December edition 2016 by Sweetcrude reports

How to reinvigorate Nigeria's oil and gas industry, by Ernest Nwapa P/08

PHCCIMA laments disparity on cargo charges between Lagos, PH seaports P/32

A Review Of The Nigerian Energy Industry facebook.com/sweetcrudereports December, 2016

VOL 03 N0. 42

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Nigeria: 4 firms sign MoAs to develop oil & gas infrastructure

our companies Chongqing Construction Engineering Group Co. Ltd, CCEGC; Tianjin Energy Resources Ltd; Oilserv Limited and Alpha Group of Companies - have signed eight memorandum of agreements, MoAs, for the development of several multi-billion dollar investment and infrastructure projects in Nigeria. The agreements were signed in Abuja in the presence and supported by senior representatives from the world's largest bank, the Industrial and Commercial bank of China, ICBC, and Standard Bank of South Africa, which are the projects financiers. The agreements set the stage for joint development, financing, and construction of several high profile projects, including crude oil and gas pipelines, oil refineries, ports, highways, and railways across Nigeria.

Simbi Wabote

Executive Secretary, NCDMB

Commissioning of topsides for Total’s Ofon 2 project built by Nigerdock, a local company

Nigerian Content:

The journey so far NCDMB management committed, optimistic Experts claim policy has achieved little success Content Development Fund grows to $600m How we are transforming Nigeria’s Africa’s 5th largest floating dockyard solid minerals sector -Fayemi P/16 ready in Nigeria next year P/33

Cover Story

2016 December, SweetcrudeReports

Nigerian Content: The journey so far NCDMB management committed, optimistic Experts claim policy has achieved little success Content Development Fund grows to $600m

Topsides for Total’s Ofon 2 project built by Nigerdock, a local company OSCARLINE ONWUEMENYI, ABUJA

ince the 1960s the Nigerian oil and gas industry has played an oversize role in the country’s economic growth and development. The sector generates about 95 percent of total export revenue and 80 percent of total national income. In addition, it expends about $10 billion annually in servicing its operations. Sadly, a significant proportion of this amount is paid to foreign contractors for services like fabrication and engineering procurement, resulting in capital flight and leaving very little to develop the country’s technological and industrial base. To forestall this phenomenon, the government introduced the ‘Local Content Development’, LCD, policy aimed at championing the course for higher indigenous participation in the sector and value addition for the nation. One of the major thrusts of the policy was to promote higher participation of small and medium-sized firms within the oil and gas industry and beyond. Investigations by SweetcrudeReports reveal that the policy has achieved very little success in enhancing more contract awards to local firms and spurring few joint venture arrangements; issues such as inadequate financing, ineffective

supervision, cumbersome prequalification requirements and disjointed oil and gas law structure, still hinder the policy efficacy. Despite the huge investments made by the Nigerian government in the oil and gas sector, an average of $10 billion p e r a n n u m , t h e s e c t o r ’s contribution to the national Gross Domestic Product, GDP, is minimal at best (at an average of less than 30%). This abysmal contribution of the oil and gas sector is often attributed to the high foreign content and low inputs by Nigerian firms or low local participation in the sector. Experts have lamented that despite the introduction of local content policy since 2006, and enactment of the Nigerian Oil and Gas Industry Content Development, NOGICD, Act in 2010, Nigerians have enjoyed very little share of the oil and gas business over the years with just 14% participation. A lot of the poor showing is blamed on the inability of the Nigeria Content Development and Monitoring Board, NCDMB, and the previous regulatory agencies to bridge the funding and capacity gap, besides other structural issues such as the delay in passage of the Petroleum Industry Bill, PIB, which has hindered oil and gas multinationals from complying with the Nigerian content directives.

To forestall this phenomenon, the government introduced the ‘Local Content Development’, LCD, policy aimed at championing the course for higher indigenous participation in the sector and value addition for the nation Success Story The NCDMB recently announced that indigenous participation in the nation’s oil and gas industry has increased to about 35 percent in the past six years. The Manager, Strategy and Policy Development Division at N C D M B , M r. A b d u l m a l i k Halilu, who revealed this during a visit by a delegation from Uganda, stated that the percentage of Nigerian Content in the oil and gas industry had increased from less than five percent before 2010 to 14 percent in 2014 and 35 per cent in 2015. He added that the Board’s interventions were expected to increase local content levels to 50 percent by 2017. According to him, contracts awarded by operating companies to Nigerian service companies had also

increased from about 40 percent of total contracts before 2010 to 75 percent in 2015 while the target was to achieve 85 per cent by 2017. He encouraged the Ugandans to decide on the model that would encapsulate their local content aspirations. The NCDMD recently stated that Nigeria was the only country that enacted a dedicated law for local content whereas other jurisdictions have local content provisions subsumed in existing laws guiding their oil and gas industry. The Board stressed that the Nigerian Content Act has helped the government and the Nigerian people reverse the flight of industry spend to foreign countries in the form of personnel, materials, equipment, fabrication and engineering designs. It further explained that the Nigerian

Government was the driving force behind the implementation process, stressing that strong political will was necessary to overcome powerful forces opposed to the implementation of local content. The Nigerian Con ten t Development Fund Speaking at the just-concluded Practical Nigerian Content Forum, in Abuja, the Executive Secretary of the NCDMB, Simbi Wabote stated that the Board was working to close skills, infrastructure and assets ownership gaps in the oil and gas industry. He explained that the Nigerian Content Development Fund, NCDF, which is funded from the one percent deducted from the value of all upstream contracts, is underpinned by Section 104 of the Nigerian Oil and Gas Industry Content Development Act. The fund was designed to provide partial guarantees and 50 per cent interest rebate to service companies that obtain facilities from commercial banks for asset acquisition and projects execution. The Act provides that the funds be used for the development of capacity in the oil and gas industry. The NCDMB Executive Secretary said, “Any time you assemble a gathering and you talk about the Nigerian Content

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2016 December, SweetcrudeReports

Nigerian oil and gas industry workers

Nigerian Content: The journey so far CONTINUED FROM PAGE 4 Development Fund, everybody wants to know what will become of the fund. What this current board will assure you is that within the shortest time possible, we will come out with a clear blueprint on how that fund will be utilised to promote local content development in our industry.’’ Noting that the fund had grown over the years, Wabote said six Nigerian companies had tapped it for capacity development. Said he, “It bothers the mind of key stakeholders when you look at the Nigerian Content Development Fund that they started contributing since 2010, when the Act was enacted. I must say that the fund has grown over the years. Probably, we have an approximate figure of $600 million in the fund. "As far as I am aware, the fund has benefitted about six Nigeria companies that have tapped into that fund for capacity development, but I must say it is not directly giving money to those Nigerian contractors. Though he did not mention the names of the beneficiary companies, he also admitted that not much has been deployed for capacity development. Wabote added, “I must say that it is not directly giving money to those six Nigerian contractors; it is about guaranteeing some of the loans that they got from the banks because we are not a funding institution. Not much has been expended from that fund for capacity development. Part of the strategy of this new board is

to come out with a very transparent process through which genuine Nigerian contractors involved in the oil and gas sector will have access to the fund.” According to him, “While the people who are contributing worry about the fund they have contributed, there are a lot of Nigerian companies that are not making their contributions as enshrined in the Act". This board will look at strategies to make them comply with the provisions of the Act, he said. Wabote further explained that the NOGICD Act seeks to develop Nigerian content across the oil and gas value chain – upstream, midstream and downstream sectors. He said, “There is an opportunity for demand-driven investments across the oil and gas industry value chain. Today, a lot of people ask me, why is Nigerian content not also focusing on the downstream and midstream activities? My response is simple: with the new board and the council, our focus will go beyond the operators in the upstream sector; our activities are all-encompassing as enshrined in the Act.” Crude oil lifting Also, he explained that contracts for lifting Nigerian crude oil will begin to yield tangible benefits for the Nigerian economy going by the renewed commitment by the NCDMB, the Nigerian National Petroleum Corporation, NNPC, the Nigerian Maritime Administration and Safety

Agency, NIMASA, and other stakeholders in the oil and gas industry. In achieving this, the Board would be aiming to prevent the situation in the past whereby Nigeria lost huge income due to foreign-owned tankers carrying Nigeria's crude. The Board, for instance, estimated in 2013 that the Nigerian economy lost over $100 billion in five decades by allowing its crude oil to be carried exclusively by foreign owned tankers. But rising from a recent workshop convened by the Board in Lagos on ‘Crude Oil Off-takers Nigerian Content Deliverables’, the NCDMB, NNPC, NIMASA and other stakeholders pledged to grow the quantum of Nigerian Content in the lifting of Nigerian crude oil by working with Nigerian shipping stakeholders to develop in-country assets capacity that meets international standards. They also agreed to ensure that companies that have invested in ownership of crude oil lifting

vessels are given first consideration in line with the provisions of the Nigerian Oil Industry Content Development Act. According to a statement at the end of the workshop, NCDMB, NNPC and NIMASA also committed to explore the possibility of a joint fund as part of waiver mechanism which can be used to purchase or finance the building a Nigerian owned Crude Oil Lifting Tankers. Another decision taken at the workshop was to properly define what constitutes "spend" in crude oil lifting contracts for the purpose of complying with the target of 90 per cent industry spend within the Nigerian economy set for Very Large Crude Carriers, VLCCs, by the NOGICD Act. Are banks stifling the NCDF? The Nigeria Oil and Gas Industry Content Development (NOGICD) Act of April 2010 established the Nigerian

Wabote further explained that the NOGICD Act seeks to develop Nigerian content across the oil and gas value chain – upstream, midstream and downstream sectors

Content Development Fund, NCDF, for the sole purpose of funding the implementation of Nigeria Content programmes within the Nigeria oil and gas industry. The Fund which represents one percent of every contract awarded in the upstream sector is set aside and employed to support contracts, projects and programmes of the Nigeria oil and gas service companies and related indigenous operators within the industry under a defined framework. However, some operators have alleged that a number of the banks appointed to disburse the fund have posed more as an obstacle than a bridge to accessing the funds, a fact that has led to very minimal traction in the growth of local services for the oil and gas industry. Erstwhile Executive Secretary of the NCDMB, Mr. Ernest Nwapa, in an interview with SweetcrudeReports, howeve r, denied the allegation that the banks are meddling with the Fund, stressing that the Fund is not meant to be given out as grant to indigenous operators. He also observed that there has been an appreciable ‘uptake’ on the fund by operators in the industry. According to Nwapa, “The money is accessible for operators. The money is meant to facilitate funding agencies to give money to indigenous operators. That is the way the fund is designed, at least at this phase. You remember that this fund came in as a zero fund. So, we designed it such that in

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2016 December, SweetcrudeReports

Nigerian Content: The journey so far

Local technicians at work

CONTINUED FROM PAGE 5 the first five years of the fund, it will only be a fund that people will see as a guarantee, believing that it will grow. Confirming that the fund has been accessed successfully by some Nigerian service companies, while some other companies are at various stages of processing their applications, the Executive Secretary said the Board was working with the Fund managers to fine-tune the conditions to be met for prospective beneficiary companies so as to make it more accessible. “We are not satisfied with the level of access to the fund and we are working to review the administration process,” he said. He however, clarified that the delays in accessing the Fund emanated mostly from the processes in the banks and how the companies packaged their proposals, adding however, that some conditions were introduced to ensure that beneficiaries were serious service companies who had bankable plans. He underlined that during his time at the helm, the Board decidedly appointed a fund manager and constituted an advisory committee, which comprises representatives of international oil companies, P e t r o l e u m Te c h n o l o g y Association of Nigeria, PETAN, Oil and Gas Trainers Association of Nigeria, OGTAN, and the Bank of Industry, BoI, in an effort to create a structured and transparent process for accessing the funding. The current conditions require the benefitting company to tie-up an arrangement with its bank for a facility meant for financing the acquisition of assets and ensure

that it draws down the loan and services it successfully. The Fund will then kick in to offset 50 per cent of the interest charged by the bank. Nwapa added that, “The fund is growing and it has grown to the point where we are looking at remodeling it because now, there is cash in that fund but it will never be a fund that people will treat as grant. It is something that people will take in a structured way. Many of the banks that are funding operations are funding because that fund is there. The fund is there as a collateral sitting in many banks and the banks are linking the loans they are giving to stakeholders to that fund. So, if you expect the NCDMB to have a vault somewhere so that when you want to do something, you will come and the Executive Secretary will approve $10 million for you, it does not work that way. The banks are designed to give those monies out.” Breaches to Local Content Like anything novel which rubs against company conventions and organizational management norms, there have been breaches to the implementations of the Nigerian Local Content law. Only last month, some Nigerians working with an American oil and gas service firm, Weatherford International, raised the alarm over gross abuse of local laws and sharp practices being perpetrated by the Nigerian subsidiary of the company, Weatherford Nigeria, against them. A source at the company, who

spoke on condition of anonymity to our reporter, said the firm has carried on with many antiNigerian policies such as mass sack on flimsy excuses and appointment of a foreigner as Country Manager in clear violation of Nigerian Local Content Act, which is one of the significant developments aimed at localising management and control of oil and gas industry. The source said apart from the fact that there were many qualified Nigerians capable of running the firm as Country Manager, the foreigner who was appointed, Manuel Hernandez from Venezuela, came into Nigeria via Business Visa and has been working as an expatriate without the necessary work permit. Going down history of the firm, the source said a Nigerian, Femi Thomas was appointed as Country Manager of the company and was there for about two years before he was redeployed as Vice President for Africa, while another Nigerian, Femi Akarikiri, was appointed to succeed him, only for the said Akarikiri to be demoted after just a year in office and replaced with Hernandez. According to the source, “The first issue is that this is not an industry where you can claim there are no qualified Nigerians for the job because oil and gas industry in Nigeria is fully sophisticated. Number two is that for the fact that you have had Nigerians in that position, the position has been nationalised and so you cannot go back and revert to say that you now need to bring an expatriate. “The third issue is that you lay off a lot of Nigerians because you claim the industry is bad and you

This fund came in as a zero fund. So, we designed it such that in the first five years of the fund, it will only be a fund that people will see as a guarantee, believing that it will grow have no money to pay but yet the question is how can you afford to pay expatriates if you have laid off Nigerians who earn a fraction of what the expatriates earn? “By the time you look at that picture, what you see is a company that does not have any commitment to Nigeria or any respect to the ideals of the country. They want to get paid, they want to drill for oil, they want to make money, but where is the growth for Nigerians in that process? The average Nigerian employee in the company earn less than $1,000 a month, but the average expatriate earns $20, 000 a month or more. How can you afford one expatriate if you lay off Nigerians on the basis that you can’t afford to pay them,” the source queried. Already, the source said the Nigerian Content Development and Monitoring Board (NCDMB) had been notified of the development, but that there was great need to raise the alarm over the mass sack of over 100 Nigerians and other deliberate plot of the company against Nigerians for prompt action by the Nigerian government and other key stakeholders.

Interestingly, the National Assembly has been at the forefront of the fight to ensure that oil and gas companies, including government organisations, adhere to the local content mandate. The House of Representatives’ Committee on Local Content said it has been in running battles with Korean firms – Hyundai Heavy Industries, HHI, and Samsung Heavy Industries, SHI, over violations of the Nigerian Oil and Gas Industry Content Development Act of 2010. The committee has also accused Nigerians of aiding foreign companies to flout the Nigerian content law, adding that every infraction in the oil and gas industry is aided by a Nigerian company. Speaking at a special panel session of the Sixth Practical Nigerian Content Conference that ended recently in Abuja, the Chairman of the Committee, Hon. Emmanuel Ekon alleged that some of the companies have violated Section 33 of the NOGICD Act by abuse of expatriate quota.

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2016 December, SweetcrudeReports

Buoy fabricated at Nigerdock yard in Nigeria

Nigerian Content: The journey so far CONTINUED FROM PAGE 6

kon identified HHI and SHI as the main culprits in the violation of the NOGICD Act. According to him, Section 33 provides that the companies should seek approval from the NCDMB before deploying expatriates. “In the course of our oversight function of the oil and gas industry, we discover that some of these companies bring in expatriates, who are somehow not qualified to work in the industry or who do not have the requisite skills as stated in their quota,” he said. He also alleged that in some instances, some of the expatriates overstay in their positions, which they are supposed to have relinquished to Nigerians. Ekon said the NCDMB was empowered to have information on all the professionals working in Nigeria’s oil and gas industry, stressing that approval is supposed to be obtained from the board by the companies on behalf of the expatriates. The Committee Chairman argued that the implementation of the NOGICD Act will provide social security and dividends of democracy to Nigerians, and called for effective collaboration among the NCDMB and the Ministry of Interior to check the abuse of Nigerian Content.

The committee chairman disclosed that they had visited the facilities of HHI and Samsung where Ekon condemned the two companies for their alleged flagrant abuse of the NOGICD Act. “The Local Content Committee three weeks ago frowned at the attitude of Samsung in bringing over a hundred welders and fitters that we have in abundance here. That is a complete violation of Section 53 of the Local Content Act. The essence of our touring these facilities is to see where these companies have violated our law and then try to enforce those companies to comply with our laws,” he said. “We started engaging Hyundai Heavy Industries (HHI). We found out that HHI violated the law by bringing in expatriates without valid papers. How they came into the country we do not know. And these are people that are coming in to take jobs who are meant for Nigerians. What we did was to invite the Immigration Services into HHI. They started their investigation that lasted about a month. At the end of it all, HHI was found guilty. As I am talking to you now, the managing director was deported last week; the country representative was deported and another officer was deported for 10 years. That means they cannot come into this country for the next 10 years. Now we have

He also alleged that in some instances, some of the expatriates overstay in their positions, which they are supposed to have relinquished to Nigerians about 31 more that are working in Chevron Excravos still HHI expatriates. They are under investigation right now; their passports have been seized and b y Tu e s d a y n e x t w e e k , Immigration Services will also come out with result of their investigation. If they are found guilty, all of them will go the same way,” Ekon explained. On its own part, the Senate Committee on Petroleum (Upstream) has tasked the Ministry of Petroleum Resources to take advantage of the local content in its effort to deliver on its mandate. The Chairman of the Committee, Sen. Omotayo Alasoadura, who stated this while on an oversight function at the ministry headquarters, Abuja, noted the need for the oil sector to adopt local content than relying on foreign machinery and import, regretted the non-

utilisation of local content in the oil sector which is in large quantity in the country.

en. Alasoadura further noted that efforts are being made to pass the Petroleum Industry Bill (PIB), even as he urged the ministry to develop a strategy to resolve the Niger Delta crisis, which it said have adversely affected oil production in the region. The committee asked the petroleum ministry to take advantage of the availability of bitumen in some parts of the country. Fielding questions from the members of the committee, Minister of State for Petroleum, Dr Emmanuel Ibe Kachukwu who reeled out some of the challenges of the ministry urged the senate to hasten the consideration of the PIB.

The PIB albatross Many experts believe that for Nigerians and the local economy to benefit from the multi-billion dollar investments in the oil and gas industry, and for the robust implementation of the Nigerian Content law, concerted efforts must be made to pass the Petroleum Industry Bill. Speaking at the panel session organised by the Petroleum Technology Association of Nigeria, PETAN, at the Offshore Technology Conference in Houston Texas, United States earlier this year, the former NCDMB boss, Nwapa said there was an urgent need to expand discussions around the proposed legislation beyond the fiscal terms. He warned that failure to sufficiently domicile the service and manufacturing ends of industry operations would mean that investments would flow into the country, but take flight in the form of overseas procurement of equipment used for operations and remuneration of expatriate personnel working on the projects. He explained, “It is expected that when PIB is passed, it would result in massive investment flow and those investments will yield revenue for Nigeria. But what we are looking for is a kind of impact that can give us employment on top of the revenue.’’

Oil

2016 December, SweetcrudeReports

How to reinvigorate Nigeria's oil and gas industry, by Ernest Nwapa

Oil and gas facility OSCARLINE ONWUEMENYI, Abuja

ioneer Executive Secretary of the Nigerian Content Development and Monitoring Board, NCDMB, Mr. Ernest Nwapa, says one of the ways to reinvigorate Nigeria's oil and gas industry is to link it with the nation's economy. Nwapa, who is President of Global Local Content Council, GLCC, maintained that Nigeria had the potential to leverage its mineral and hydrocarbon resources for industrial development, adding that local content policies across all sectors would facilitate job creation and stimulate local industrial development. "National content should remain a priority in the oil and gas industry, at the minimum, to ensure that significant gains made by the Nigerian Oil and Gas Industry Content Development (NOGICD) Act of 2010 are not reversed. "The momentum from increased indigenous asset ownership, in-country fabrication and manufacturing capabilities and human capital development can be strengthened for the oil and gas industry, and the Nigerian economy, by extending its benefits to other sectors," he said. Nwapa, while speaking at the sixth edition of the Practical Nigerian Content Conference in

Abuja, further explained: "Broadening the agenda will simultaneously propel the practice of patronising Nigerian goods and services such that promoting "Made in Nigeria" can become a national patriotic culture in a few short years. "Industry collaborations linking the oil and gas industry to the rest of the Nigerian economy will help share strategies to improving job creation, training opportunities, domiciliation of capacity, technology and services, and the development/upgrade of critical facilities and infrastructure". Also at the Practical Nigerian Content Conference, NCDMB's Executive Secretary, Engr. Simbi Wabote, revealed that the implementation of the NOGICD Act 2010 has attracted for the country investment commitments worth $2 billion. Wabote stated that before the Act was enacted, equipment, component parts, spare parts, personnel were shipped from abroad into the country and that, since the legislation came into effect, the oil and gas industry has recorded significant Foreign Direct Investment, FDI, in pipe mill and growth in Nigeria-owned marine vessels. Wabote said the major focus of the Nigerian Content Law was not "Nigerianisation" of the oil and gas sector, but rather "domiciliation" of value-adding

activities. He identified investment opportunities in the sector to include fabrication and construction; manufacturing of component parts, equipment, spare parts, accessories, drilling fluid, Sub-sea production systems, line pipes, and personal protective equipment, PPE. Others are design engineering; project management; shipping and logistics; rigs and marine vessels - financing, and lease to own; installations of facilities; inauguration of plants and equipment; maintenance of facilities, equipment; services finance, legal, insurance, and testing, training.

abote also identified the Floating Production Storage Offloading, FPSO, integration yard being constructed in LADOL yard in Lagos for the integration of the Total's Egina FPSO as one of the landmark projects that would come on stream between 2017 and 2019. Other projects slated for the same period, according to Wabote, include manufacturing of LPG gas cylinders in-country and the establishment of oil and gas parks in five locations across the country to create 15,000 jobs. To stimulate investment and in-country value-addition, Wabote said the NCDMB had intervened directly in the establishment of manufacturing

hub for equipment, component part, spare parts, PPEs and Chemicals, as well as provision of funding support to prospective investors to establish Liquefied Petroleum Gas (LPG) cylinder manufacturing plants. He said apart from supporting third party pipe mill investors, the agency had also intervened in the establishment of a 150,000 MT per annum capacity pipe mill for manufacturing line pipes and had also provided $100million Nigerian content intervention fund to support manufacturers.

Oil flows from Otakikpo marginal field

ekoil has announced that oil has flowed from the Otakikpo Marginal Field in Nigeria to onshore storage tanks, where it will be evacuated upon completion of the offshore pipeline. All onshore facilities have already been fully commissioned and signed off by the regulators, according to Lekoil, and the offshore pipeline leading from the storage tanks to the tanker offloading manifold is now 80 percent complete. Upon completion of the pipeline, the joint venture partners, comprising Green Energy International Ltd as operator and Lekoil as technical partner, expects to start transporting to the export terminal and subsequently, be able to gradually ramp up production to 10,000 barrels of oil per day. “We’re delighted to announce this key milestone from the Otakikpo field. I would like to thank the entire team that has worked so hard on this project, our partners Green Energy, investors, debt financiers, our host communities and our government regulators for their continued support,” Lekan Akinyanmi, Lekoil’s CEO, said.

2016 December, SweetcrudeReports

Oil

Nigeria targets 2.1mb/d oil output in January ...Projects prices at $60/barrel

igeria is hoping to boost its oil production to 2.1 million barrels per day, mb/d, next month while expecting oil to rise to $60 per barrel by the end of March 2017. Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu, made the disclosure at two separate fora in Abu Dhabi - the Bloomberg Markets summit and on the sidelines of a meeting of the Organisation of the Petroleum Exporting Countries with non-OPEC oil producers. Speaking at the Bloomberg Markets summit, Kachikwu said Nigeria hoped to see production move up to 2.1mb/d, adding that the country's output was at 1.9 mb/d with all three of its main fields online.! The minister, on the sidelines of the OPEC meeting with nonOPEC oil producers, spoke of t h e c o u n t r y ’s a m b i t i o u s expectation for oil to rise to $60 per barrel by the end of March 2017. Nigeria is desperately seeking to bolster revenues and reverse a severe foreign exchange crisis brought about by a recession which followed a plunge in oil price to $37 early last year. Kachikwu said though Nigeria was looking at 1.8mb/d, it could be as high as 2mb/d “when you then add on some of the volumes that are going to be due to natural declines, due to step downs for purposes of repair works in rigs, you are probably going to hit the 2 million barrels number.”

He said Nigeria had decided to watch developments in the global oil sector over the next six months, warning, however, that it was not expecting anything “dramatic” to happen overnight even if shale producers increased their production. He called on all oil producers to work together to control output and adopt a more realistic price. He added that things had changed from when the market was predictable to a situation where nothing could be taken for granted anymore. On Nigeria’s expectations about the oil price, Kachikwu said, “We are hoping to do better. We are hoping to get closer to $60 towards the latter part of Quarter 1. If the momentum that we see today

Oil rig and storage facility

beginning in January in a bid to reduce global oversupply and prop up prices. It agreed to exclude Nigeria and Libya from production cuts due to security threats being

Nigeria is desperately seeking to bolster revenues and reverse a severe foreign exchange crisis brought about by a recession which followed a plunge in oil price to $37 early last year keeps up and if the parties remain disciplined to the course that they have committed to.” Recently, OPEC agreed to reduce output by around 1.2 million barrels per day,

encountered in their respective oil sectors. Non-OPEC countries are expected to contribute another 600,000 b/d to the OPEC cut, with Russia pledging to reduce output by around 300,000 b/d.

India to buy 11 million mt of Nigerian crude in 2017

9 December 2016, News Wires, Lagos -- Just a month after Nigeria's Minister of State for Petroleum, Dr. Ibe Kachikwu, negotiated a $15 billion crude-for-cash swap deal with India that would see the Indian government making an upfront payment to Nigeria for crude purchases, Indian refiners have indicated interest in increasing imports of Nigerian crude from nine million metric tonnes, MMTPA, in 2016 to 11 million metric tonnes in 2017. By the terms of the deal, which are yet to be agreed, the $15 billion would be repaid on the basis of firm term crude contracts over some years and in consideration for Indian public sector, PSU, companies collaborating in the refining sector. Other methods of repayment include exploration and production activities on a government-to-government basis by Indian PSU companies, and long-term contracts for the supply of crude to Indian PSU companies from Nigeria. Successful bidders for Nigeria’s crude oil term lifting contracts for 2017 will emerge by the middle of this month. Indian refiners such as Indian Oil Corp, IOC; Bharat Petroleum Corp Ltd, BPCL, and Hindustan Petroleum Corp Ltd, HPCL, currently have crude oil lifting contracts for 2016 with the Nigerian National Petroleum Corporation, NNPC. However, NNPC’s Group Executive Director, Refineries, Anibor Kragha, told S&P Global Platts in an interview on the sidelines of the Petrotech conference in New Delhi on Monday that the Indian state-run refiners were pushing for an increase in crude oil allocations from Nigeria.

Oil

2016 December, SweetcrudeReports

Nigeria’s Senate in session

Senate to pass new PIB in tranches - Senate President

he Nigerian Senate will pass the Petroleum Industry Governance Bill, more popularly known as the Petroleum Industry Bill, PIB, in tranches as a way out of its non-passage for the past eight years, according to President of the Senate, Dr. Bukola Saraki. Disclosing this in Abuja at a three-day Public Hearing on the PIB organised by the Senate Joint Committee on the bill, Saraki said the passage of the bill in tranches was necessitated by the need to unbundle its contents into manageable compartments that could be implemented in phases. Saraki noted that the Senate was set to pass the first tranche of the bill while putting measures in place for the passage of other tranches. He added that the passage of the first tranche would further tackle persistent problems associated with the fiscal framework and host communities. He said, “This public hearing is another avenue for us to hear from the operators, regulators, experts and other stakeholders in the industry on how to move the industry forward. We want to move away from the way things were done in the past

during the consideration of such bills, especially fiscal framework and host communities. “We will push for greater partnership so that the bill will be a win-win for everyone; one that works for the government, attractive to oil companies and takes into consideration concerns of the host communities. We will also tackle the issues of downstream, gas and environment. We are poised and resolved to deal with all issues related to the industry, albeit in tranches.”

he Senate President added that “As a nation, we cannot afford any further delay in our effort to reform our oil and gas industry. The journey begins now and I assure you that we will guarantee that all of these bills are passed in record time.” Saraki expressed concern that though the petroleum industry contributed over 90 percent of the country’s foreign exchange earnings, existing legal, regulatory and institutional structures in the industry were out-dated. He noted that the sector had performed below expectations, adding that the development had led to the Federal Government and investors losing a significant edge in the oil and gas investment trends.

He said that it was unacceptable that till date, Nigeria still imports over 90 percent of needed petroleum products, flares substantial gas produced, damages the ecosystem and pollutes host communities. The Senate President added that in spite of Nigeria’s might in the sector, it could not supply adequate electricity to individual homes and industries. He said, “This situation has u n d e r m i n e d o u r c i t i z e n ’s standard of living, life expectancy, national energy security. It has therefore resulted in other unforeseen fallout like labour unrest, fuel queues, a high cost of delivery of products and unquantifiable wastage of national productivity. “The oil and gas industry is yearning for good governance, competitiveness, transparency, indigenous participation and accountability.” Saraki assured that the bill would be passed in record time. The Chairman of the joint committee, Sen. Omotayo Alasoadura, said if Nigeria must get out of the present recession, the petroleum industry must be made efficient and more profitoriented. He said it was, therefore, expedient to pass the bill to reposition the industry.

Baru vows to grow NPDC's reserves, production capacity

igerian National Petroleum Corporation, NNPC, Group Managing Director, Dr. Maikanti Baru, has vowed to grow the Nigerian Petroleum Development Company, NPDC - the NNPC upstream subsidiary - beyond its current 7th position in the Nigeria oil producers' list. To achieve this, Baru specifically vowed to improve the company's oil and gas reserves and production capacity. Dr. Baru, who described NPDC as showing a “conspicuously excellent growth in its proven reserves,” emphasised the need to expand the company’s footprints within the nation’s upstream sub-sector of the nation’s oil and gas industry. He said, “As part of our 12 Business Focus Areas, we are dedicated to growing NPDC thereby increasing our reserves portfolio. We will not relent until NPDC exceeds its current position of being the 7th largest oil producer in Nigeria.” To achieve this, the GMD added, the NNPC under his watch would aggressively explore opportunities in other petroleum acreages in Nigeria and with a particular interest in the Gulf of Guinea. According to him, NNPC was also working hard to improve the portfolio of services rendered to the oil industry by its second Edobased upstream outfit, the Integrated Data Services Company, IDSL. “The long-term objective is for IDSL to be on its own so as to actualize its vision of becoming the ultimate centre for the provision of Geophysical and Petroleum Engineering Services in the Oil and Gas Industry,” the GMD added. Describing Edo state as “a strategic partner hosting NNPC’s strategic facilities”, the GMD further noted that the State remains relatively peaceful with least incidents of pipeline vandalism and sabotage compared to other areas in the Niger Delta. The GMD, therefore, lauded the support of the Edo State Government for its collaboration with security agencies towards safeguarding oil and gas facilities that traversed the state.

2016 December, SweetcrudeReports

Oil

Oil industry workers

'JV funding shortfalls costing Nigeria 200,000 barrels of oil per day’ KUNLE KALEJAYE

he chronic joint v e n t u r e , J V, funding shortfalls being experienced in the Nigerian oil and gas industry is costing the nation about 200,000 barrels in daily oil production, the Nigerian National Petroleum Corporation, NNPC, has said. In the last three to five years, according to the corporation, the joint venture funding shortfalls have resulted in declining JV oil production from about 1 million barrels per day to about 800,000 barrels per day currently - a loss of about 200,000 barrels per day. NNPC Group Managing Director, Dr. Maikanti Baru, disclosed this in Abuja as he spoke of NNPC's exit plans from the cash call system with its joint venture partners comprising the multinational oil companies Shell, Total, Agip, Chevron and ExxonMobil. Speaking at the 34th annual international conference and exhibition of Nigerian Association of Petroleum Explorationists, NAPE, Baru revealed that the development would relieve the Federal Government of the cash call burden with the JVs sourcing for funds for their operations,

estimated at $7-$9 billion annually. To address the structural funding problem which, according to him, has been compounded by the security challenges in Niger Delta, Baru said NNPC was exploring alternative funding mechanism that allows the JV business finance itself by retaining its operating costs and capital allowances (fiscal costs) in order to sustain and grow the business. He explained: "Where the fiscal costs for any year are not sufficient to fund the budgetary requirements of the joint venture, part of the profit margin could be retained to fund the budget and where necessary, external financing could also be sought to finance commercially viable and bankable capital projects without recourse to government treasury". He added: "The JV cash call exit model we are pursuing guarantees Government most of the revenue that normally accrues to it from the JV operations by lifting the royalty and tax oil upfront. This contributes 75% to 85% of the accruable revenues to government. "Consequently, the effect on

In the last three to five years, according to the corporation, the joint venture funding shortfalls have resulted in declining JV oil production from about 1 million barrels per day to about 800,000 barrels per day currently - a loss of about 200,000 barrels per day

government take would be minimised. We are working assiduously to kick start this from 1st January, 2017". Stating the reason behind the exit model, the NNPC boss said in 2016 alone, underfunding of NNPC cash calls is estimated at about $2.5 billion. "This is aside the inherited arrears estimated at over US$6 billion," he said.

Savannah Petroleum signs MOU with NNPC, NNDC

avannah Petroleum Plc has signed a Memorandum of Understanding, MOU, with New Nigeria Development Company Ltd and Nigeria National Petroleum Corporation to support a collaboration between the three parties in the Nigerian section of the Central African Rift System. Under the terms of the MOU, the parties will establish Technical and Steering Committees to manage the process of evaluating the technical and commercial prospectivity of the “materially underexplored region,” according to Savannah. Savannah expects to enter into additional agreements over time with NNDC and NNPC and is also in discussions with its new partners in relation to the pursuit of other potential opportunities in Nigeria.

“We are delighted to commence working with Savannah Petroleum in the Nigerian portion of the Central African Rift system. Savannah’s technical knowledge and experience of working in the Niger section of this system is a major asset for NNPC as we look to unlock the potential of this area,” Mazadu Bako, group general manager of frontier exploration services, NNPC, said. “Savannah is very pleased to announce its partnership with NNDC and NNPC. We very much look forward to leveraging our experience gained from working in the Niger section of Central African Rift to assist in the exploration of the Nigerian section,” Andrew Knott, CEO of Savannah Petroleum, said.

Oil

2016 December, SweetcrudeReports

Optimum Petroleum plans OPL 310 appraisal, development next year SAM IKEOTUONYE

n d i g e n o u s o p e r a t o r, Optimum Petroleum Development Limited, says it will commence a p p r a i s a l a n d development work on its OPL 310 asset together with partners next year. The appraisal and development work will contribute to the production of oil and gas reserves, "supporting the industrial development and energy needs of Lagos State and the petroleum industry of the Federal Republic of Nigeria” the company said. The company recently granted its minority partner, Mayfair Assets and Trust Limited - a subsidiary of Lekoil Limited - a 17.14 per cent economic interest in Oil Prospecting OPL 310 It stated that the decision was made with the consent of Ministry of Petroleum Resources subject to Mayfair’s payment of 2.5 per cent of the transaction cost to the Federal Government and the signing of an agreement with the operator. It added that in line with the Ministerial guidance on this issue, it remained "resolute in finalising the agreement for the 17.14 per cent assignment and to define the rights and obligations of both parties for the optimal development of OPL 310 without further delay". However, according to further details, the operator can make no assurances for the successful completion as negotiations have been ongoing since 2013 and plans for a well to be spudded in early 2016 were not completed. To date, Optimum Petroleum has not executed an agreement nor received payments as detailed in a 24 October 2015 non-binding term sheet. “Optimum Petroleum is pleased to announce progress on the resolution of the issues in relation to OPL 310 development and has pledged to continue in its efforts to bring yet another Benin Basin field into production following the successful development of the Aje field on OML 113," Managing

Director/Chief Executive Officer, Optimum Petroleum, Yusuf K.J. N’Jie said. It would be recalled that effective July 29, 2015, Optimum Petroleum terminated all agreements with Afren, including its role as technical adviser and the joint operating agreement with the company due to material breaches of Afren’s undertakings and obligations on OPL 310 operations. Regulatory filings regarding the termination were executed with Nigeria’s Department of Petroleum Resources, DPR, on August 3, 2015. Optimum had entered agreements with Afren Plc, a UK oil company, in 2008 and its Nigerian subsidiary Afren Investments Oil and Gas Ltd. Following Afren’s protracted funding challenges since 2013 and inability to drill, added to Afren Plc entering into insolvency and administration in the UK in July 2015, the operator terminated all contracts with Afren and its subsidiaries for the breach of all its financial and technical obligations to progress the asset and duly informed the Department of Petroleum Resources.

Upstream oil industry workers

The appraisal and development work will contribute to the production of oil and gas reserves, "supporting the industrial development and energy needs of Lagos State and the petroleum industry of the Federal Republic of Nigeria” the company said

Optimum Petroleum said it had filed a claim in Nigeria for $2.5 billion against Afren for recovery of financial losses due to the material breach of its obligations in the development of OPL 310.

Peak oil demand imminent by 2040 - Expert

il and gas industry expert has forecast that global peak oil demand will come in the next 15 to 20 years. But he predicted that the development would specifically hit Nigeria as 34 percent of the country's oil profit would likely disappear due to zero patronage from the market. This was made known at the 34th Annual Nigerian Association of Petroleum Explorationists, NAPE, preconference by leader Sub-Sahara Africa, Accenture Strategy Upstream, Mr. Timi Familusi. Also, the Royal Dutch Shell Plc, the world’s second-biggest energy company by market value, said demand for oil could peak in as little as five years. Peak oil demand, according to the World Bank, is when oil would become less valuable as a result of climate change, influx of electric cars and a take over of the energy market by solar energy, wind and other renewable energy sources. In his presentation, titled "Stimulating upstream investments in Nigeria’s frontier basins", Familusi said world's peak oil demand period has been fixed between the next 15-20 years (2030-2040), noting that Nigeria’s oil will receive no patronage from the world market by that date.

Oil

2016 December, SweetcrudeReports

Artistic impression of Oil and Gas Free Zone

OGFZ: Govt woos foreign investors with zero-tax, other incentives KUNLE KALEJAYE

he Oil and Gas Free Zones Authority, O G F Z A , h a s highlighted the advantages foreign investors stand to enjoy in opening up businesses in Nigeria's Oil and Gas Free Zones, OGFZ. According to managing director of the authority, Mr. Umana Okon Umana, the benefits for investors include zero-tax from federal, state and local tax authorities; zero-levies and rates (that is no corporate tax, withholding tax, value added tax and capital gain tax); 100% foreign ownership and 100% repatriation of profit and dividends. Umana, who disclosed this during a visit to the Malaysian High Commission in Abuja, said other benefits are 100% repatriation of foreign capital investment and streamlined documentation that makes for fast-tracking of all business transactions. He told the Malaysian High Commissioner, Lim Juay Jim, that Nigeria owned functioning and vibrant oil and gas free zones in Onne in Rivers State; Warri, Delta State and Apapa, Lagos and that the OGFZA was developing additional oil and gas free zones in Brass, Bayelsa State; Ikpokiri, which is contiguous with Onne in Rivers

State and Ibaka in Akwa Ibom State.? According to him, the developed free zones in Onne, Warri and Lagos, and the new ones being developed in Brass, Ibaka and Ikpokiri presented viable and irresistible opportunities for investors to take advantage of and become part of the profitable history of Nigeria’s oil and gas industry. He said there were opportunities for the development of infrastructure such as roads and power plants to provide dedicated electricity for the oil and gas free trade hubs.Umana also explained that attractive opportunities for downstream industries like refineries, manufacturing of pipes for the oil and gas sector and related industrial goods as well as infrastructure existed for investors in the free zones. He added that his agency was willing to partner with any investor, using the publicprivate partnership, PPP, model to achieve its mandate and business plan, stressing that the success recorded in the Onne free zone derived from the PPP business model. The High C o m m i s s i o n e r, M r. J i m , commended Umana for the visit and the presentation promising to visit the OGFZA headquarters with a delegation of Malaysian investors to explore investment opportunities in keeping with the strong historical and

He added that his agency was willing to partner with any investor, using the public-private partnership, PPP, model to achieve its mandate and business plan, stressing that the success recorded in the Onne free zone derived from the PPP business model

economic ties between Nigeria and Malaysia.? Explaining that Malaysia has for long seen Nigeria as the economic hub of Africa, he said that it was Nigeria’s economic weight that made Malaysia to relocate its Africa trade mission from Nairobi, Kenya to Lagos. Umana was accompanied on the visit by the head of trade and investment at OGFZA, Adamu Kontagora; head of legal department and company secretary, Barr. Abduwasiu Sule, and Maurice Etim, Chairman of Aurum Energy Maritime and Construction Limited.

Nigeria needs 2.4m litres of biofuel daily – Group

igeria needs 2.4 million litres of biodiesel daily to successfully implement the Paris Agreement on Climate Change, the Jatropha Growers, Processors and Exporters Association of Nigeria, JaGPEAN, has said. The National President of JaGPEAN, retired Maj. Gen. J. Omosebi, stated this at the second interactive meeting of the national and state executives of the association in Abuja. Omosebi said this had underscored the need for massive domestic production of Jatropha plant, which is a rich source of biodiesel, to meet the required feedstock to implement the agreement. He explained that the association had plans by to mobilise farmers to cultivate 100,000 hectares of Jatropha farm nationwide in 2017 and 2.5 million hectares within the next five years.

President Muhammadu Buhari signed the climate change agreement on behalf of the country in New York in September. Buhari had expressed the country’s commitment to cut Green House gas emissions unconditionally by 20 percent by 2020. To achieve this objective, the country is expected to blend 20 per cent of biofuel into every litre of diesel and petrol to be consumed in the country before the deadline. Already, the Ministry of Petroleum Resources has started reviewing and updating the country’s Biofuel Policy to boost local production and uptake of the critical product. This, according to the JaGPEAN national president, is a huge business opportunity for players in the Jatropha value chain, especially farmers.

Oil

2016 December, SweetcrudeReports

Nigerdock is local content success story – Wabote

Nigerdock’s Snake Island facility in Lagos

xecutive Secretary of the Nigerian C o n t e n t Development and Monitoring Board, NCDMB, Engr. Simbi Kesiye Wabote, has described Nigerdock - a wholly indigenous Nigerian energy services company - as the success story of local content policies implementation in the country. Wabote stated this when he visited Nigerdock’s facilities at the Snake Island Integrated Free Zone in Lagos together with other officials of the board and representatives of International Oil Companies, IOCs, operating in the country. S i m i l a r l y, t h e S e n a t e Committee on Maritime, during a visit by its members, commended the level of facilities in place at Nigerdock, with Chairman of the committee, Senator Ahmed Rufai Sani Yerima, pledging the support of the Senate towards the success of the company. “The Senate will assist to make this company move forward,” he said after he led members of the committee on a tour of the facilities. Wabote, during his visit, also had words of commendation for Nigerdock. “Nigerdock is an example of some of the local content policies we have adopted. In the past, I’m sure none of you visited this yard, but, while I was speaking to the chairman of the group, he told me that before they came here, they had 20 drivers and two cars. And those

two cars were not working, but, today, we went round and saw the impact of local content on these facilities,” he said. He commended the chairman of Nigerdock, Mr. Anwar Jarmakani, for keeping fate with Nigeria and providing employment for more than 100,000 household despite the economic challenges in the country. He promised that NCDMB will work closely with the company. “Despite the economic challenges in the country, the company is still keeping fate. I am overly impressed,” he said. Wabote added: “It is my first time of visiting the island. I decided to visit and see what the company is doing. With me here are top management of the board and representatives of IOCs except for ExxonMobil. This visit will give them the opportunity to talk about what they’ve seen.” Nigerdock was handed over to Jagal - the parent company of Nigerdock - by ex-President Olusegun Obasanjo government and Jagal has since then invested over $500 million in improving facilities in the company.

orthy of note is N i g e r d o c k ’ s contributions to Nigerian human capacity development, having trained over 6,000 Nigerians across diverse disciplines and developed worldclass systems and processes driven by competent and professional Nigerian workforce.

As West Africa’s leading indigenous company with e x p e rt i s e in o il a nd g a s construction, the company has also handled various highly technical projects for companies in the oil and gas sector, including Shell, Mobil, Chevron and Total. Speaking on the general level of local content development in the Nigerian oil and gas sector, the NCDMB boss explained that operators in the industry have increased their compliance level with the local content policy, from less than three percent when the NCDMB Act was enacted in 2010 to 30 percent at the moment. He said: “Before 2010, the local content attainment was about three per cent because the country focused more on the revenue they get from selling oil and the tax they get out of that revenuE. But, with the advent of local content, we felt all the money that was left on the table, we needed to retain some of it incountry, hence the push to carry out most of those activities that hitherto were exported out of the country to happened here”. He attributed the current increased drive for project design in-country to enforcement of the Local Content Law. From front-end to detailed engineering design, he said, operators have brought back design to Nigeria. This initiative, according to him, has led to the establishment of a lot of design companies to deliver value to the

sector, enabling the various IOCs to set up their own design teams within the country. “In terms of service, a lot has improved and today we have moved the needle to about 30 per cent. We are not there yet,” he admitted, stressing that local content development was not a sprint, but a marathon, and will require skills and huge investment to achieve greater success,” Wabote added.

Chevron: Haastrup retires as Brikinn takes over as PGPA

hevron Nigeria Limited, CNL, operator of the joint venture with the Nigerian National Petroleum Corporation, NNPC, (the NNPC/CNL JV) has announced the appointment of Mr. Esimaje Brikinn to the position of General Manager, Policy, Government and Public Affairs, PGPA. Mr. Brikinn replaces Mr. Deji Haastrup, who recently retired from the company after 21 years of distinguished service to CNL and Chevron Corporation. Brikinn has since resumed work in his new position. Brikinn received his Bachelor of Engineering degree in Agricultural Engineering from the Federal University of Technology, Akure in 1989 and a Master’s degree in Production Engineering (Industrial Engineering option) from the University of Benin in 1993. He also holds a certificate in Sustainable Environmental Management from the College of Natural Resources of the University of California, Berkeley. He joined Chevron Nigeria on April 1, 1996, as an Operator Trainee for the Escravos Gas Project and moved to the Policy, Government and Public Affairs (PGPA) department in the year 2000 as a Field Public Affairs Representative, interfacing with community stakeholders in support of field operations and capital projects. Within PGPA, he has held numerous positions of increasing responsibility in Nigeria and the United States in the course of his career. These includes Community Engagement Representative, Government Affairs Representative, Community Engagement Coordinator, Social Performance Advisor, Manager Social Performance & Planning and Area Manager, PGPA West.

Focus

2016 December, SweetcrudeReports

Fayemi

Mining site

How we are transforming Nigeria’s solid minerals sector – Fayemi OSCARLINE ONWUEMENYI, Abuja

he Minister of Mines and Steel Development, Kayode Fayemi, has revealed that state governments will now receive 13 per cent of mining revenues derived from their states, in line with the provisions of Section 162 of the 1999 Constitution (as amended). He said the arrangement was part of efforts to transform the solid minerals sector and make it contribute more to the economy. The minister was speaking at the 5th Sustainability in the Extractive Industries Conference 2016 in Abuja, with the theme: “Revisiting the Nigerian Economy Beyond Oil: Prospects for a thriving Export-Driven Extractive Sector.” “The target of the ministry is to achieve 5 per cent

contribution to the gross domestic product (GDP) by 2020, against the current 0.34 per cent,” he said. “This is a significant shift that signposts our commitment to facilitating a win-win situation for all stakeholders and reduce subsidiarity tensions between federal and state governments. “To give the states and communities good reason to work with the federal government, we need to create avenues for a greater degree of financial participation and revenue sharing,” the minister added. Lamenting the country’s missed opportunities, Fayemi said rather than leverage on the vast resources to industrialise, oil stunted Nigeria’s development potentials, causing division among the

people, in their struggles to access oil rents. “We did not take advantage of our oil wealth over the past decades to become an economic superpower. We rather indulged in unbridled profligacy, and further lost traction in our development journey. “We reversed the modest gains achieved in the growth of other important sectors, such as mining and

agriculture sectors, as well as supporting institutions that sustain economic growth, such as our tax-based revenue generating capacities,” he noted. He said the country’s mining sector had, since 1999 recorded a number of positive developments.

part from the August 31 approval of the Mining Sector Roadmap by the

This is a significant shift that signposts our commitment to facilitating a win-win situation for all stakeholders and reduce subsidiarity tensions between federal and state governments

Federal Executive Council, to pave the way for the sustainable turnaround and growth of the mining and metals sector over the short, medium and long term, the minister identified various reform initiatives to lay a solid foundation. They include the enactment of the Nigerian Minerals and Mining Act, 2007; formulation of the National Minerals and Metals Policy, 2008; formulation of the Nigerian Minerals and Mining Regulations, 2011, and establishment of the Mining Cadastre Office, MCO. Other initiatives include establishment of the Nigerian Institute of Mining and Geoscience, NIMG, as well as control departments for Mines Inspectorate, MI, Mines Environmental Compliance, MEC, and CONTINUES ON PAGE 17

Focus

2016 December, SweetcrudeReports

We are transforming Nigeria’s solid minerals sector – Fayemi

Mining site

CONTINUES FROM PAGE 16

Artisanal and Small Scale Mining, ASM. The legal framework and the supporting regulatory institutions, he explained, would provide the sector with a competitive legal and regulatory environment for effectiveness. For instance, the minister said the Mining Cadastre Office, as the sole issuer of mineral titles, can now issue six types of licenses and permits, covering all activities, from identification to exploration, to mineral production within 30-45 days. Some of the major achievements of government in the sector include improved funding of the mining sector through activation of the 0.5 per cent mining sector component of the Natural Resources Development Fund, NRDF, and approval of N30 billion intervention fund. The minister said the NRDF funds would be utilized for

geosciences data generation, improved mines-field security, monitoring and enforcement of the provisions of the Nigerian Minerals and Mining Act 2007 and its Regulations of 2011. On the other hand, he said funds from the international development partners, like the World Bank, African Development Bank AfDB, and United Nations agencies, would go for implementing Nigeria Mineral Sector Support for Economic Diversification projects. Other key achievements, Fayemi said, include revocation of non-performing mineral titles in line with the provisions of the Nigerian Minerals and Mining Act, 2007 and its regulations of 2011 to make such areas available for acquisition by financially and technically viable investors and completion of the revision of the Explosives Act.

“The combination of all of the efforts above has seen an almost 300% leap in revenues accruing from the sector jumping from N700 million to about N2 billion per month within a year alone,” the minister said. The Executive Secretary, Nigerian Extractive Industries Transparency Initiative, NEITI, Mr. Waziri Adio, said the economic recession the country was currently facing as a result of the crisis in the oil sector was “totally avoidable.” According to him, the country came to the present "terrible path" because its leaders failed to do what they were supposed to do. “Between 1999 and 2014 when prices of oil started falling, Nigeria made in excess of N70 trillion in 16 years. The question to ask is where did the money go? How come we did not use the money to set our economy on a sound footing that would ensure the country earned

On the other hand, he said funds from the international development partners, like the World Bank, African Development Bank AfDB, and United Nations agencies, would go for implementing Nigeria Mineral Sector Support

foreign exchange from different sources? “The money was not put in infrastructure to empower he people and open new streams of income. Nothing was put aside for the rainy day. As a country we need to resolve that this is not good place to be. We need to do everything to get out here. We need to diversify massively to solid minerals sector,” Adio stated.

Gas

2016 December, SweetcrudeReports

LPG

DPR to begin clampdown on illegal LPG dealers in January

he Department of P e t r o l e u m Resources, DPR, says it will begin a clampdown on nonregistered Liquefied Petroleum Gas, LPG, retailers in Ogun and Lagos states beginning from January, 2017. It sent out the warning during a safety training workshop by the Liquefied Petroleum Gas Retailers, LPGAR, Branch of the National Union of Petroleum and Natural Gas Workers, NUPENG, Lagos State Chapter. DPR Lagos Zonal officer, Gas, Mr. Ekitudo Williams, said the agency will commence a holistic implementation of laws regulating the LPG business and that it will shutdown unlicensed shops as officially conveyed to LPGAR-NUPENG leaders by DPR on October 31, 2016. “Unlicensed gas retailers are liable to (1) arrest, (2) prosecution, (3) closure of their gas shops or other retailing outlets and (4) other punitive action as considered appropriate by DPR,” Williams said. He explained that DPR had exercised patience for years while appealing to retailers to comply with the laws, alleging that

LPGAR-NUPENG had for years encouraged its members to apply for license using its mechanism but many refused to comply. “LPGAR can no longer protect any retailer who refuses to abide by the rules and regulations governing cooking gas retailing business as set by DPR. “You are expected to have one shop-one license as a matter of urgency to observe and put in place (1) license (2) two fire extinguishers liquid and powder of at least 5kg each, (3) bucket of sharp sand, (4) well ventilated shop, distance from fire sources, display of appropriate warning signs and emergency number, LP Gas training certificate or the sector ’s valid seminar certificate,” he stated.

t the training workshop tagged "LPG Retailing; The Safety Watch in Lagos", LPGAR-NUPENG urged its members to be more safety conscious in carrying out their business. Chairman of the Lagos Chapter, Mr. David Okenwa, said it was important for cooking gas retailers to be well informed on the latest safety tips that would enhance their operations

without hazardous effect on themselves, the people and the environment. Okenwa said the training, which was conducted in collaboration with Crownbondis Global Resources Nigeria Ltd, a health, safety and environment consultant, is to certified trained LPG retailer dealers in Lagos. “We want to make sure that in every nook and cranny of Lagos State, where cooking gas is sold, retailers must be well trained because our concern is the safety aspect of the business, and the proliferation in the system now has made it possible for every Tom, Dick and Harry to sell the product. “Most dealers don’t know anything about safety, as a result we’ve had several fire cases in Lagos. That is why we have organised this workshop for our members, to sensitise cooking gas retailers on safety measures for their business,” he said. LPGAR-NUPENG National Chairman, Mr. Chika Michael Umudu, said the association was co-operating with the Standard Organisation of Nigeria, SON, to tackle the menace of substandard cooking gas cylinders in the market.

NNPC, Total supply gas to Alaoji Power Plant

he Nigerian National Petroleum Corporation and Total E&P Nigeria Limited, TEPNG, under the NNPC/Total Joint Venture, have commenced supply of 100 million standard cubic feet per day, mmscf/d, of gas to the Alaoji Power Plant, owned by the Niger Delta Power Holding Company, NDPHC, within the Eastern Grid Domestic Gas market. The commencement of gas delivery to the power plant facility is sequel to the completion and start up of the Obite-Ubeta-Rumuji gas pipeline - also known as the O-U-R pipeline - and the Northern Option Pipeline - also known as NOPL - by the NNPC/Total Joint Venture in August this year. The O-U-R pipeline is a 42-inch facility, extending 45 kilometres from Obite to Rumuji in Rivers State, and will transport both domestic and export gas. The NOPL project consists of a 50kilometre, 24-inch gas pipeline, together with two above ground installations, which starts at the Oil Mining Lease, OML, 58 in Rivers State and ends at the Owaza node in Abia State. The NOPL has the capacity to provide up to 300 million cubic feet of gas to the Eastern Grid Domestic Gas market, with Alaoji Power Plant taking up to 100mmscf/d to generate electricity while other users of domestic gas take up the rest. “The completion of these pipelines is an important milestone in the activities of Total in Nigeria. The NOPL is unique and strategic in meeting the Federal Government’s objectives of gas supply to the domestic market ”, said Nicolas Terraz, Managing Director/Chief Executive, Total E&P Nigeria Limited. The two critical gas infrastructures are part of the ambitious OML 58 upgrade initiative to increase oil and gas production, improve integrity of the facilities and eliminate flaring from the mature onshore field.

Gas

2016 December, SweetcrudeReports

Nigeria, Morocco to construct Trans-African gas pipeline

igeria and Morocco have agreed to build a pipeline to carry Nigerian natural gas to North Africa and Europe in a major initiative to boost energy production across West Africa and create industrial hubs to attract foreign investment. The two countries’ sovereign wealth funds will jointly develop the pipeline to run about 4,000 kilometres (2,500 miles) along the West African coast from Nigeria to Morocco on a route yet to be decided. Coastal countries along this route include Benin, Togo, Ghana, Ivory Coast, Liberia, Sierra Leone, Guinea, Guinea-Bissau, Gambia, Senegal and Mauritania. The coastline then runs

through the disputed territory of Western Sahara before reaching Morocco. “ T h e Tr a n s - A f r i c a n Pipeline will improve access to energy across West Africa … helping address one of the region’s most significant barriers to development … (and) will strengthen energy exports to Europe, linking Nigerian gas to the European energy market through Morocco,” a statement on the planned project said. The two countries signed an agreement to this effect during a visit to Nigeria this week by King Mohammed VI of Morocco, who has been on a charm offensive in subSaharan Africa since his country in September asked to be re-admitted to the African Union. Morocco left

the 53-state continental body in 1984 when the AU recognised Western Sahara as the independent Sahrawi Arab Democratic Republic. Morocco claims Western Sahara, while a United Nations resolution has called for a referendum to decide its fate. Oil companies have abandoned exploration there, and European fishing companies have withdrawn fleets because of tensions. Nigeria has the world’s ninth highest proven gas reserves but suffers a massive shortage of power, in part because oil companies continue to flare off a significant amount of gas. In addition, militants regularly attack gas pipelines to protest production that has destroyed agricultural land and fishing areas.

Gas pipeline

Interpipe focuses on quality key part of nterpipe considers quality control as a , exceeding the activities to manufacture products lemented at customer needs. Quality control is imp ing from all stages of production process - start i mill and up to min e continuous casting at the in-hous d pipe ends and nondestructive testing of pipe body an shipping to customers. pliance with The Company has been certified for com andards: nal st requirements of national and internatio

U ISO 9001, Quality Management System acc. to DST ISO 9001, and API Specification Q1; c. to ISO 14001 Environmental Management System ac standard; and ent System Occupational Health and Safety Managem acc. to OHSAS 18001 standard; d for Company’s products have been certifie al and n o compliance with requirements of nati 5L, EN D(IN), international standards: API 5CT, API GOST, and TU; & gas companies. Company is prequalified by major oil

Gas

2016 December, SweetcrudeReports

Gas refilling plant

Nigeria: LPG consumption to reach 3m tonnes in 5 years - NLNG OSCARLINE ONWUEMENYI, Abuja

market study conducted by the Nigeria LNG Limited has showed that given the right conditions, the Liquefied Petroleum Gas (LPG) market in Nigeria can grow its penetration and market share by 32 per cent from 400,000 metric tonnes per annum (MTPA) to 3 million MTPA within five years. Speaking recently in Abuja during the LPG stakeholders meeting, the Managing Director of NLNG, Mr. Tony Attah, stated that the study by the company also projected that within the five year period, the country can improve her per capita consumption of LPG from approximately 2 kilogramme (kg) to 12kg. He noted that Nigeria’s LPG per capita consumption was the lowest in Africa and that increased adoption of LPG could yield a lot of socioeconomic benefits to the country. Attah said the NLNG had taken up the drive to improve

LPG usage in Nigeria but that its efforts would need to be complemented by certain government actions to ensure the market peaks in line with the market estimate its study revealed. “It is expected that an aggressive and wellcoordinated market expansion strategy should lead to the growth of the Nigerian LPG market at annual rates of up to 32 per cent from the current level of over 400,000MTPA to over 3 million MTPA in five years with a potential increase in per capita consumption from approximately 2kg to over 12kg, well above the subSaharan average of 3.5kp per capita,” Attah said. He however explained that, “There are still other bottlenecks beyond our control which frustrates the full-fledged development of the market including the dearth of investments in LPG reception facilities and supply infrastructure, throughput challenges, as well as onerous fiscal regime and regulatory environment, such as the imposition of VAT

on LPG produced in the country while the volumes imported are granted VAT waivers; all these continue to hinder overall step change growth in the industry.”

value chain especially in LPG plant operations, transportation and cylinder quality/recertification,” he explained.

e added that unlocking the potentials of the industry will require a public-private sector partnership. According to him: “The government needs to intervene by removing fiscal and regulatory bottlenecks necessary for creation of a conducive business environment for private sector investment in all segments of the value chain.” “The removal of VAT on LPG as well as taxes and duties concessions for LPG equipment and cylinders must be at the top of the priority list for the government. “On the other hand, the private sector must deepen the market to create efficiency and provide quality services at lower costs whilst ensuring that highest safety standard are adhered to across the entire

Gas Masterplan fundamentally defective - Kachikwu

inister of State for Petroleum Resources, Dr Ibe Kachikwu, says the Gas Masterplan, a lynch-pin of the previous administration’s reform of the oil and gas industry, was fundamentally defective. Kachikwu, who spoke in Abuja, said this was so given the master plan's failure to bring required change to the sector. He said, “If the gas master plan was that fantastic how come we don’t have changes in that sector. “That means something is fundamentally wrong but I believe no work ever done in life is a waste. People who did the Gas Masterplan and the Petroleum Industry Bill did a huge work.” He hinted of a review of the implementation of the masterplan, saying where the government was headed with this and other reforms in the oil and gas sector "is to try and free the industry so that it can do its own rule, set its own prices", adding, "There are few mechanics that we still have to get in place properly". He continue: “We can't forget the fact that we still have foreign exchange challenges; we can’t forget the fact that income to the government is still very tight so you need to see how you balance that but what is important is: what is the objective? “The objective is still to fully deregulate and we have started that process. It is a continuing process and we will continue finetuning it until we get to where we should be.”

Power

2016 December, SweetcrudeReports

Electricity revenue shortfall to hit N3tr by year-end - NERC

Electricity

evenue shortfall in the power sector will hit N3 trillion by the end of this year, the Nigerian Electricity Regulatory Commission, NERC, has warned. “This is like a doom’s day scenario because if care is not taken, the shortfall in power sector will hit N3 trillion by end of 2016. The reason is a lack of revenue attributed to the services provided but doesn’t get paid for,” Acting Chairman and Chief Executive Officer of NERC, Dr. Anthony Akah, revealed in a statement obtained by our correspondent in Abuja. In October, Nigeria Electricity Hub, an initiative of Nextier Power, said that the Nigerian electricity supply market will record an estimated N1 trillion shortfall by December 2016, which could lead to systemic bankruptcy and a risk of nationwide blackout, if left unresolved. The Chief Executive Officer of Niger Delta Power Holding, NDPHC, Chiedu Ugbo, also stated that since the establishment of the company’s first power plant in 2011, estimated energy invoiced by the eight power plants currently amounted to N235.4 billion. Of

this estimate, about 55.3 percent, he explained, has been paid while the remaining 44.7 percent is still outstanding and owed by the Discos, and as of August 2016, debts owed the company by the market stood at N105 billion. “The implication is far reaching: capacity utilisation, low productivity, inability to meet obligations, asset replacement issues and finally it challenges them as a going concern,” the NDPHC boss said. Akah, in the statement obtained by SweetcrudeReports, described the huge shortfall as a “doom’s day scenario”, saying it came about as a result of services rendered by the different strata of the sector yetto-be-paid for by consumers.

e mentioned power theft, metre by-pass, unpaid bills as some of the causes of the revenue shortfall, explaining that power losses were usually estimated and added to the bills/tariffs of those customers with metres. The Chief Executive Officer, Association of Nigerian Electricity Distributors, ANED, Azu Obiaya, had earlier assessed the liquidity challenge from the perspective of the

Discos. Discos are experiencing a revenue shortfall of N38 billion monthly, with the government alone, through its ministries, departments and agencies (MDAs), currently owing the Discos about N58 billion, he said. This, the ANED chief said, could amount to N309 billion by the end of the year, and that the Discos’ books no longer reflected cash flows that were necessary for lenders to accept funding their ongoing projects. He also noted that as of December 2015, the Discos experienced a revenue shortfall of N298 billion due to the noncost reflectivity of the Multi-Year Tariff Order, MYTO.0, a tariff plan then in force in the power sector in Nigeria. As a result of this, the NERC approved electricity tariff increases to raise liquidity for the sector but its implementation was suspended for about six months, resulting in losses of about N13 billion for the Discos. Apart from these, other losses are coming through inflation of the naira and its weakness against major international currencies as well as from pipeline vandalism.

Ex-Power Minister leads team to invent fuel-efficient power system

mmediate-past Minister of Power, Prof. Chinedu Nebo, in Abuja announced the invention of an innovative fuel-efficient power generation system by a mechanical engineering team led by him. Nebo said by its design, the generator will run on very low fuel to produce optimum power outputs. In addition to the fuel-efficient system, the team also said it has created another power system that would run on renewable energy sources like sun and biomass to generate electricity without fossil fuel. Codenamed ‘power-seed wed machine’, the preliminary details of the system were presented to the Minister of Science and Technology, Dr. Ogbonanya Onu by Nebo when he paid the minister a courtesy visit in his office. Nebo stated that his engineering team had spent time testrunning the fuel-efficient system and would deploy it to select tertiary educational institutions in the country to power their operations for one year before commercialising it. He noted that the fuel-efficient power generating system was designed to use electro-technical and mechatronic technology to produce power through iteration. According to him, just about 20 per cent of the amount of fuel needed by existing power generating systems to generate a kilowatt hour of power would be used by the system. He added that the renewable energy powered system would run completely without fossil fuel in homes and offices. “Honourable minister, it is true that I have come to pay a courtesy call on you, but I have also come to tell you that something good is happening. “I am confident to tell you that the days of the big power systems that consume lots of fuel are numbered with our invention. We have invented a power delivery system that will drastically reduce fuel and maintenance cost as well as infrastructure cost,” Nebo said.

2016 December, SweetcrudeReports

Power

Renewable energy

Nigeria targets 30,000mw renewable energy by 2030

igeria plans to generate about 30 per cent of its e n e r g y requirement from renewable energy by 2030, going by calculations by Minister for Power, Works and Housing, Mr. Babatunde Raji Fashola. Fashola, who disclosed this in Lagos, said the Federal Government was vigorously exploring clean sources of energy in order to bridge the gap in electricity supply in the

country. He stated that by 2030, Nigeria plans to generate 30,000 megawatts from renewable energy sources, about 30 percent of the projected national energy supply by that year. According to the minister, Nigeria’s current power mix is lopsided with 80 percent being generated from gas. The minister also disclosed that lack of funds to drive development in the power sector has forced the Federal

Government to initiate privatisation process for the Transmission Company of Nigeria, TCN. "The government can no longer handle funding of the power sector alone. That is why we are now looking towards involving private sector in transmission. This will help in raising fund for the sector," he said. It would be recalled that after the privatisation of the sector, TCN was concessioned to the Canadian company, Manitoba,

Senate directs Discos to patronise local meters manufacturers

he Chairman, Senate Committee on Power, Steel Development and Metallurgy, Senator Enyinnaya Abaribe, has called on electricity distribution companies or Discos in the country to patronise indigenous manufacturers of energy meters in order to support local industries. A press statement by the Head, Corporate Communications of Kaduna Electric, Abdulazeez Abdullahi, quoted Senator Abaribe as making the charge in Kaduna during the Committee’s oversight duties to Kaduna Electric. According to Abaribe, the electricity distribution companies must key into the ongoing efforts to turn around the nation’s industrial sector. He said the current wide spread complaints about metering would be drastically reduced if

the distribution companies source their meters locally. “Sourcing meters locally will fasten the Discos meters deployment processes, support our industries, grow the economy and above all, lessen the present foreign exchange challenges”, he contended. Senator Abaribe also commended the management of Kaduna Electric for the efforts made so far by the company to improve on its operations. He particularly expressed satisfaction with the meters deployment programme currently being undertaking by the company in Kaduna, Kebbi and Sokoto states. He also directed the Nigerian Electricity Regulatory Commission to make available to the committee the audited accounts of all the distribution companies as soon as possible.

“The government can no longer handle funding of the power sector alone. That is why we are now looking towards involving private sector in transmission. This will help in raising fund for the sector," he said but was later taken over by the government. To ensure increasing funding for the power sector, the Federal Government has also called on the World Bank, International Monetary Fund, African Development Bank, United States Agency for International Development and other world agencies, to invest in the country’s energy sector. According to Fashola, who made the call, government wanted investment in the generation, distribution and transmission sectors of the industry. Fashola said the sector had huge investment potentials, which only bigger corporations had the capacity to meet, adding that the sector also had the capacity to provide returns on investment.

He said the government was striving to provide an enabling environment through its policies to guarantee adequate returns on investment. “Without doubt, bad environment is a problem, which the government is trying to address. It is obvious that the power sector has huge potentials, which can only be realised with the right environment. “When one considers that the sector is divided into 11 power distribution companies (Discos) and six power generation companies (Gencos), one would see that there is huge potential in the industry. "This is the reason the Federal Government is asking investors, especially global financial institutions, to invest in the sector,” he said. ?

Power

2016 December, SweetcrudeReports

Stable power: Nigerians should be ready to pay N10,000 monthly - ANEDC

A transmission substation

KUNLE KALEJAYE

he Association of N i g e r i a n E l e c t r i c i t y Distribution Companies, ANEDC, says for Nigerians to enjoy stable power supply for 24 hours a day, each home must be ready to pay between N9,000 and N10,000 monthly for electricity consumption. This was made known by the spokesman for the association, Mr. Sunday Oduntan, in Lagos. According to Oduntan, with Nigeria's population of over 180 million people, the country needed a maximum of 180 million megawatts of electricity, and a minimum of 20,000 megawatts to achieve stable power supply. This is a far cry from what electricity generating companies currently churn out to the national grid. As a result, Oduntan said Nigerians should "forget about uninterrupted power supply for now." "We have a long way to go. If we are going to have stable power supply, each home should be ready to pay between N9,000 and N10,000 monthly. Electricity is a commodity that needs to be paid for. Money and other resources are used to produce electricity. Dollar is used to purchase gas to generate power,” he said. Speaking on the impact of

stable electricity in reducing unemployment rate in the country, Oduntan said Nigeria can not tackle unemployment without first ensuring power stability. "No small scale or large scale business can thrive without stable electricity,” he said. ANEDC's stand came few days after the Association of Power Generation Companies also said the country needed 180 million megawatts of electricity to be self-sufficient. T h e b o d y, t h r o u g h i t s Executive Secretary, Dr. Joy Ogaji, said: “The rule of thumb for an industrial nation is about 1MW for every thousand of the population. This puts Nigeria’s energy need at about 180,000MW range given its population of about 180 million. The Federal Government has a target of 40,000MW by the year 2020. “It is not about projecting the megawatts, we should also put other building blocks which go with generating the megawatts such as a firm, i n d e p e n d e n t a n d knowledgeable regulator, a default-proof payment plan, firm payment guarantees and incentives for investors. In summary, government should provide an enabling environment and avoid interference, focus on policies and give direction.? “More

often than not, the Gencos have sufficient generated power available. Without the capacity to transmit and distribute to the final consumers, all the effort is wasted. That is the scenario. That is the basic dilemma the industry faces, "she said.

Power transformer

BEDC provides 500 distribution transformers

enin Electricity Distribution Plc, BEDC, has provided over 500 distribution transformers to ensure reliable power distribution to its customers. The company has also constructed 10 dedicated distribution lines for commercial and industrial customers, including replacing failed ones, in addition to 398 distribution transformers provided in the review period. The company, therefore, assured customers across its franchise areas of Edo, Delta, Ondo and Ekiti states of its readiness to resolve all issues and problems associated with operations, soliciting for their patience and understanding. The Managing Director and Chief Executive Officer, Mrs. Funke Osibodu, who was represented by the Executive Director, Commercial, Mr. Abu Ejoor, gave the assurance during a public forum organised at the instance of the House of Representatives Committee on Power, in Benin City. He affirmed that BEDC was committed to resolving issues bordering on the power supply, metering, and transformer repair and billing complaints as quickly as possible, noting that some will require time to tackle. According to him, BEDC has resolved over

50,000 complaints through the customer complaints unit since inception, using centralised Call Centre and complaints tracking software; adding “we have also resolved the backlog of metering requests at takeover, having installed over 120,500 meters; we have taken advantage of both the industry CAPMI Scheme and own funded meters. Earlier, the Chairman House Committee on Power, Dan Asuquo, had told consumers who brought complaints to the public forum that distribution companies or Discos were purely in business and as such must cover their costs, urging customers to ensure prompt payment of bills. He, however, advised that BEDC should be sensitive to customer complaints since they were the core of their business in the first instance. Also, the acting General Manager, Customer Services, Nigerian Electricity Regulatory Commission, NERC, Shittu Shuaibu, urged customers who are not satisfied with the complaints resolution by BEDC to approach the forum office in Benin for further assistance.

Power

2016 December, SweetcrudeReports

Discos miss 100,000 metering target - Report

he nation's 11 electricity distribution companies or Discos may not attain their respective annual target of installing 100,000 meters this year due to foreign exchange crisis, among other factors. With just three weeks to the end of 2016, an updated metering report in the power sector has shown only 161,640 customers got meters between January and October 2016. This revelation came as another report from the Nigerian Bulk Electricity Trading, NBET, said the Discos’ monthly energy payment dipped significantly with an average of 26.84 percent payment for August. The reported 161,640 meters installed so far, projects a huge shortfall of meter installation by year end. Ibadan Disco, which has the largest customers in its network, attained 50 percent of its target by metering 50,730 customers between January and October 2016. It had promised to instal 100,000 units annually. Ibadan Disco installed 23,610 meters, Eko Disco provided 21,131 meters; and Benin Disco installed 20,244 meters. While Port Harcourt Disco installed 11,695 meters, the others had less than 4,000 installed meters this year. Meanwhile, the NBET data published for August 2016 rated the Discos’ payment performance below average

on their remittances. The 11 Discos consumed 91.69 percent of the total energy (2.30-gigawatt hour-GWh) sent out in August but paid only 26.84 percent of the bill. Rather than pay the N34.93 billion raised for them, they paid only N9.37 billion, the record showed. The N28.32 billion market shortfall in August dropped payment to 24.61 percent for the 20 Generation Companies’ bills. NBET said Gencos got only N9.37 billion instead of N38.09 billion for the month.

Electricity pylons

This revelation came as another report from the Nigerian Bulk Electricity Trading, NBET, said the Discos’ monthly energy payment dipped significantly with an average of 26.84 percent payment for August

Eko Disco, Huawei sign MoU

ko Electricity Distribution Company has signed a Memorandum of Understanding, MoU, with Chinese technology company, Huawei, to expedite installation of prepaid meters within its network. Details of the agreement revealed that, starting with 100,000 meters installation, customers within Eko Disco network would be fully metered before the end of the deal with Huawei. Chairman of West Power Gas, owners of Eko Disco, Mr. Charles Momoh, who spoke before the signing of the agreement at West Africa Power Industry Convention, WAPIC 2016, in Lagos, said the deal would speed up the company’s meter installation programme before the deadline of the Bureau of Public Enterprise, BPE's, five years metering scheme for power distribution companies.

Lawmakers demand full privatisation of power sector

igeria's House of Representatives has called for full privatisation of the power sector. To this end, the House stressed the need to Power plant remove the middleman role played by motion tilted: ‘Need to avert Nigerian Bulk Electricity imminent total blackout in Trading, NBET, company, Nigeria,’ sponsored by Abiodun which was set up to engage in Adeogun, who expressed the purchase and resale of concern over the N400 billion electric power and ancillary owed gas manufacturers, power services from independent generation and distribution power producers and from the companies (Gencos and Discos) successor generation respectively. companies. He observed that the The lawmakers also imminent threat of a blackout is emphasised the need to due to the huge debts owed enhance the responsibility of power generation and Nigerian Electricity distribution companies by the Regulatory Commission, Armed Forces, government NERC, for effective service ministries, departments and delivery. agencies, may lead to distortion The resolution was passed of production, generation and following the adoption of the distribution corridors.