BusinessDay 07 May 2020

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news you can trust I ** thursDAY 07 may 2020 I vol. 19, no 558

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NGUS mar 31 2021 393.92

LOLADE AKINMURELE bleak future without petrodollars is something Nigeria has been warned about for years, yet the day of reckoning has caught the government unprepared and

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the coronavirus pandemic. The Finance Minister was blunt in expressing the hard economic realities facing the country as she rolled out a forecast of dismal economic indices for Nigeria at the dialogue session. First, the government expects GDP to contract by 3.5 percent

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this year. That’s significant for two reasons. Not only is it going to mark the country’s biggest economic contraction since the 1980s, it’s the first time the Nigerian government is less optimistic about its economy than Continues on page 29

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In Nigeria as petrodollars fade, the chickens come home to roost FG, states in dire straits with oil revenues down 80% scampering for a way out against the odds. The times have rapidly changed for Africa’s largest oil producer facing a “double whammy”, as the minister of finance, Zainab Ahmed, put it during a dialogue session Tuesday, of tumbling oil prices and

3M 0.00 2.52

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NGUS mar 26 2025 413.36

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IOCs’ underreporting of gas flare cost Nigeria N521.9bn in 2019 DIPO OLADEHINDE

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il companies in Nigeria are under-reporting the volume of gas they flare from oil fields to avoid paying the upgraded levy imposed, a development that has cost Nigeria over N521.9 billion last year. By day, gas flares in the Ebedei, Goi, Oloibiri, Bodo and other villages in the Niger Delta constantly burning flames atop large metal pipes up the skies like a thick fog are an eerie reminder of the waste and pollution associated with the oil industry in Nigeria. By night, locals say the flares are so bright in some places they fear it damages their eyes. Oil and gas companies operating in Nigeria flared 475.3 billion standard cubic feet (SCF) of gas in 2019, causing the country a loss of $1.7 billion, about N521.9 billion, according to data obtained from Gas Flare Tracker (GFT). GFT is a satellite-based technology, created by the Social Democracy Network (SDN) in 2013. It uses remote sensing to determine the amounts and volumes of gas flares in Nigeria. Continues on page 29

Inside

Sadique Abubakar (m), chief of air staff, with Nigeria Air Force Branch Chiefs and Nigerian Air Force’s new helicopter pilots, during their winging in Abuja.

Businesses count costs of coronavirus pandemic, work out relaunch plans P. 4

Financial stress looms for DisCos as collection losses now exceed 70% ISAAC ANYAOGU

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lectricity distribution companies (DisCos) collect an estimated 60 percent of electricity billing, according to an operational report by the regulator, but the coronavirus pandemic has seen them collecting half of their regular collection, operators say. This means that DisCos are losing over 70 percent of their

market invoice. Yola DisCo is reportedly the worst hit, reporting collection losses of nearly 80 percent. “The DisCos are in a serious financial situation,” Chuks Nwani, a Lagos-based energy lawyer, said by phone. If the DisCos are under a financial strain, it trickles down to other players in the value chain including generation companies (GenCos), gas companies, the

Transmission Company of Nigeria (TCN) and the Market Operator. These operators will see a fall in their revenue because DisCos’ collections are used to pay everyone else. Worse still, the government may continue to subsidise the sector at a time it is cashstrapped and battling to contain the spread of the novel coronavirus in Nigeria. Nigeria’s electricity market is

grossly illiquid. The 11 DisCos recorded cumulative losses of N787 billion in their 2018 financials, a 10 percent increase from the previous year. But the DisCos have managed to keep the lights on – however abysmally – because the Federal Government is picking the tabs, having been forced to pay over N2 trillion in the form of various interventions to assuage a lack of market price for electricity and

inefficiency of operators. This has led to a situation where the power sector is privately owned but nationally financed. The Federal Government has eased a lockdown on economic activities imposed five weeks ago to halt the spread of the coronavirus, but many people who have hunkered down at home all this Continues on page 29


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