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DisCos to Repay CBN N9.96bn Debt in Four Months
“The debt service obligations for the CBN PAF is a significant fiscal burden on FGN, at N198 billion (US$550 million) per year from 2020 to 2027 per the original agreed term-sheet. The original PAF was unconditional and was used by NBET to supplement the remittances of Discos and ensure at least 80 per cent payment to Gencos.”
“The PAF expansion (approved by the FGN in May 2019) is conditional and underpinned by an accountability framework. Power sector shortfalls are rising and are fiscally unsustainable. From 2015 to 2019, the tariff shortfalls – the difference between allowed tariffs and cost-reflective tariffs, which the FGN is responsible for funding, increased significantly as allowed tariffs stayed flat while the costreflective tariff increased due to FX depreciation and inflation.
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Electricity distribution companies in the country are expected to repay in four months N9.96bn of the debts owed to the Central Bank of Nigeria, according to Punch.. In September 2014, about a year after the privatisation of the power sector, the CBN introduced a “In 2019, with tariffs at only 56 per cent of cost-reflective levels, the annual tariff shortfall was estimated at N524 billion (US$1,718 million). Tariff shortfalls between 2017- 2019 totalled N1,249 billion (N1.2 trillion). This situation is not fiscally sustainable and takes away resources for human and physical capital investment – in 2019 the FGN budget was only N428 billion (US$1,403 million) for health and N650 billion (US$2,131 million) for education,” it added.
The Bank equally stated that it has identified risks that could derail the implementation of the PSRP, and which include political and governance, macroeconomic, sector strategies and policies, institutional capacity for implementation and sustainability, as well as stakeholders and operational risks associated with distribution constraints.
Months
N213bn intervention fund, called the Nigeria Electricity Market Stabilisation Facility (NEMSF). The NEMSF, a loan facility with a 10year repayment period, was meant to assist the generation companies and the Discos to settle legacy gas debts, execute agreed metering and maintenance programmes, According to it: “Macroeconomic risk is rated high, as a result of the significant uncertainty over key macro-fiscal parameters and the heightened macro risks related to COVID-19. In 2020, COVID-19, decline in oil prices and the projected economic downturn for Nigeria will likely further aggravate the precarious financial situation of the power sector making it challenging to implement the PSRP financing plan.
“Operational risk linked to distribution constraints is rated high. The program’s objectives will not be achieved if the existing constraints in the distribution segment are not addressed. The program thus has a strong focus to incentivize improved performance by Discos and to strengthen regulatory oversight
DisCos to Repay CBN N9.96bn Debt in Four
and accountability.” and finance procurement of transformers and other equipment. The Nigerian Electricity Regulatory Commission, in its Multi-Year Tariff Order 2020 for the Discos, gave the power firms minimum remittance thresholds with respect to the CBN loan.
Enugu Electricity Distribution Company is expected to repay N1.65bn from September to December; Benin Disco, N1.47bn; Abuja Disco, N1.45bn; Ibadan Disco, N1.25bn; and Kaduna Disco, N1.01bn.
Port Harcourt Disco is expected to repay N1bn; Jos Disco, N789m; Ikeja Disco, N526m; Kano Disco, N508m; and Eko Disco, N293m.
Yola Disco has the lowest payment obligation of N17m in the four-month period, according to NERC.
According to the commission, all the Discos are obligated to settle their market invoices in full as adjusted and netted off by applicable tariff shortfall approved by the commission.
It said the Discos would be liable to relevant penalties/sanctions for failure to meet the minimum remittance requirement in any payment cycle in accordance with the terms of its respective contracts with the Nigerian Bulk Electricity Trading and the Market Operator, an arm of the Transmission Company of Nigeria.
The Discos recently lamented the impact of the CBN loan on their financial transactions and remittance obligations.
According to the Association of Nigerian Electricity Distributors, the total amount of Discos’ portion of the CBN NEMSF is N49.9bn and a part of the cash was used as collateral for letter of credit guarantees to banks.
“The NEMSF loan currently encumbers Discos’ balance sheets and is worsened by the difference in aggregate technical, commercial and collection loss as used in the tariff model versus reality,” it said. The Discos had early this month announced what they called ‘new service reflective tariff’, which took effect from September 1, with the tariffs being charged residential consumers receiving a minimum of 12 hours of power supply rising by over 70 per cent.
The PUNCH reported last week that following the recent increase in electricity tariffs, the 11 distribution companies in the country are allowed to collect a total of N417.09bn from their customers from September to December.
The amounts recoverable by the Discos through the allowed enduser tariffs range from 61 per cent to 90 per cent of the total revenue required, according to NERC.
The Federal Government would fund a tariff shortfall of N104.5bn that would be recorded by the Discos in the four-month period, the regulator said.
FEC Approves $2m for West African Power Pool 2020 Budget
By Ikenna Omeje
The Federal Executive Council (FEC) has approved Nigeria’s contribution of $2 million to the 2020 budget of the West African Power Pool (WAPP), at its 19th virtual meeting presided over by President Muhammadu Buhari.
This was disclosed by the Minister of Power, Saleh Mamman, who stated that the specialised pool covers 14 of the 15 countries of the regional economic community, namely Benin, Côte d’Ivoire, Burkina Faso, Ghana, Gambia, Guinea, Guinea Bissau, Liberia, Mali, Niger, Nigeria, Senegal, and Sierra Leone. Mamman, who briefed journalists alongside Information and Culture minister, Lai Mohammed; Digital Economy minister, Dr. Isa Pantami; and Transportation Minister, Rotimi Amaechi, said participating in the regional market would generate immediate foreign exchange for Nigeria as oil revenue is dwindling.
“The pool is about having synergy within the West African region. The decision has been taken by ECOWAS, it’s for the generation of electricity in the region, so as to have more constant and steady power supply. It’s like the national grid in Nigeria. So we are going to have regional grid. It means, in case there is a failure in one country, another can supplement. The $2 million is a contribution,” he said. Also commenting, Mohammed said: “The West African power pool is made up of all West African countries because each member state contributes annually to the cost of power transmission across the pool. Because, the consequence is that if there is a problem in one country, it could inadvertently affect the other country.
“This was created in 1999 by authorities of the West African Heads of State. It’s a common pool and every country has its own section and our contribution for this year is $2 million. It’s not as if we are giving $2 million to ECOWAS, we are simply paying our own contribution to the transmission from Nigeria to other West African countries and vice-versa.”
WAPP is a specialized agency of the Economic Community of West African States (ECOWAS), which was created by a decision of its highest organ -- Authority of Heads of State and Government in 1999, at the 22nd Summit of the regional group.
-Mervin Azata
Young, smart, energetic, hardworking, tenacious and resourceful are words that best describe Mervin Ekpen Azeta, an award-winning Nigerian energy professional, intersectional advocate, and presidential scholar.
Mervin who is a Product and Service Delivery Manager with one of the world’s largest energy service and technology providers, Schlumberger. Currently based in the Republic of the Congo, she focuses on improving the quality of delivery of oil and gas well completion projects, developing talents, and promoting higher levels of engagement and internal alignment to sustain solid performance in an increasingly competitive and dynamic marketplace.
She has been featured in media publications as an influencer and trailblazer, keenly passionate about sustainable development, gender equality, youth engagement as well as cultivating the next generation of female scientists, technologists, engineers, mathematicians and transformative leaders. Mervin serves on multiple boards, inspiring a shared commitment to deliver a cleaner, healthier, secure and sustainable energy future for all.
Mervin holds a BEng, with First Class Honors, in Chemical Engineering from the University of Benin, as well as an MSc, with Distinction, in Sustainable Energy Futures, Mechanical Engineering, from the Imperial College London.
Mervin, alongside two other Nigerian women, emerged winners of the ExxonMobil Power Play Awards 2020 announced virtually on September 16, 2020.
The program was created to recognize the accomplishments of remarkable women and the men who support and empower them in the LNG industry. She won under the Rising Star category presented to an outstanding female professional, age 35 or younger.
In this interview with our Editor, MARGARET NONGO-OKOJOKWU, Mervin speaks about her passion for engineering, challenges faced by female engineers and the future of the oil and gas industry. Excerpts:
Congratulations once again on your award as Rising star of the ExxonMobil’s Power Play Awards, how do you feel about this?
Thank you very much for the kind words. I am deeply honored to be named the winner of the Power Play Rising Star Award, from amongst an esteemed group of finalists, and I truly appreciate the team at ExxonMobil for recognizing my contributions to making the LNG industry an inclusive, impactful and sustainable one. I am also incredibly grateful to my family, friends, mentors, and employer (Schlumberger) for the exceptional support I have enjoyed in my career.
Give us a brief description of your background; how did you rise to become a ‘Rising Star’?
I have a bachelor’s degree in Chemical Engineering, with First Class Honors, from the University of Benin; and, a Masters in Sustainable Energy Futures with Distinction, from Imperial College London. I joined the industry shortly after my National Service in 2011. Prior to joining the industry, I made a conscious decision to excel in all that I do and avail myself of opportunities to learn and positively impact others. By the special grace of God, I have been committed to that for as long, and particularly serving the world with my resources and talents through numerous avenues, including corporate work, and extracurriculars in organizations like the World Energy Council, Society of Petroleum Engineers, Society of Women Engineers, amongst others. I have also been very passionate about inspiring girls’ interest in STEM, mentoring and supporting others in their careers, and influencing greater access to affordable, cleaner, reliable, smarter and sustainable energy for the millions, who are currently unserved and/or underserved.
and avail myself of opportunities to learn and positively impact others. And, I have been committed to that for as long, and particularly serving the world with my resources & talents through numerous avenues, including corporate work, and extracurriculars in organizations like the World Energy Council, Society of Petroleum Engineers, Society of Women Engineers, amongst others. I have also been very passionate about inspiring girls’ interest in STEM, mentoring and supporting others in their careers, and influencing greater access to affordable, cleaner, reliable, smarter and sustainable energy for the millions, who are currently unserved and/or underserved.
What informed your choice of engineering?
An innate desire to tackle the toughest global challenges, and the limitless opportunities engineering provides to make a terrific difference in our world.
What can you identify as a major challenge with female engineers?
Firstly, the perception that engineering is a tricky discipline and one for the boys; and it gets really complicated when these female engineers are not able to find as many role models or senior female engineers to learn or glean inspiration from, as they progress in their studies.
And secondly, there is the broken rung, which, according to the Lean
In & McKinsey’s ‘Women in the
Workplace’ report, are obstacles that keep women from advancing in their careers, right at the start of the corporate ladder. A few friends and I could easily have been victims of this systemic barrier, but for the grace of God, the support of mentors/ sponsors and a stern determination to rise above it. “ these female engineers are not able to find as many role models
as they progress in their studies. And secondly, there is the broken rung,
which, according to the Lean In & McKinsey’s ‘Women in the Workplace’ report, are obstacles that keep women from advancing in their careers, right at the start of the corporate ladder.
How in your own opinion can these challenges be surmounted?
I would state just three things, for now:
By encouraging insightful conversations around the challenges, especially within the frameworks of STEM education and diversity, equity and inclusion, as awareness is a critical step;
Secondly, we also have to address as many barriers (political, legal, cultural, structural, and otherwise), stereotypes and unconscious biases adversely impacting the talent pipeline and gender representation across engineering professions; and,
Lastly, we need to actively mentor the next generation of innovators, thinkers and leaders so they are properly guided, and equipped to wade through whatever challenges they face.
Who’s your role model and what informed your choice?
I have several; Jesus Christ, my parents and a good number of phenomenal men and women, who have devoted, and continued to devote, their lives to pleasing GOD, as well as making the world a better,
cleaner, healthier, prosperous and secure place for all.
Have you experienced any form of biases due to your gender? How did you handle such?
Sure, I have. I find this is a given in our world; and, I clearly understand that I am going to continue to experience some form of bias in and out of the workplace, my country of origin or any other environment. So, I have resolved to never let it get to me. I have called, and would continue to call it out whenever I am able to. I would also have an honest, possibly sweaty palm, conversation, if necessary; and educate as many more women I am able to reach, so we do not stall or lose the progress we are making on diversity, equity and inclusion.
How do you see technology changing the landscape of your profession in the future and how are you bracing up for the change?
Technology has the potential to fundamentally transform every profession and deliver tremendous benefits in terms of efficiency, reliability, safety and performance, albeit making many jobs redundant, if not extinct. So, I can’t help but embrace it, remain radically curious, constantly reskilling and upskilling to stay relevant, whilst meaningfully contributing to the industry. Aren’t you concerned about the future of oil and gas as an engineer presently in the hydrocarbon field?
Not quite! I do believe oil and gas will remain relevant for the foreseeable future; and, there are also
Where do you see yourself in 10 years as per career path you desire?
Influencing policy, leadership and innovation to deliver an inclusive and sustainable transition to a lowcarbon energy future.
You have automatically become a role model to many, what advice do you have for young people like you out there especially young girls aspiring to go the same route of STEM?
There is so much you can achieve, if you stay humble and curious, willing to serve with a mix of purpose, courage, kindness and professionalism, and determined to create value. Do not let anyone or anything hold you back or make you feel less of yourself!
“Be fueled by your fears, instead!
Any thoughts of entrepreneurship in the future?
I do think
“entrepreneurship should be an integral part of quality
STEM education, and our curricula should be modified to encourage this being taught in schools,
including elementary schools. Helping kids explore their curiosity and creativity, take on challenges with a problem-solving mindset and develop other valuable life skills early on in life would always prove to be highly advantageous when they pursue their respective career paths, in the long run.
USTDA Provides Support for Senegal’s First Major Gas Pipeline
Early in September, the U.S. Trade and Development Agency announced grant funding for a feasibility study to develop Senegal’s first major domestic onshore gas pipeline. This project will support cleaner and lower-cost power generation and enhance the country’s economic growth. USTDA’s engagement will help the developer – Fonds Souverain d’Investissements Stratégiques (FONSIS), Senegal’s sovereign wealth fund – attract financing to the project. A grant agreement was signed in a virtual ceremony that included USTDA Chief Operating Officer, Head of Agency Todd Abrajano, Senegalese Minister of Petroleum and Energy Mouhamadou Makhtar Cisse, U.S. Ambassador to Senegal Tulinabo S. Mushingi, and CEO of FONSIS Papa Demba Diallo.
“This pipeline will become the backbone of Senegal’s domestic gas sector and help create the infrastructure to supply the country’s power plants and transform its energy sector,” said Todd Abrajano, USTDA Chief Operating Officer, Head of Agency. “U.S. companies are eager to partner with Senegal on this opportunity, and we intend to make a meaningful difference in the lives of millions of Senegalese by reducing power generation costs by
up to 50 percent.”
The USTDA grant will help define the technical specifications and project economics of the onshore pipeline network. Specifically, the feasibility study will recommend a final pipeline route, finalize technical specifications for each segment of the pipeline and define the technical requirements for the front-end engineering and design phase of the project. The study will also verify the gas demand and provide updated economic and financial analysis.
“Today, we highlight another example of U.S.-Senegal energy cooperation. The United States Trade Development Agency has approved a grant of nearly $1.3 million to support the development of Senegal’s natural gas pipeline system. This system will help Senegal transition its electricity generation to clean, inexpensive natural gas, using its own energy resources,” said U.S. Ambassador to Senegal Tulinabo S. Mushingi.
“This grant from USTDA will help us define the technical specifications and economic aspects of this very strategic project for our country and thus allow us to accelerate its implementation,” highlighted the Chief Executive Officer of FONSIS, Papa Demba Diallo. CEO Diallo continued “Working with PETROSEN and SENELEC and in agreement with the Ministry of Petroleum and Energy, this is a strategic project that will accelerate the use of gas, especially in electricity production, and contribute to lowering the cost of electricity. This will help spur Senegal’s industrial sector and make our companies more competitive.”
“Power Africa applauds Senegal’s efforts to advance their gas capacity for export and domestic use. The U.S. government, through the Power Africa Initiative partnership between USTDA and USAID, supports Senegal’s continued progress towards self-reliance and its stated goal of increasing its generation capacity to 2.5 GW by 2030. The Power Africa-funded Senegal Gas Roadmap, completed in July 2019, proved instrumental in bringing this project to fruition. We look forward to working with our partners to support Senegal’s ongoing work towards energy independence,” said Mark Carrato, U.S. Power Africa Acting Coordinator.
This project supports the U.S. government’s Power Africa and Prosper Africa Initiatives, as well as USTDA’s U.S. Gas Infrastructure Exports Initiative.
