Energy
Shell, TotalEnergies, others suffer €100bn hit from Russia operations
Europe’s biggest companies have suffered at least €100 billion in direct losses from their operations in Russia since President Vladimir Putin’s full-scale invasion of Ukraine last year.
According to a report obtained, a survey of 600 European groups’ annual reports and 2023 financial statements shows that 176 companies have recorded asset impairments, foreign exchange-related charges, and other one-off expenses as a result of the sale, closure, or reduction of Russian businesses.
The aggregate figure does not include the war’s indirect macroeconomic impacts such as higher energy and commodities costs. The war has also delivered a profit boost for oil and gas groups and defense companies.
Moscow’s decision to seize control of the Russian businesses of gas importers Fortum and Uniper in April, followed by the expropriation of Danone and Carlsberg last month, suggests more pain lies ahead, according to analysts.
The report noted that more than 50 per cent of the 1,871 European-owned entities in Russia before the war are still operating in the country, according to data compiled by the Kyiv School of Economics. European companies still present in Russia include Italy’s UniCredit, Austria’s Raiffeisen, Switzerland’s Nestlé, and the UK’s Unilever.
“Even if a company lost a lot of money leaving Russia, those who stay risk much bigger losses,” said Nabi Abdullaev, partner at strategic consultancy Control Risks. “It turns out that cut and run was the best strategy for companies deciding what to do at the start of the war. The faster you left, the lower your loss.”
It stated that the heaviest costs of withdrawal are concentrated in a few exposed sectors.
Those with the biggest write-downs and charges are oil and gas groups, where three companies alone — BP, Shell, and TotalEnergies — reported combined charges of €40.6 billion.
The losses were far outweighed by higher oil and gas prices, which helped these groups report bumper aggregate profits of about €95 billion ($104 billion) last year.
Utilities took a direct hit of €14.7 billion, while industrial companies, including carmakers, have suffered a €13.6 billion blow. Financial companies including banks, insurers, and investment firms, have recorded €17.5 billion in write-downs and other charges.
Looking at global investment flows into Russia, “even if Europeans were the only investors there, which they are not, the country would account for just 3.5 per cent of their total outward investments,” he said.
According to the report, BP reported a $25.5 billion charge, announcing three days after the invasion that it would sell its 19.75 per cent stake in state-owned oil group Rosneft.
It took TotalEnergies longer to report a total cost of $14.8 billion. The French energy group has yet to write down its 20 per cent stake in the Yamal LNG project. Shell took a $4.1 billion charge, while Norwegian oil and gas group Equinor and Austria’s OMV have reported €1 billion and €2.5 billion respectively.
German group Wintershall Dea in January said the Kremlin’s expropriation of its Russia business had wiped €2 billion of cash from its bank accounts. In turn, Wintershall’s owner BASF wrote down its stake in the energy explorer by €6.5 billion.
Uniper, which was bailed out by the German state last year, booked €5.7 billion in impairments, while Finland’s Fortum took a €5.3 billion hit.
Eleven carmakers took a combined €6.4 billion in charges. Renault wrote off €2.3 billion after selling its Moscow plant and the stake in Russia’s Avtovaz in May 2022.
Volkswagen reported a €2 billion write-down and in May Moscow approved the sale of VW’s local assets, including a plant employing 4,000 people, which were still valued at Rbs111.3 billion (€1.5 billion) last year, according to company disclosures.
In the financial sector, France’s Société Générale threw in the towel in April 2022, selling Rosbank and its insurance activities to Vladimir Potanin, an ally of Putin, taking a €3.1 billion hit in the process. But only a handful of the 45 Western banks with Russian subsidiaries have exited the country, partly because of constraints imposed by Moscow.
Raiffeisen, still the largest Western bank in the country, has taken €1 billion in write-downs and other charges. The lender has said it is exploring a sale of its Russian unit, which it values at €1 billion currently.
UniCredit, which has vowed to find a buyer for its local business, has accounted for a €1.3 billion hit, while Italy’s Intesa Sanpaolo took a €1.4 billion charge.
“The groups still operating in Russia are taking a high-risk gamble, said Anna Vlasyuk, a research fellow at KSE. The tighter exit rules introduced by Moscow since the start of the war have made expropriation likely and extracting any dividends out of these businesses is almost impossible,” she said.
Energy
Synergy, commitment crucial to clean energy transition, sustainability in Africa — CEO, Egbin Power
As carbon emissions reduction and energy security remain a crucial focus in the global sustainability agenda, shared commitment, synergy and decisive actions are the cornerstone of accelerating the transition to cleaner energy and achieving a sustainable environment.
Having analysed the percentage of global greenhouse emissions attributed to sectors including electricity/heat production, agriculture/forestry and land use, transportation, industry and others, the Chief Executive Officer, Egbin Power, Mokhtar Bounour, charged for synergy and renewed commitment among stakeholders.
He made this known at the maiden edition of Asharami Square, a Sahara Group initiative aimed at amplifying the discourse on sustainability through impactful media advocacy.
While highlighting Egbin Power’s unwavering commitment to reducing carbon emissions and promoting sustainable energy sources, Bounour further stressed the need for deepened engagement and advocacy to further prioritise sustainability.
Bounour outlined Egbin Power’s comprehensive approach to sustainability, which includes an array of pragmatic initiatives such as obsolescence management, asset upgrades, energy efficiency improvement, sustainability and environmental impact management, and fugitive emissions minimization.
These programs are strategically designed to effectively address carbon emissions and promote cleaner energy initiatives.
According to him, Egbin Power drives sustainability through afforestation, adoption and enforcement of ANSI Lighting Design Standards for the Egbin built environment, a gradual switch from Internal Combustion Engines (ICEs) to Compressed Natural Gas (CNG) and the integration of Electric Vehicles (EVs) into the company’s operations, among other interventions.
“These actions demonstrate Egbin Power’s commitment to thinking globally and acting locally, ensuring that deliberate and impactful steps are taken to promote sustainability and environmental consciousness actively.
“As a responsible organisation Egbin Power is steadfast in its commitment to promoting sustainability.
“Our roadmap and initiatives are designed to align with global sustainable development goals and to ensure that we contribute to a cleaner and more sustainable energy landscape in Africa.
“Our pragmatic initiatives which include obsolescence management, asset upgrades and overhauls, energy efficiency improvement, sustainability and environmental impact management, and fugitive emissions minimization as part of programs designed to address carbon emissions.
“We are committed to treating the environment with the utmost care, knowing well that every activity we engage in – either as an individual or collectively as an organisation has an impact on the ecosystem,” Bounour explained.
By Esther Agbo
NNPC Retail Limited has swiftly responded to allegations circulating on social media regarding coercive practices at one of its filling stations.
A video clip surfaced on social media, X (formerly Twitter) precisely, purportedly showing customers being pressured to purchase lubricants or engine oil in order to obtain Premium Motor Spirit (PMS), commonly known as petrol. The attendant in the video claimed that this directive originated from NNPC Retail Management.
In a statement issued, NNPC Retail categorically refuted the allegations, asserting that such practices are entirely false and do not align with the company’s Customer Service Charter. According to NNPC Retail, customers visiting any of their filling stations are under no obligation to purchase additional products as a condition for buying petrol.
Managing Director of NNPC Retail Ltd, Mr. Huub Stokman, emphasised the company’s commitment to transparent and quality service delivery.
He stated, “We are dedicated to providing clear, transparent and quality service to all our customers, guaranteeing that their needs are met without any recourse to unnecessary and unscrupulous conditionalities.”
In response to the incident, NNPC Retail Limited has initiated an investigation to ascertain the facts surrounding the video. The company has assured the public that appropriate disciplinary measures will be taken against any individuals found responsible for misconduct.
“The public is hereby advised to disregard the information in its entirety and report any such occurrences to the appropriate authority.
“In the meantime, NNPC Retail Limited has launched an investigation into the unfortunate incident and assures that appropriate disciplinary action will be taken against the culprit (s).”
In line with the Electricity Act 2023, the Nigerian Electricity Regulatory Commission, NERC, issued an order transferring regulatory oversight of the electricity market in Imo to the Imo State Electricity Regulatory Commission.
This was contained in a recent order signed by NERC Chairman Sanusi Garba.
The order shall take effect on July 1, 2024.
The implication is that Imo State will be responsible for the complete regulation of its electricity market.
The order stated: “Section 230 (3) of the Act mandates the commission to develop a transition plan and timeline for the transfer of regulatory oversight of the intrastate electricity market from NERC to ISERC upon receipt of formal notification from the State
“EEDC shall complete the incorporation of EEDC SubCo within 60 days from the effective date of this Order and, EEDC SubCo shall apply for and obtain a licence for the intrastate supply and distribution of electricity from ISERC.
“EEDC shall identify the actual geographic boundaries of Imo State and carve out its network in Imo State as a standalone network with the installation of boundary meters at all border points where the network crosses from Imo State into another state.”
With the development, Imo becomes the fourth state to get electricity regulatory authority after Enugu, Ondo and Ekiti states.
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