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44,068MW stranded as power sector loses N645.15bn

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The cumulative revenue lost by the power sector in 2020 was N645.15 billion, while the total quantum of electricity constrained during the period was 44,068 megawatts, investigation has shown.

Constrained power is the quantum of electricity that could not be generated and supplied to the national grid as a result of various challenges to power production in the sector.

It was learnt that the major impediments to power generation during the 12-month period were unavailability of gas, transmission bottlenecks and distribution constraints.

Documents obtained by our correspondent from the Federal Ministry of Power in Abuja showed that from January till December 2020, the sector lost billions of naira on a monthly basis.

It recorded its highest constrained revenue of N65.55bn in March, while the lowest loss of N25.55bn was posted in December.

The revenue losses posted in January, February, April, May, June and July were N56.41 billion, N54.96 billion, N64.64 billion, N61.6 billion, N61.77 billion and N63.21 billion respectively.

In the months of August, September, October and November, the sector’s constrained revenues were N62.92 billion, N45.99 billion, N52.58 billion and N29.97 billion respectively.

Further findings showed that while the sector posted monthly revenue losses, it also recorded large monthly constraints to power generation.

It was observed that in January 2020, for instance, the total quantum of electricity that was constrained in the sector was 3,791MW.

The 4,489MW of electricity that could not be generated and supplied to the national grid in April was the highest quantum of electricity that was constrained in a single month in 2020.

Figures from the documents showed that the total quantum of power constrained on a monthly basis were 3,949MW in February; 4,406MW in March; 4,140MW in May; 4,290MW in June; and 4,248MW in July.

Others include 4,229MW in August; 3,194MW in September; 3,534MW, October; 2,081MW, November; and 1,717MW, December.

Our correspondent also gathered that the overall highest peak power generated on the national grid during the 12-month period was recorded in the month of October.

The peak power recorded in October was 5,520MW, as this was followed by the 5,517MW posted in November and the 5,504MW recorded last month.

The peak power generation recorded on the grid in other months include 4,931MW, 5,268MW, 4,803MW and 5,316MW in the months of January, February, March and April respectively.

For the months of May, June, July, August and September, the peak power figures were 5,296MW, 5,173MW, 5,272MW, 5,420MW and 5,195MW respectively.

The documents also showed the average quantum of energy sent out to power users across the country on a monthly basis.

In the month of January, for instance, the average energy sent to power consumers nationwide through the national power grid was 3,821MW-hour/hour.

For the months of February, March, April, May, June and July, the average energy sent were 4,114MWH/H, 3,912WH/H, 4,099WH/H, 4,147WH/H, 3,708WH/H and 3,830WH/H respectively.

The average energy sent out in the months of August, September, October, November and December stood at 4,049WH/H, 3,872WH/H, 4,168WH/H, 4,381WH/H and 4,504WH/H respectively.

The revenue losses and constrained power in the sector had been attributed to a number of factors by operators in the business.

Power generation companies, for instance, had often complained about the inability of distributors to accept  electricity generated by Gencos as well as the inefficiency of the Transmission Company of Nigeria to effectively wheel energy.

In addressing the concerns in the sector, the industry regulator explained that it was vital to have the right pricing in the business.

The Commissioner, Legal, Licensing and Compliance of the Nigerian Electricity Regulatory Commission, Dafe Akpeneye, told our correspondent in Abuja that without the right pricing, the power business would find it tough to thrive.

He said, “The industry has not been able to stand on its own because the pricing hasn’t been right.

“And if the pricing was right, have you seen other investors coming in, knocking the door to invest in the Nigerian distribution sub-sector?

“Everybody looks at the pricing and they will say no, we can’t get our monies back because the pricing isn’t right.”

Akpeneye, however, noted that the regulator was working to get the pricing right in order to address the revenue shortfalls in the industry.

He said, “In getting the pricing right, with the announcement of service reflective tariff that we’ve done, it has spurred interest in the Nigerian power sector and people are looking to come in to invest in different aspects.

“This is because investment follows certainty. Nobody will invest where he is going to make a loss. But where you can do your projections and see that there is a return, people will invest.”

He expressed hope that the power sector would stabilise once the implementation of the service reflective tariff persists, adding that it would further enhance revenue generation in the industry.

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Energy

Marketers advocate ethanol as alternative fuel, plan $7bn yearly savings

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The Major Energies Marketers Association of Nigeria has stated that ethanol could be adopted as a biofuel to help Nigeria in reducing energy poverty and emissions.

According to MEMAN during a recent quarterly press webinar and engagement, about $7.4 billion could be saved annually by taking advantage of Nigeria’s ethanol resources as a biofuel to support petrol.

Ethanol is a biofuel that is commonly used as a substitute or additive to petrol in vehicles. It is typically produced through the fermentation of plant materials like cassava, corn, sugarcane, and others.

MEMAN noted that ethanol blended into biofuel as a transformative energy source has the potential to change Nigeria’s energy landscape and pave the way for a sustainable economy.

Experts, who spoke at the webinar, revealed that Nigeria had what it takes to exploit its ethanol to biofuel potential.

Presenting a paper titled ‘Ethanol as a Biofuel,’ a Senior Consultant with Africa Practice, Agwu Ojowu, pointed out that developing the ethanol industry could save the nation about $7.4bn ba year.

“Nigeria’s cassava production, standing at 63 million metric tonnes annually, represents 26 per cent of the global total. However, with 40 percent of this yield lost each year, there is a significant economic loss estimated at $7.4bn. Developing the ethanol industry could mitigate these losses, enhance economic stability, and capitalise on the depreciating currency to reduce costs,” Ojowu stated.

He emphasised that ethanol’s higher octane rating improves fuel quality and helps meet environmental standards by reducing sulphur content and greenhouse gas emissions.

Those attributes, he said, make ethanol a cost-effective and environmentally friendly alternative to petrol, aligning with Nigeria’s climate commitments.

Going down memory lane, Ojowu recalled that Nigeria’s foray into ethanol began with the 2007 biofuels policy, which mandated a 10 percent ethanol blend in fuel.

“Despite initial challenges, including the suspension of the policy in 2008, because of blending inconsistencies, the potential of ethanol remains significant. Ethanol’s cost-effectiveness compared to petrol has historically led to economic arbitrage, suggesting that a well-regulated biofuel market could be economically advantageous,” he said.

Ojowu added that ethanol presents numerous benefits, including economic, environmental, and agricultural advantages, without necessitating vehicle modifications.

The Executive Secretary of MEMAN, Clement Isong, also emphasised the role of renewable energy in addressing Nigeria’s energy poverty.

He highlighted the importance of diverse energy sources, including biofuels, solar, hydroelectricity, and wind energy, to create a balanced and sustainable energy mix.

“MEMAN is committed to engaging with industry stakeholders to advocate for energy solutions that meet Nigeria’s needs,” Isong said.

He expressed optimism about the future of renewable energy in Nigeria and the continued efforts to enhance press engagement and industry collaboration.

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Energy

Abuja DisCo adds 45 new feeders to Band A

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The Abuja Electricity Distribution Company, (AEDC) has disclosed it has added 45 new feeders to the Band A category of customers who would enjoy a minimum of 20 hours of electricity as stipulated by the Nigerian Electricity Regulatory Commission (NERC).

The new feeders are majorly in the Asokoro, Wuye, Garki, Suleja, Apo and other areas of the capital city. This was disclosed by the Disco on their official X (formerly Twitter) page where it described the feeder location and specific areas served by the feeder.

Other areas where feeders were upgraded to band A include; Suleja, Garki Area II, Wuse, Anyigba, Mpape, Jabi, Gwagwalada, Gwarimpa etc.

The DisCo noted that the upgrade to band A for the affected feeder location is effective from June 1, 2024.  Similar upgrades across other DisCos

In April, the Nigerian Electricity Regulatory Commission (NERC) announced a more than 200 percent increase in electricity tariffs for Band A customers.

This move is part of efforts to eliminate electricity subsidies and implement a cost-reflective tariff system in the power sector.

Abuja Disco’s addition of new feeders to Band A is in line with similar actions by other distribution companies like Eko and Ikeja DisCos following the tariff hike.

Band A customers are on specific feeders that receive a minimum of 20 hours of electricity daily. According to NERC, these customers account for approximately 17 percent of all electricity users in the country.

The decision to raise electricity tariffs for Band A customers has sparked public outrage, particularly among trade and labour unions nationwide.

Organised labour members have protested the increase, while the Manufacturers Association of Nigeria (MAN) has advised its members not to pay the new tariff, claiming they were not consulted.

MAN has instructed its members to continue paying the old rate of N66/kWh. The various electricity distribution companies have vowed to disconnect customers who fail to pay the new tariff under their band.

The group has also filed a petition with NERC regarding the tariff hike, which is currently awaiting resolution.

Furthermore, the Organised Private Sector (OPS) comprising all chambers of commerce and trade associations across the country had warned that the new tariff could lead to the shutdown of 65 percent of businesses across the country.  The group stated that the over 200 percent hike in electricity tariff to N220/KWh then made Nigeria’s power cost the highest in the world. It warned that the hike could exacerbate the economic situation in the country and push more people into unemployment and poverty.

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Energy

Settlement agreement: NNPC asks court to discontinue lawsuit against Mobil subsidiaries

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The Nigerian National Petroleum Company Limited (NNPC) has filed a motion to discontinue its lawsuit against Mobil Nigeria subsidiaries and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in the High Court of the Federal Capital Territory, Abuja.

The motion is aimed at finalizing a settlement agreement for the divestment of Mobil Producing Nigeria Unlimited to Seplat Energy Offshore Limited for $1.28 billion.

NNPC’s legal counsel, Afe Babalola & Co., presented the motion, requesting the court’s permission to withdraw the suit and strike it off the court’s cause list.

The motion cites legal precedents, including the Supreme Court decision in Adama v. Maigari (2019), which supports the relisting of a discontinued suit if the out-of-court settlement fails.

The lawsuit, originally filed by NNPC on July 5, 2022, was referred to arbitration on August 3, 2022.

Recent negotiations have led to an out-of-court settlement decision, with the Settlement Agreement requiring NNPC to withdraw the lawsuit.

The court is currently considering the motion, which, if granted, would pave the way for the parties to complete the settlement and divestment transaction.

No further details have been released, but sources indicate that the settlement agreement includes clauses designed to align the interests of all parties and finalize the transaction.

The development is seen as a significant step towards resolving the longstanding dispute between NNPC, the Mobil subsidiaries, and NUPRC.

Approval of the motion would allow the parties to focus on finalizing the settlement and completing the divestment transaction.

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