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FG reiterates plan to boost power supply to 6,500MW in six months

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The Minister of Power, Mr Adebayo Adelabu, has reiterated the Federal Government’s plan to raise electricity generation from 3,500 Megawatts(MW) to 6,500MW within the next three to six months.

Adelabu who was on a working visit to various power projects in Lagos on Friday, said the aim was to enhance power supply across the country to meet the growing energy demands.

His visit included an inspection of the headquarters of Eko Electricity Distribution Company (EKEDC) and two 20 MVA injection substations at Randle, Surulere, along with Supervisory Control and Data Acquisition (SCADA) monitoring rooms.

Adelabu emphasised the urgency of boosting electricity generation capacity, stating, “3,500 megawatts is not acceptable, and we have plans to increase the capacity to a minimum of 6,000 to 6,500 within the next three to six months.”

He commended EKEDC for its achievements over the past decade and stressed the need for continuous improvement in the power sector to drive economic growth and development effectively.

Highlighting the critical role of the power sector in industrial and economic development, Adelabu compared Nigeria’s power generation capacity unfavourably to that of countries like Korea and China, underscoring the need for substantial improvement.

Addressing challenges in the power sector, Adelabu emphasised the importance of prioritising baseload power generation and gradually transitioning to cleaner energy sources to meet the nation’s energy needs effectively.

He acknowledged the persisting complaints about power outages and urged stakeholders to work collaboratively to address these challenges and improve service delivery.

Adelabu outlined the government’s strategy to prioritise service provision to customers in higher billing bands while gradually extending improved services to all segments through strategic infrastructure investments.

Recognising the role of Distribution Companies (DisCos) in customer service, Adelabu said it was important to ensure proactive engagement and efficient operations at this level to address consumer needs effectively.

He stressed the need for comprehensive reforms and transformation in all segments of the power sector, focusing on issues such as metering, vandalism, debt collection, and customer relations.

Adelabu highlighted the necessity of stimulating demand through customer engagement to ensure effective utilisation of generated power and underscored the importance of efficient distribution to prevent wastage.

The Minister noted the government’s commitment to enhancing the sector’s performance through substantial investments in infrastructure and efficient customer response.

In response to the minister’s visit, Chairman of EKEDC, Mr Oritsedere Otubu commended the government’s efforts to improve power supply and expressed the company’s commitment to supporting the initiative.

The CEO of EKEDC, Dr Tinuade Sanda said the company would continue to collaborate with government agencies and consumers to protect power assets and curb vandalism within its operations.

Sanda said that the company, in the last six months, had invested over four billion Naira on transformers,  cables and rehabilitation over 352 feeders to ensure stable supply during the rainy season.

She added that the debt profile of the company in the last 10 years stood at over N131 billion, inclusive of the Ministries,  Departments and Agencies (MDAs).

“We also use this medium to appeal to our customers to pay their bills for effective service delivery.

“The MDAs outstanding debts to date stood at over N36 billion,  adding that the DisCo will not hesitate to embark on mass disconnection of debtors,” she added.

She, however, said the company was ready to embark on mass disconnection of debtors, including government agencies with outstanding debts, to address the issue of unpaid bills.

Energy

NNPC Ltd, Schlumberger sign agreement to boost upstream operations

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As part of strategic reforms aimed at unlocking opportunities in the nation’s oil and gas industry, NNPC Energy Services Limited (EnServ) and Schlumberger (SLB), a renowned global technology company, have signed a technical partnership agreement towards bolstering upstream operations.

The agreement was signed at the NNPC Ltd.’s Corporate Headquarters in Abuja on Thursday, with senior management teams from both companies in attendance.

Speaking shortly after the signing, the Group Chief Executive Officer of NNPC Ltd., Mr. Mele Kyari, described the ongoing reforms within the industry as a trigger for potential release of investments in the short term.

“Quite a number of reforms are unfolding, and at the back of it is a potential release of investments that we are seeing in the very short term. Our physical environment is excellent today; contracting processes have been reviewed by virtue of the clear reforms the President has put in place; and ultimately, we are already seeing substantial energy going into unlocking opportunities of today,” Kyari stated.

Highlighting the numerous benefits of the partnership, Kyari said it would lead to increased activity and more drilling campaigns that would add value to the two organisations.

He revealed that NNPC was working on a rig share platform with a definite plan around well drilling activities and associated operations in the coming years, which, he further explained, would increase crude oil production and support the ongoing plan to deepen gas utilisation within the country.

Kyari, who expressed confidence in the long-standing relationship between NNPC Ltd and Schlumberger (SLB), said the NNPC would leverage the assets within its control to accelerate the values that will come from this partnership.

“We are counting on Schlumberger (SLB) as our partners of 70 years. We are in business; we see the opportunities and strategic need to work with you and ultimately, we will create value for our country,” the GCEO noted.

Earlier in his remarks, the Chief Executive Officer of Schlumberger (SLB), Mr. Olivier Le Peuch, said the agreement was poised to accelerate the achievement of Nigeria’s exploration and production targets, which will foster Nigeria’s economic growth and prosperity.

“We are here to celebrate the strategic partnership that we signed with EnServ as a technical partner. This agreement is geared towards unlocking the capacities of EnServ for Nigeria, which potentially will help NNPC Ltd. to achieve its exploration and production targets. We look forward to using this technical partnership as a springboard to accelerate the vision that the industry needs,” Le Peuch added.

He noted that as a company that has been on the shores of Nigeria for 70 years, Schlumberger (SLB) remains committed to investing in local talents and building capacity through technology and performance.

“We are pleased to be at the centre of this transition and are in a position where we can bring our technical capability, technology, and capacity to the country so as to support the operations of NNPC Ltd,” he concluded.

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Energy

Electricity subsidy gulps N629bn, as DisCos generate N1.1trn

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The Federal Government spent N628.61 billion as subsidy on electricity in 2023, as power distribution companies collected a total revenue of N1.08 trillion during the same period, the latest industry data obtained from the Nigerian Electricity Regulatory Commission during the week showed.

An analysis of figures from the power sector regulator indicated that electricity subsidies continued to increase every quarter all through last year.

It was observed that subsidies on power in the first, second, third, and fourth quarters of 2024 were N36.02 billion, N135.23 billion, N204.6 billion, and N252.76 billion respectively.

It was also observed that during the same period, power distribution companies raked in N247.09 billion, N267.86 billion, N267.61 billion, and N294.95 billion in the first, second, third, and fourth quarters of 2023 respectively.

The rise in revenue by DisCos prompted calls for improved services from the power firms, as consumers condemned the Discos’ inability to deliver satisfactorily.

In the absence of cost-reflective tariffs, the Federal Government undertakes to cover the resultant gap between the cost-reflective and allowed tariff in the form of tariff subsidies.

For ease of administration, the subsidy is only applied to the power generation cost payable by DisCos to the Nigerian Bulk Electricity Trading company, which is the power trader in the sector.

The transmission and administrative service costs payable by DisCos to the Market Operator, an arm of the Transmission Company of Nigeria, are recovered 100 percent.

However, it should be noted that the power generation cost is a major component that guarantees electricity generation and supply across the country.

Also, the share of the NBET invoice to be covered by DisCos is determined by the percentage of the generation cost they can recover from the allowed tariff and set out as their Minimum Remittance Obligation in the periodic tariff orders issued by the commission.

Commenting on the amount spent on electricity subsidy in the fourth quarter of 2023 in its latest report, the NERC said, “It is important to note that due to the absence of cost-reflective tariffs across all Discos, the government incurred a subsidy obligation of N252.76 billion in 2023/Q4.”

This represents an average of N84.25 billion per month, which is an increase of N48.16 billion (23.54 percent), compared to the N204.6bn (average of N68.20 billion per month) incurred in 2023/Q3.

“This increase is largely attributable to the government’s policy to harmonise exchange rates, while also directing that end-user customer tariffs remain at the December 2022 approved rates,” the commission stated.

Explaining the subsidy spent on power in the third quarter, NERC said, “It is important to note that due to the absence of cost-reflective tariffs across all Discos, the government incurred a subsidy obligation of N204.59bn in 2023/Q3 (average of N68.20bn per month).”

This is an increase of N69.37 billion (51.30 percent) compared to the N135.23 billion (average of N45.08 billion per month) incurred in 2023/Q2; this increase is largely attributable to the government’s policy to harmonise exchange rates.

“The rise in the government’s subsidy obligation meant that in 2023/Q3, Discos were only expected to cover 45 percent of the total invoice received from NBET. For ease of administration of the subsidy, the MRO is limited to NBET only with the MO being allowed to recover 100 per cent of its revenue requirement from the Discos.”

On the same subsidy issue for the second quarter of 2023, the commission stated that due to the absence of cost-reflective tariffs across all Discos, the “government incurred a subsidy obligation of N135.23bn in 2023/Q2.”

It added that this represents “an increase of N99.21 billion (275 percent) compared to the N36.02 billion incurred in 2023/Q1. This increase is largely attributable to the government’s policy to harmonise exchange rates. On average, the subsidy obligation incurred by the government per month was N45.08 billion in 2023/Q2.”

The data from NERC also showed how power distribution companies garnered about N1.1tn from customers across the country last year amid complaints of poor supply by end-users of electricity.

On the collection efficiency of the Discos in the fourth quarter of 2023, the regulator said, “The total revenue collected by all Discos in 2023/Q4 was N294.95 billion out of N399.69 billion billed to customers.

“This translates to a collection efficiency of 73.79 percent which represents a decrease of -2.77 basic points when compared to 2023/Q3  (76.56 percent).”

The commission explained that over previous quarters, it observed that whenever there was an increase in energy offtake, there was usually a decrease in DisCos’ billing and collection efficiencies for the same period.

“This is probably because DisCos send more energy to areas where they incur more commercial losses. The inverse relationship between energy offtake by DisCos and billing as well as collection efficiencies may pose challenges to the long-term growth of the NESI (Nigeria Electricity Supply Industry) unless DisCos make significant progress towards improving energy accounting and addressing the major causes of losses,” it stated.

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Energy

Bonga is asset of the year in Shell group

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Nigeria’s premier deep-water development, Bonga, operated by Shell Nigeria Exploration and Production Company Limited (SNEPCo) has won the coveted Asset of the Year award in the Shell Group for 2023, the latest recognition of its best-in-class performance in Safety, Environment and Asset Management.

Bonga had clinched same award in 2016 and was first runner up in the same category in 2019 for improved production, maintenance, problem-resolving capability, operational excellence and cost ownership.

The asset won again this year beating targets in oil production, plant availability, and greenhouse gas emissions. The asset also recorded zero fatalities and spills. “This is a testament to a culture of excellence which has endured at Bonga since first oil in 2005,” SNEPCo Managing Director Elohor Aiboni said of the award. “We appreciate the hard work of staff and contractors as well as the support of the Nigerian National Petroleum Company Limited and our co-venturers – TotalEnergiesNigeria Limited, Nigerian Agip Exploration and Esso Exploration and Production Nigeria Limited which has enabled Bonga to continue to safely and efficiently deliver value to stakeholders.”

Among other factors, SNEPCo has relied on a motivated workforce, cutting-edge technology and a relentless drive on safety to deliver oil and gas at record levels at Bonga. Last year, the Floating, Production, Storage, Offloading (FPSO) vessel, which is at the heart of the operations, achieved the one billionth barrel of crude oil export. Overall, Bonga produced 138,000 barrels of oil equivalent per day (boepd) in 2023 compared to around 101,000 in 2022.

The latest award for Bonga adds to a lengthy list of laurels won by Shell in Nigeria in the past few years. In 2022 alone, Shell Companies in Nigeria were recognised as Best International Company of the Year (Petroleum Technology Association of Nigeria), Upstream Company of the Year (Nigeria International Energy Summit) and Leading Tax Compliant Firm in Nigeria (Federal Inland Revenue Service.)

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