Tuesday, October 1, 2019

Sigma boss tasks investment experts on capacity building - New Telegraph Newspaper

Sigma boss tasks investment experts on capacity building - New Telegraph Newspaper


Sigma boss tasks investment experts on capacity building - New Telegraph Newspaper

Posted: 30 Sep 2019 05:33 PM PDT

Fifty-nine years ago today, Nigeria, which newly discovered oil then, gained independence from Britain to, among other things, solely run the affairs of its crude barrels and mega watt of electricity. Adeola Yusuf, in this report, reviews the bumpy route the country's energy sector plied in its journey of nationhood

Exactly four years and eight months after the first crude oil was discovered in Oloibiri in the present Bayelsa State area of Nigeria, the clamour by the fore fathers of Nigeria bore its fruit: The country was let off the hook by Britain and it, on October 1, 1960, became a nation independent of direct administrative and political interference from its colonial master.

Like oil and gas, the power sector – which is also a cardinal sector in the energy industry – predated the Nigeria's independence.

Electricity generation started in Nigeria in 1896 but the first electric utility company, known as the Nigerian Electricity Supply Company, was established in 1929; 31 whole years before Nigeria's Green-White-Green National flag was hoisted.

Today, the two sectors under energy industry – oil and power – have risen to become the major indices for the country's progress; they have become the yardstick to measure the success and/or failure of the country as nation in existence for the past 59 years.

The oily path

The oil sector, which has  over the years – remained the cash cow for Nigeria, has actually clocked 63 years in existence. While the sector has a number of successes, its failure has overshadowed the success story.

From the expansion of oil exploration and production from onshore to shallow water to deep offshore, the sector  from upstream; midstream to downstream  has fuelled the bus that has conveyed Nigeria in its journey of nationhood.

These are, however, dotted and stained by crude theft, pipeline vandalism, corruption, illegal bunkering and refining, fuel subsidy and scarcity, inefficient government refineries, policy summersault and revenue loss to foot-dragging on passage of Petroleum Industry Bill (PIB) among others.

The upstream

The upstream stratum of the oil and gas sector is headlined by a number of issues. One of these issues is the monumental waste of resources to corruption, pipeline vandalism and  crude oil theft among others.

While the nation battles with these, it was unbelievable to note that oil projects and investments worth over $100 billion are trapped in Nigeria.

A Canada-based petroleum economist, Tosan Omotshola, and members of the highest body of geologists in Nigeria, Nigeria Association of Petroleum Explorationists (NAPE) who rolled out this figure in Lagos blamed policies summersault for this huge economic loss.

"Projects with production value of 875,000 barrels of crude per day (about 1 m bopd) and investments of over $100 billion are untapped, and are wasting away," Omotshola, who doubles as the Principal and Executive Director, Kaptepua Capital, Canada, said on the sideline of a training for media professionals in Nigeria's oil and gas industry.

The projects, he noted, "include Bonga South West Aparo with 225 000 barrels of oil per day production capacity (bopd); the Bonga North with 100,000 bopd; Bosi with 140,000 bopd; and the Bosi Satellite with 80,000 bopd."

Others, according to Omatshola, include the Uge field with production capacity of 110,000 bopd; the Zabazaba with 120, 000 bopd ; and the Nsiko field with 100,000 bopd.

With the delay suffered on these projects, huge investment value of over $100 billion is being trapped, he declared.

Corroborating Omatshola's view, the President, NAPE, Ajibola Oyebamiji, noted that it did not make any economic sense to know that these volumes of investments are delayed and wasting away in a country that is broke.

"We need to work on a lot of economic variables," he said

Refineries TAM scam tops midstream

The country, from its midstream stratum as at the last count, wasted N264 billion on refineries, which turned out to be a conduit pipe.

The N264 billion investments injected into the turn around maintenance (TAM) for Nigeria's three ailing refineries would not be queried, New Telegraph has learnt.

Investigations by this newspaper revealed that the Federal Government had jettisoned any plans to review the investments made between 1999 and 2015 on the refineries, despite ineffectiveness of the contracts.

Instead, the Nigerian National Petroleum Corporation (NNPC) said it would begin a fresh rehabilitation of the refineries by January 2020.

The nation's refineries, located in Port Harcourt, Warri and Kaduna, will roar to life to refine crude oil at optimum capacity come 2022, NNPC assured.

The four refineries located in Port Harcourt (two), Warri and Kaduna have a combined capacity to refine 445,000 barrels of crude per day. Inefficiencies of these refineries had worsened the deficit in supply of petroleum products and raised dependence on importation of the products.

The $1.746 billion TAM investment is different from the $308 million reportedly spent for the same purpose by the military governments of the late General Sani Abacha ($216 million) and General Abdusalami Abubakar (rtd) $92 million.

A former GMD of NNPC, Funsho Kupolokun, had, according to report, said that over $1 billion was committed to refinery repairs between 1999 and 2007.

After the late President Musa Yar'Adua stopped the sale of the refineries in 2007, NNPC reportedly announced it had awarded contract to a Nigerian firm to carry out a comprehensive TAM on all the refineries. The contract sum as revealed by the then NNPC boss, Abubakar Yar'Adua, was $57 million.

In 2009, the then GMD of NNPC, Alhaji Mohammed Sanusi Barkindo, also announced that the Corporation spent $200 million on the maintenance of the Kaduna refinery. In 2012, NNPC was reported in local media to have planned repair of the refineries with N152 billion.

A former Minister of Petroleum Resources, Alison-Madueke, was quoted to have said $32 million had already been paid for the materials needed for the said refinery repairs.

NNPC, in January 2015, had in a statement, said it took decision in 2011 to rehabilitate all refineries, using the Original Refinery Builder (ORB) of each of the refineries.

Down-stream's share of shenanigan

Aside from N1 trillion annual waste on fuel subsidy in the downstream oil sub-sector, fuel marketers bemoaned poor margin and N306 per dollar foreign exchange difficulties, among other crisis rocking the downstream sub-sector of the oil industry.

This came just as the Nigerian National Petroleum Corporation (NNPC) and the Major Marketers Association of Nigeria (MOMAN) announced fresh collaboration to guarantee sanity in supply of Petroleum products for Nigerians.

Declaring that the two parties have resolved to continue to work hand-in-hand to grow the Petroleum Industry, the Corporation, which announced this, maintained that the new move is a part of concerted efforts to guarantee energy security in the country.

Group Managing Director of the NNPC, Mallam Mele Kyari, in conjunction with MOMAN Chairman, Mr. Tunji Oyebanji, made the declaration, according to a statement, during a visit by the association's executive Wednesday in Abuja to the corporation's helmsman.

Like oil, like power   

As Nigeria celebrates its 59 years of independence today, its power industry also clocks 90 years. For power, the journey, which started in 1929 is, however full of ups and downs.

Today, the sector has transformed with privatisation of power assets into an angel or a beast as the case may be.

As at last Tuesday, the liquidity crisis rocking the power industry worsened as the N435.7 billion revenue under-recovery in the value chain began to hunt sector. Investors in the distribution stratum of the chain, who unanimously declared this, maintained that the investment deficit being suffered by the sector was buoyed by the ceiling slammed on the DisCos by government.

This came as the Head, Energy Reserch, FBNQuest Merchant Bank, Rolake Akinkugbe-Filani, declared that the crisis in the power sector is a major impediments to the free flow of credit facilities from banks and other lenders to the sector.

"We have not come across one example of succesful industrialisation without access to regular and adequate power supplies," she said during a session at the Power Nigeria conference in Lagos.

Rising under the auspices of Association of Nigeria Electricity Distributors (ANED), the investors, in the same vein, declared that every DisCo could not, according to the ceiling placed on investors by government, spend more than N5.5 billion a year as allowable investment."

This, the Director, Research and Advocacy, ANED, Sunday Oduntan said on a programme monitored by this newspaper, is grossly affecting the efficiency of the DisCos. Stating that four million households who are customers of DisCos in Nigeria are yet to be metered, Oduntan maintained that efforts to ensure metering has been taken off the Discos.

With this, according to Claudius A. Awosope, a professor of electrical and electronics engineering, the situation of power sector, despite 90 years of its existence in the country, is saddening.

Awosope who doubles as the Deputy Dean, School of Applied Engineering, College of Engineering, Covenant University, Ota, said in a document obtained by this newspaper that the current status of electricity generated in Nigeria with regard to its population is grossly inadequate.

"This challenge has been in existence since 1970s when the Federal Government improved the economic life of the workers. This made the workers to increase their electricity consumption by purchasing several sophisticated and automating machines that consumed quite a lot of energy. The power utility company, on the other hand, was not prepared for this increase in consumption. This challenge has consistently left a deficit in consumption and generated electricity ever since that period in the Nigeria's electricity consumption history. Thus, this has led to consistent imbalance in the demand and the supply of electricity," he maintained.

Beaming searchlight on power value chain

There are three major segments namely: generation, transmission and distribution segments and each of them performs specific duties in the provision of electricity. The generators are the source of the energy which is then transported after transformation of the voltage from low level to high level voltage. At this high level voltage, power losses due to transportation are reduced but not eliminated. At the distribution station, this high voltage is then stepped down.

To achieve the various processes mentioned above, the engineers require a lot of expertise and efficient tools to ensure that the generated power is not in any way wasted. This has led to provision of circuit breakers, power transformers; switch gears, instrument transformers, condensers. All these equipment must be well maintained to ensure that the availability of supply is not curtailed by inappropriate actions by these tools.

Last line

Nigeria's energy industry is central to the success or failure of the country as a nation and it should be made to play its key role of transforming the country.

Government should vigorously pursue the anti-corruption fight in the energy sector while all Nigerians should lend their hands of support to government in putting the energy sector back to its enviable position.

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