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NERC threatens DisCos with sanctions for rejecting power

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The Nigerian Electricity Regulatory Commission has expressed concern over the electricity load rejection by power distribution companies despite the blackout witnessed in many parts of Nigeria.

It threatened to enforce appropriate regulatory actions against DisCos that fail to meet the key performance targets for electricity offtake, stressing that the disparity between available power capacity and customer demand was becoming large.

The power sector regulator in its latest quarterly report for Q3 2023 analysed by our correspondent on Friday, stated that the Partial Activation of Contract regime, which took effect in July 2022, defined the target volume of energy to be off-taken by Discos at any time as their Partially Contracted Capacity.

It explained that under the PAC regime, Discos had take-or-pay obligations on their PCC, meaning that they must pay for available power capacity irrespective of their offtake.

It said this structure was consistent with international best practices for long-term contract-based power procurement and ensures that power generation companies earn capacity payments to compensate them for availability.

“Considering the large disparity between available capacity and customer demand, it is expected that Discos will offtake their Partially Contracted Capacity at all times provided that the generation is available.

“However, the commission continues to observe with concern that many DisCos do not take their full PCC due to a combination of technical limitations as well as load rejection by the Discos largely due to commercial reasons, i.e., high losses in certain areas,” the NERC stated.

It, however, stated that to curtail this practice, the commission included load offtake as a key metric in its KPI Order — Order on Performance Monitoring Framework (NERC/316-326/2022), which was issued to Discos effective October 2022.

“The order provides that persistent load non-offtake to certain thresholds may trigger regulatory actions against the management of erring DisCos.

“Furthermore, it is noteworthy that when DisCos have offtake ratios below 100 percent, this means that they incur increased wholesale energy costs as they still have to pay NBET/Gencos for unused capacity for which they have no avenue to recover revenues,” the commission stated.

Further analysis of the report showed that in 2023/Q3, the average energy offtake by Discos at their trading points was 3,253.83 megawatts-hour/hour, which represented an increase of +0.08 percent (+2.52MWh/h) when compared to 3,251.31MWh/h off-take in 2023/Q2.

But the commission pointed out that during the quarter, all the DisCos took less than their available PCC, except Eko and Ibadan DisCos which recorded offtake performance of 112.25 percent and 105.55 percent, respectively, and would therefore benefit from reduced wholesale energy costs.

The commission stated that it would utilise its Order on Performance Monitoring Framework “to enforce appropriate regulatory actions against Discos that fail to meet the KPI targets for offtake ratio.”

It added that “the situation room set up by the commission will continue to undertake a daily analysis of the energy offtake performance of DisCos and intervene with the management of DisCos as required.”

Power consumer groups have repeatedly kicked against the load rejection by DisCos, as they wondered why this had continued amid the poor supply of electricity across the country.

“Many Nigerians lack power supply, yet we still hear of electricity load rejection by Discos, what an irony that should be stopped,” the National Secretary, Nigeria Electricity Consumer Advocacy Network, Uket Obonga said.

He urged the commission to enforce all disciplinary sanctions that would make the power distributors live up to expectations in the supply of electricity to end users nationwide.

Meanwhile, the NERC explained that the Partial Activation of Contract regime also mandates GenCos or the Transmission Company of Nigeria to compensate DisCos through Liquidated Damages in the event of capacity shortfalls.

According to the regulator, under the single-buyer model being operated in the power sector, when there is a shortfall in generation, LDs from GenCos are treated as net-offs in the invoices issued to NBET thereby reducing the net payables due from DisCos.

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530 CNG buses ready for deployment in Lagos, Oyo, Kwara, FCT, others

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The process for nationwide deployment of Compressed Natural Gas (CNG) vehicles has commenced. Not less than 530 buses are to be deployed by the end of the month in six pioneering states.

These are Oyo, Lagos, Kwara, Kogi, Kaduna, Nasarawa, and the Federal Capital Territory (FCT) Abuja.

Programme Director of the Presidential Compressed Natural Gas Initiative (PCNGI) Michael Oluwagbemi stated this yesterday.

It was during the event signaling the commencement of 15-day-long activities ahead of the rollout.

He said the distribution is on a demand-led basis.  He added that efforts would be accelerated at the conversion of diesel and petrol-fuel engines across the country.

According to Oluwagbemi, President Tinubu has directed the PCNGI to ensure the conversion of at least 10 per cent of the total number of vehicles in the country in the first year of the rollout of the initiative.

 

The programme began yesterday in the Southwest with the Presidential (virtual) commissioning of the critical gas supply projects.

 

Today, the team will inspect the Jets and Mikano Factory along with representatives of the Ministry of Labour and workers unions.

Southsouth and Southeast stakeholders engagement will be held tomorrow in Port Harcourt, the Rivers State capital.

Affiliate conversion and refuelling at the Femadec Site as well as an inspection tour of the Total Energies support station are planned.

Another six-day inspection tour of the Kojo Factory at the Enugu-Onitsha Site will begin on May 24 to receive the first set of assembled tricycles, buses, cylinders and kits ahead of the official launch.

The Luojia Assembly Plant for CNG tricycles on the Lagos-Ibadan Expressway will be inaugurated on May 30.

“These programmes are a fulfilment of President Bola Ahmed Tinubu’s promise to drive Nigeria’s energy transition in the transportation sector leveraging CNG and enabling economic growth,” Oluwagbemi stated.

He noted the President’s political will to ensure the full utilisation of natural gas which hitherto was being flared.

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Oil block bid rounds: NUPRC assures interested buyers of conducive environment

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The Chief Executive of the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), Engr Gbenga Komolafe, has assured prospective investors interested in participating in the country’s oil rounds of a conducive environment to conduct their business.

Komolafe made this assertion at the Miami International Roadshow for the 2024 licensing round, organised by the NUPRC in partnership with the Petroleum Technology Association of Nigeria (PETAN) and Zetse Advisory & Consulting.

Speaking, Komolafe declared that the marketing of oil blocks has garnered staunch backing from the highest echelons of the government.

Engr. Komolafe, who underscored the role of presidential support in attracting investors to the Nation’s oil sector, said the Licensing Round is part of concerted efforts by Nigerian authorities to revitalise the country’s oil and gas industry and foster increased investment.

According to him, the backing signals a concerted effort to provide a conducive environment for both domestic and foreign investors seeking opportunities in Nigeria’s energy market.

The Miami International Roadshow serves as a crucial platform for showcasing Nigeria’s vast potential in the petroleum sector and fostering partnerships with international stakeholders. By collaborating with stakeholders such as PETAN and Zetse Advisory & Consulting, Komolafe further affirms Nigeria’s commitment to fostering a transparent and investor friendly regulatory environment in its pursuit of energy sector excellence.

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Tinubu commissions OB3, ANOH, AHL gas projects

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…Reiterates commitment to utilise Gas for economic growth, prosperity

President Bola Ahmed Tinubu on Tuesday virtually commissioned three gas projects in Imo and Delta state.

The projects were executed by NNPC Limited and its partners in Ohaji-Egbema, in Imo State and Kwale, in Delta States, on Wednesday.

The three projects commissioned include the expansion of the AHL Gas Processing Plant, the ANOH Gas Processing Plant and the 23.3km ANOH to Obiafu-Obrikom-Oben (OB3) Custody Transfer Metering Station Gas Pipeline Projects.

Speaking, President Tinubu reiterated the commitment of his administration to utilize Nigeria’s abundant gas resources towards revamping the nation’s industrial growth and kickstarting its economic prosperity.

“It is pleasing that approximately, 500MMscf of gas in aggregate would be supplied to the domestic market from these two Gas Processing Plants, which represents over 25 percent incremental growth in gas supply. In practical terms, this translates into more gas to the Power Sector, Gas-Based Industries, and other critical segments of the economy,” the President added.

The President said from the onset, his administration was clear of its intention to leverage on the virtually unlimited capacity of gas to deepen domestic gas utilisation, increase national power generation capacity, revitalise industries, and create multiple job opportunities for economic growth.

He said aside the Presidential Compressed Natural Gas (CNG) Initiative which is aimed at moving Nigerians away from petrol and diesel as vehicular combustion fuel, significant progress has also been recorded in incentivising gas development through Presidential Executive Orders.

While congratulating the projects partners (NNPC Limited, Sterling Oil Exploration & Energy Production Company Limited (SEEPCO) and Seplat Energy for the successful implementation of the three projects, Tinubu particularly charged the NNPC Limited to, as the national energy company of choice, sustain its relentless efforts and record more successes in the energy sector for the benefit of all Nigerians.

He described the commissioning as a highly significant milestone for Nigeria as it demonstrates his administration’s efforts to accelerate the development of critical gas infrastructure geared at enhancing the supply of energy to boost industrial growth and create employment opportunities.

He said the projects were fully in line with the Federal Government’s Decade of Gas initiative, and his administration’s quest to grow value from the Nation’s abundant gas assets while concurrently eliminating gas flaring and accelerating industrialisation.

“I wish to assure the citizenry that these are just the beginning, as the federal government is stepping up its coordination of other landmark projects and initiatives that will ensure the earliest realisation of gas-fueled prosperity in our country. Consequently, I wish to assure investors in the energy space that this is an investment enabling government and we will not relent in facilitating the ease of doing business,” the President noted.

Earlier in his address, the Minister of State for Petroleum Resources (Gas) Rt. Hon. Ekperikpe Ekpo highlighted the efforts of his ministry to continue to champion the utilisation of gas as a transition fuel as Nigeria moves towards achieving clean energy efficiency and security by 2060.

Ekpo commended the President for his leadership and support towards the success of the three projects.

He said: “Mr. President, the decision to eliminate fuel subsidies at the start of your administration has compelled increased spending in upstream and midstream gas development, and the use of gas as an appropriate, more cost-effective, and cleaner alternative to diesel and gasoline. Furthermore, in keeping with the Paris Climate Change agreement, this measure solidifies the use of gas as our transition fuel as we move the Nation towards achieving green energy sufficiency by 2060.”

The Minister appreciated  President Tinubu, saying his “inspiring leadership has been the driving force behind our progress towards a future full of opportunity and promise.”

He described the AHL Gas Processing Plant 2 (GPP – 2) and ANOH Gas Processing Company (AGPC) Plant, which were commissioned, as important facets of the Decade of Gas initiative, and a reflection of the NNPC Ltd. and its Joint Venture partners’ efforts.

“In addition to producing over 160,000 metric tonnes of propane and 100,000 metric tonnes of butane annually, this plant promotes rapid industrialisation and reduces reliance on LPG import,” he said.

In his remarks, the GCEO NNPC, Mr. Mele Kyari described the commissioning as a demonstration of Mr. President’s commitment and support to grow the domestic utilisation of natural gas for power generation, as feedstock for gas-based industries and overall rapid industrialisation of Nigeria on the back of the enormous gas resources in the country.

Kyari assured that as part of its mandate, NNPC Ltd remains committed to maintaining energy security by executing more strategic gas projects for the benefit of Nigeria.

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