experts hailed the ongoing implementation of the Petroleum Industry Act (PIA), noting that continuous growth, strengthening, enablement and stability of the Nigerian Upstream Petroleum Regulatory Commission (the Commission) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority were vital to the growth of Nigeria’s energy sector.

“Nigeria needs to scale up the utilisation of her substantial natural gas resources for the development of her people; therefore, participants recommended the speedy implementation of the provisions in the Petroleum Industry Act that establish the framework for natural gas utilisation, and where needed, any amendments to the law that will create an attractive investment climate,” it stated.

According to the association, the hopes of the rural energy poor lie in the use of off-grid renewable energy sources.

Lauding the initiatives of the Nigerian government to electrify communities outside the electricity grid network through the Rural Electrification Agency, NAEE recommended that the initiatives should be sustained to alleviate poverty.

The current huge burden of subsidy removal on Nigerians, according to the association, could be alleviated by a rapid expansion of measures to speed up the utilisation of natural gas as a substitute for premium motor spirits (PMS).

“These include promoting the activities of the Natural Gas Expansion Programme, the conversion of engines to run on compressed natural gas (CNG) and the speedy deployment of CNG stations all around the country.

“The present crushing effects of the removal of the PMS subsidy need to be alleviated through measures such as mass transportation programmes and others that are directly targeted at most of the affected Nigerians.

“The long-overdue rehabilitation of existing refineries remains a necessity, to promote diversification and guard against monopoly power, noted conference participants,” NAEE said.

At the current petrol pricing template, the pump price of petrol will sell anywhere between N478 and N590 per litre, based on the effective dollar rate the Central Bank of Nigeria (CBN) settles upon following the directive by the new president to reform currency rates, BusinessDay analysis shows.

The Nigerian National Petroleum Company Limited met with oil marketers to agree on indicative pricing on Tuesday. Mele Kyari, its group chief executive officer, met President Bola Tinubu at the Presidential Villa shortly after he resumed work. The results of these engagements have yet to be made public.

Using the CBN naira-dollar rate of N467/$1, the pump price of petrol could rise to N390 per litre if the government no longer pays subsidy. When the rate allowed for airlines to repatriate funds, which stand at N600/$1, is used, BusinessDay’s calculations show that the effective pump price would be N478 per litre in Lagos.

At the black market rate of N750/$, the picture changes. The product cost rises to N503.91 per litre. Other costs including traders’ margin, freight, NPA port charges, NIMASA, financing costs, jetty storage, and wholesale margin bring the landing cost to N565.34.

When retailers margin, dealers margin and transport cost are added, it brings the price in Lagos to N590.34. The price could average around N600 when it is transported across Nigeria.

The major components that constitute petrol landing cost in Nigeria include product cost, traders and insurance margin, shipping, charges by government agencies, financing and banking charges and storage charges. These come to about N358.24 per litre as landing charges. Another N25 is added based on retailer margins (N15), dealer’s margin (N5) and Transport cost at (N5). This brings the total costs to N383.24.

However, pump price would vary based on station and location and, with the government’s subsidised transport charges, could average at N385 per litre using the official exchange rate. This pump increases to N478 litre using the N600/$1 rate and N600 using N750/$1 as the parallel market rate.

BusinessDay reached this conclusion by analysing the Nigerian government’s current pricing template based on current oil prices and marketers’ surveys on what prices would be at different oil price and dollar rate scenarios.

The current panic buying is contributing to worsening the problem as it gives unscrupulous marketers the avenue to exploit consumers. This is why NNPC Ltd, the marketers’ group and the regulator are calling for calm.

The oil regulator said in a statement that it is working with the NNPC and other key stakeholders to guarantee a smooth transition, avoid supply disruptions, and ensure that consumers are not short-changed in any form.

“Contrary to speculations and concerns, the announcement is in line with the Petroleum Industry Act (2021) which provides for total deregulation of the petroleum downstream sector to drive investment and growth,” the statement said.

The Nigerian Midstream and Downstream Petroleum Regulatory Authority assures that there is an ample supply of petrol to meet demand as it has taken necessary steps to ensure distribution channels remain uninterrupted and fuel is readily available at all filling stations across the country.

A joint statement issued by the Major Oil Marketers Association of Nigeria (MOMAN) and the Depot and Petroleum Marketers Association of Nigeria (DAPPMAN), on Tuesday, called for calm.

“In light of the assurance given by the Nigerian National Petroleum Company Limited (NNPCL) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), we wish to reiterate that there is no cause for alarm,” they said.

“We strongly urge Nigerians to avoid panic buying or stockpiling of petrol. This behaviour not only creates artificial scarcity but also poses a significant safety hazard.”

According to the oil marketers, the NNPCL has assured Nigerians of adequate fuel supply and the NMDPRA is working closely with stakeholders to ensure a seamless transition.

“They are ensuring distribution channels remain uninterrupted, thereby making fuel readily available at all filling stations across the country,” it read. “The decision to phase out this fuel subsidy regime is not merely a fiscal reform; it is a significant stride toward social justice.”

“We understand the concerns regarding potential price increases. However, we expect marketers to maintain reasonable pricing, as NNPCL remains the sole supplier of the product currently,” the Joint statement read.

The oil marketers said they anticipate minimal changes regarding distribution costs, considering the cost of the product constitutes 80 percent of the pump price and pledged to manage these distribution costs diligently to minimize the impact on the pump price in collaboration with the Nigerian Association of Road Transport Owners and other crucial stakeholders,

Some analysts say phased removal is the best option. “My recommendation is that the process should be done in phases,” said Ayodele Oni, energy lawyer and partner at Lagos-based Bloomfield law firm.

Oni said the refineries in the country should be functional and operational to the extent that they can meet the demands of the country. This would certainly reduce the importation of refined products into the country and the associated costs such as haulage, insurance, ship-to-ship transfer costs, etc

Refineries

Since Tinubu’s inaugural speech, labour unions have been kicking against subsidy removal. At a press briefing in Abuja on Tuesday, Festus Osifo and Nuhu Toro, president and general secretary of Trade Union Congress of Nigeria, said they expect the President to be wise with the issue at hand.

“We dare say that this is a very delicate issue that touches on the lives, if not very survival, of particularly the working people, hence ought to have been treated with the utmost caution, and should have been preceded by robust dialogue and consultation with, the representatives of the working people, including professionals, market people, students and the poor masses,” they said in a statement.

The labour leader said they were concerned that Tinubu was not specific in how the plan will work and that Nigerian workers and indeed masses must not be made to suffer the inefficiency of successive governments, adding that they are ready to dialogue with the President.

“We are also worried that in his speech President Tinubu failed to delve into or reveal his plans on how to tackle and address the issue of poor and unchecked deterioration in industrial relations, particularly in the education, health and judiciary sectors, often resulting in prolonged strike and Industrial actions and their attendant adverse effects on society and the economy.”

However, analysts say subsidy actually benefits the rich at the exclusion of the poor.

“Fuel subsidy only rewards the elites, middle class, and rich in Nigeria. If you go to rural areas, you will hardly buy fuel at the regulated pump price. The fuel subsidy that is supposed to help the poor actually helps in intensifying their poverty and misery. So, fuel subsidy is only for the rich and has to go,” said Bongo Adi, a professor of Economics at Lagos Business School.

Labour leaders have also called for fixing the refineries before subsidy is removed but in the current situation, local refining would only save freight and port charges as crude constitutes over 86 percent of the cost.

Tinubu meets Kyari, Emefiele, others

Tinubu on Tuesday met behind closed doors with Godwin Emefiele, governor of CBN, NNPC boss, Kyari, in an apparent effort to address the fallout of fuel subsidy removal.

The meeting was his first official assignment in the Presidential Villa. The President arrived the meeting at about 2:32pm, and was received by Vice President Kashim Shettima, at the foya of the President’s office, accompanied by Tijjani Umar, permanent secretary, State House.

Others include Femi Gbajabiamila, speaker of House of Representatives, Wale Edun, Dele Akake and James Faleke.

Fuel subsidy, a burden on poor Nigerians – Shettima

Shettima described Nigeria’s huge subsidy spendings as a burden placed on poor Nigerians.

Shettima, speaking with State House Journalists on his first day in office at the Presidential Villa, said: “You and I benefit 90 percent from the fuel subsidy, while the poor, 40 percent of Nigerians, benefit very little. And we know the consequences of unveiling a masquerade.”

He said: “The truth of the matter is that it is either we get rid of subsidy or the fuel subsidy gets rid of the Nigerian nation.

“We will get fierce opposition from those benefitting from the oil subsidy scam. But where there is a will, there is a way. Be rest assured that our President is a man of strong will and conviction. In the fullness of time, you will appreciate his noble intentions for the nation. The issue of fuel subsidy will be frontally addressed. The earlier we do so, the better.”

Also speaking on the issue of multiple exchange rates, he said the Tinubu administration would collapse the multiple exchange into one.

He said: “So these are two big elephants in the room and as the days go by, we will be unveiling our agenda. He is going to unveil his agenda because as I have always said, there can never be two captains in a ship. He is the president and commander-in-chief of the armed forces.

“I’m the vice president. Your relevance is directly proportional to the level of your loyalty to the president. This is a gentleman that I have known for well over a decade; that I have interacted closely with. Be rest assured that we are going to work harmoniously as a team, as a family for the greater good of our nation.”

Read also: Fuel subsidy crisis: Tonye Cole urges Tinubu to discuss more with labour

FG owes NNPC N2.8trn, says Kyari

Also speaking on the subsidy issue, Kyari told journalists that the federal government owed the NNPC N2.8 trillion for money expended on fuel subsidy.

He revealed that the federal government “no longer have the money to pay the agency money spent on subsidy” adding that government has not paid NNPCL for subsidy for about two years.

Kyari also affirmed that the subsidy is no longer sustainable as it has made it impossible for the company to funds to fund its operations.

Kyari said the petrol queues that have resurfaced are understandable as marketers would like to understand the meaning of the president’s pronouncement that “subsidy is gone.”

He urged Nigerians to avoid panic buying, adding that the NNPCL has enough stock. “What you are seeing is normal because consumers will like to rush to the filing stations to fill their tanks, while the marketers will want to take advantage of the situation. The combined the two is what you are seeing play out.”

The NNPCL boss assured that government will initiate measures to cushion the effects of the removal of subsidy.