Health of Mother Earth Foundation (HOMEF), a Non-Governmental Organisation (NGO), said oil exploration by multinational companies was a major contributor to environmental warming and climate change effects in Nigeria.
Coordinator of the organisation, Mr Nnimo Bassey, stated this on Sunday at an environmental awareness campaign tagged “Break Free 2016” in Ibeno, Akwa Ibom.
He said that exploitation of crude oil and flaring of gas had destroyed the ecosystem thereby causing environmental warming in the country.
“We can break free from fossil fuel; we cannot keep on burning fossil fuel and the oil companies knew many years ago that oil extraction causes global warming,” Bassey said.
He said that the spread of chemical in the ocean during oil spills had affected fishing activities in the parts of the country.
According to him, the polluted water has affected the quality and quantity of fish in the ocean.
“It is happening in 15 countries around the world; everybody is saying the use of crude oil, the use of crude, the use of gas is destroying the planet.
“It makes the planet to change, everywhere is hot; it is because when oil is burning, it pollutes the air as the weather is changing,” Bassey said.
He alleged that a scientific study sponsored by a multinational in the area had proved that oil exploration was detrimental to human health and the environment.
“They paid scientists to hide the information so that they can make profits in dollars now that the information is coming out in the USA,” Bassey alleged.
He called on the multinational companies to the leave the oil in the soil, saying that 80 per cent of the chemical kept in the soil had polluted the ocean.
Also speaking, Executive Director, Peace Point Action (PPA), another NGO, Mr Umo Isua-Ikoh, said that residents of oil-bearing communities were suffering from respiratory and skin diseases.
Ikoh attributed the situation to breathing of poisonous gases emitted into the air through oil exploration and extraction activities in the area.
He said that the objective of the awareness campaign was to stop the impunity committed in the Niger Delta by the oil multinational companies.
“If we are sincere about doing our part to fight climate change, then we must leave the oil and gas in the soil,” Ikoh said.
He said that oil and gas companies were sacrificing peoples’ lives and future of children “at the altar of profit’’ and that governments in the country had “unfortunately, become their bedfellows’’.
“Our roofs top wear and tear very fast because of acid rain. Companies around continue to flare gas with impunity in spite of several targets to end gas flaring.
“We want to see an end to gas flaring in the Niger Delta region,” Ikoh emphasised.
He claimed that though Akwa Ibom had been the highest oil producing state in Nigeria, it had the worst socio-economic indicators in the Niger Delta.
According to him, oil wealth does not directly translate to wealth and sustainable development for the people.
“The truth is that oil and gas exploration and production has left in its wake only environmental disaster, time bomb, poverty, disease and conflict in the region,” Ikoh said.
In his remarks, a former Chief Medical Superintendent in the state, Dr Charles Abakam, decried the state of devastation of the environment in Ibeno Local Government Area by oil extraction activities.
Abakam said that people living in an environment where oil was exploited had the tendency to develop prostate cancer.
He said that apart from destroying the ecosystem, oil exploration was injurious to the health of the people in the oil producing areas and called for cessation of oil extraction.
The Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu, has said the federal government would have had to shop for N16.4 billion every month to offset subsidy claims of petrol marketers if it had not taken the decision to remove subsidy on fuel consumption.
Kachikwu explained in a tweet on his twitter handle @ibekachikwu that as at the time the government made the decision to end subsidy on petrol and subsequently hiked the pump price, it was incurring about N13.7k as subsidy on each litre of petrol bought by Nigerians.
He said at such rate, government would have paid out N16.4 billion to marketers monthly, adding that the government does not have such fund in its 2016 budget, more so now that the country’s earning from crude oil production has dropped.
THISDAY monitored the minister’s tweet weekend in Abuja where he tried to justify the new framework for petroleum supply, distribution and pricing. He also listed the benefits of the new policy.
“There is no provision for subsidy in 2016 appropriation. As at today, the current PMS price of N86.50 gives an estimated subsidy claim of N13.7 per litre which translates to N16.4 billion monthly. There is no funding or appropriation to cover this,” said the minister in the tweet.
He further stated: “NNPC has continued to utilise crude oil volumes outside the 445,000 barrels per day, thereby creating major funding and remittances gaps into the federation account.”
Kachikwu also said renewed insurgency and pipeline breaks in the Niger Delta has resulted to Nigeria’s daily crude oil production dropping to 1.65 million barrels per day (mbpd) as against the 2.2mbpd that was projected in the 2016 budget.
He said this has reduced government’s earnings and foreign exchange build ups to perhaps support subsidy on importation of petrol into the country.
He equally listed the benefits of the new policy, saying that going forward, 100 per cent payment to the federation account on the allocated 445,000bpd of crude oil to the Nigerian National Petroleum Corporation (NNPC) would be assured and tailored to provide palliative measures for the country.
He also said the policy will encourage market stability in the downstream petroleum sector; stabilise fuel supply in the country; discourage hoarding of products and reignite investors’ interests in setting up refineries in the country to cut importation of petroleum products.
Meanwhile a former energy and mines minister of Venezuela, Dr. Alirio Parra has described the recent decision of the government on Nigeria’s downstream petroleum sector as historic and smart.
Parra who is also a member of the global oil industry outfit, CWC Group, stated at a forum in Abuja over the weekend that the liberalisation of the downstream sector in the oil industry is a bold testament to the fact that oil is a market-driven commodity.
A statement from the Group General Manager, Public Affairs of the Nigerian National Petroleum Corporation (NNPC), Mallam Garuba Deen Muhammad stated this.
According to Parra in the statement: “One really important change in the oil and gas industry in Nigeria is the decision by the federal government to open the domestic market for competition.
“I am not necessarily talking about the elimination of subsidy, but opening the market, is a statement that oil is market driven and that with time, it is going to be to the benefit of Nigeria, and to all Nigerians.”
He further stated that the opening of the market will in no time encourage more players to bring in petrol which would eventually lead to a new era of competitive pricing.
For oil and gas stakeholders who gathered at the just concluded Offshore Technology Conference (OTC) in Houston Texas, by implementing technological solutions, the industry will be able to retain a high level of production and at much lower costs.
Along with the high-tech displays and gee-whiz presentations that highlighted the yearly event, the conference featured sessions on how to reduce operating expenses and extend the lives of aging oil and gas fields.
OTC Chairman, Joe Fowler stated that many of the 300 papers presented focused on techniques and equipment to bring down the high cost of offshore drilling to make it more competitive in a low-price environment.
More than 68,000 attendees from 120 countries gathered at the yearly conference, placing 2016’s OTC among the top 15 highest attended in its 48-year history.
Speaking at the event, the Chairman of PETAN, Mazi Bank-Anthony Okoroafor, emphasized the need for oil and gas operators to invest in technological advancement to effect cost reduction.
He also stressed the need for focus to be placed on existing in-country capacity instead of patronage.
He added that the country should actively pursue reserves and production growth, which he said, has been on the decline.
Okoroafor emphasized on leveraging proven Nigerian companies and in-country capacity building, adding that proper implementation of the Nigerian oil and gas industry content development will significantly drive down the cost of doing business in the oil industry and cushion the effects of the low prices.
He stated: “The industry has operated under the local content Act regime for six years now, there is the need to take a closer look at the implementation strategy to ensure it is delivering the desired value to various industry stakeholders in particular and the Nigerian populace in general, proper implementation of local content will lead to massive economic transformation of our great nation”.
Chairman, PETAN Conference Committee, Ranti Omole, stated that based on the belief of indigenous companies, the association is partnering to reduce cost of operations and projects in Nigeria through increased local patronage.
He stated: “The industry has been undergoing challenging and turbulent period for the past two years due to low prices of crude oil and low demand. This has resulted in severe adverse consequences in the industry as well as on the economy of many oil producing nations including our country. This has led major players in the industry to rationalize their operations, seek efficiencies and cost saving measures to ensure profitability and survival of their businesses.”
The Acting Executive Secretary, Nigerian Content Development and Monitoring Board, Daziba Obah, said with the right support and environment, indigenous companies are best positioned to provide services and process at most lower cost without compromise to standards.
Obah added that there is opportunity to leverage the low value of the naira to source services, technology and solutions local at much cheaper cost.
He noted that there will be much more cost savings if operators develop increased project management capabilities to manage projects. “Operators will save costs by optimizing existing facilities and improving maintenance efficiencies.
Dwelling on the role of the Federal Government to help save the indigenous companies from the pangs of crude oil prices, former Chairman of PETAN, Emeka Ene, he said that there is need to develop the steel sector for local production of steel billets, coils and plates.
Ene added that government should accelerate gas infrastructure along source corridors to ease availability of the commodity in oil and gas parks, oil and gas free zones and other manufacturing locations supporting oil and gas activities.
He stated: “There is need to engage relevant agencies to foster cordial and seamless working relationship with respect to expatriate quota and issuance of work permit. There should also be a periodic industry-wide capacity audit of local companies to establish current capacities and embark on gap closure interventions. Research and development clusters should be encouraged to promote the development of home grown technology”.
Nigeria’s leading industrialist and President of Dangote Group, Mr Aliko Dangote, has again challenged the country to further explore agriculture as this is its surest way to break free from economic challenges.
He was speaking on Tuesday at the opening ceremony of the Katsina State Economic and Investment Summit with the theme ‘Unlocking Investment Potentials for Sustainable Development’.
Mr Dangote explained that “Brazil has 350 billion dollar in reserves of which 80% of that money is contributed by Agriculture”.
“I think it’s a lifetime opportunity which God has given to us by repositioning things while oil has gone down. It is not a curse, it is for us to diversify the economy. We have been relying on oil and I think oil very unreliable.
“When you look at it, despite the downturn of various economic activities in the whole world, the only things that have actually not gone down are agricultural products.
“Rice, wheat, sugar have not gone down in price, so we should make sure that we use this opportunity which God has given us – arable land.
“Both us and Brazil, we have the same quality of land and Brazil today are number one in sugar, soybean, poultry and in a lot of things. So I think we should copy that.”
He said that the decision to open up Katsina State to investors was long overdue as the state has been behind other states economically. He commended the State Governor for the initiative.
“I think the only way for Katsina State to catch up is to concentrate on Agriculture,” he added.
He, however, emphasized the need to create an enabling environment for investment as being the most effective way to attract investors.
He said, “Investors normally do not need to be told. You don’t need to invite anybody, if they see a conducive environment for investment, they will actually gate-crash even if they are not invited.”
He went on to enumerate five steps that need to be taken for potential investors to see an enabling environment.
“One is to identify the sectors of the economy where the state has a comparative advantage, and develop information and data which will enable investors evaluate opportunities in these sectors.
“Publish clear legal and regulatory terms and clear incentives to guarantee profitability for investors.
“Provide an incumbent land and reasonable supporting infrastructure and let investors do the rest.
“Ensure that all your officials buy in to the vision, (because) nothing will discourage investors more than uncooperative and hostile public officials.
“The final piece of advice is to start with your local investors or those who are already here with you. If they are happy and making good (revenue), they will definitely invest more and the foreigners will cue in.
“You don’t need anybody to come and bring in foreign direct investment (FDI). FDI always follows local direct investment,” he said.
Last week Wednesday, the European Union (EU) was quoted as asking Nigeria government to increase export of agricultural produces like rubber, cocoa and palm oil to the EU countries. The Head of EU Delegation to Nigeria and ECOWAS, Mr Michel Arrion, said this at a press conference on commemorate the 40 years of EU-Nigeria partnership in Abuja. Arrion said there were potential exports, which Nigeria could develop in commercial quantities, lamenting that such exports to the EU were currently in low quantities.
Ordinarily, the EU head of delegation call is a welcome development but deep down it is an insult to the people of Nigeria for him at this time to call for a continued export of primary commodities to the EU.
For over 40 years, Nigeria and Africa countries have been exporting primary commodities to Europe to feed their factories and in return bring back the processed product at higher prices. They have not thought of helping to transfer technology to Nigerians to enable the country process and add value to the agricultural produce in order to sell at higher prices.
Perhaps the call is coming as a result of the fear that Nigeria is looking more to Chinese technology and developing a higher trading relationship. The Union has every cause to worry because its traditional source of cheap raw material is being threatened by the growing trading relation between Nigeria and China.
All along and in the last forty years as it claims, the Union has not considered it necessary to set up local processing plants in Nigeria to process agricultural produce to either semi processed or finished products that could command higher value in their home countries. Even when Nigerian businesses struggle to set up such processing plants they are denied access to European market in the name of quality.
It is quite unfortunate that it is at this time that the present government is trying to refocus the economy that the EU is asking Nigeria to concentrate in producing and exporting primary commodity to Europe. In the opinion of the EU “There are potential exports like rubber for instance for tiles that Nigeria could certainly develop. We will be delighted to import and to buy more rubber from Nigeria; the problem is that the production is very small. We will be delighted to buy more cocoa from Nigeria. We are buying most of our cocoa from Ivory Coast and Ghana, while not from Nigeria?” he said.
Is the EU a true friend of Nigeria? Knowing that the current economic crisis the nation is facing arose from the collapse of commodity prices in the global market, the EU is still urging Nigeria to continue to export primary commodities to it without adding value to them. The government must be wary of such advice and take the necessary measures to ensure that no commodity is exported from Nigeria without value addition in the near future.
The current Federal government’s policy on agriculture should be comprehensive enough to embrace the entire value chain in each of the commodities it intends to develop fully. The European Union knows too well that in the last ten to fifteen years nearly half of the country agricultural produce are wasted as a result of lack of storage facilities and processing capability. It has not one day attempt to offer a solution.
In recent years farmers in the northern part of the country had suffered losses of tones of tomatoes as result of lack of processing facilities. In recent months thanks to brave Nigerian business men like Dangote and the rest that have to set up tomatoes processing plants to help arrest the continued influx of processed tomatoes that were being dumped into the Nigeria market.
Time has come for Nigeria to seek home grown solution to its economic problems. In the case of cocoa while the majority of cocoa is exported as beans, the processing of other cocoa-derived products also takes place in Nigeria. Cocoa processing consists in the conversion of beans into cocoa butter and cocoa powder, two intermediary products and such conversion is operated by grinders (or converters).
The quantity of butter obtained from the beans depends on the fat content of the beans, while powder is normally considered as a by-product of processing, as shells and paste. Butter and powder are subsequently recombined in different shares to obtain chocolate, with the addition mainly of milk and sugar. Cocoa powder is also used as a component in other confectionary products. Instead of setting up chocolate factories in Nigeria, European firms prefer to import the beans into Europe at cheapgate farm prices and processed same into finished products as chocolate, cocoa beverage etc that are sold at higher prices as imported items into Nigeria.
Although Nigeria has the capacity to process locally some quantities of other cocoa-derived products, such as butter, the local product is often tagged of a low quality when exported by European firms in order to discourage local production.
Nigeria does not need the EU to remind it that it has a lot of possibilities in agricultural products. Nigerians are aware of the potentials. What Nigeria need are true friends that will help it convert the known potentials to realities that will generate employment opportunities to the teaming population. Nigeria has had enough of good wishes, it needs fresh ideas not the same old diplomatic talk with tongue in check. Read more at: http://www.vanguardngr.com/2016/05/export-rubber-cocoa-palm-oil-us-eu-tells-nigeria-2/
Since the start of 2016, oil prices have swung between $27 and $42 per barrel, about a quarter of the 2008 peak crude oil price of $145. On February 16, oil ministers from Saudi Arabia, Russia, Qatar, and Venezuela agreed to a tentative deal to freeze their production in an attempt to boost prices. This was a characteristic move. For decades, this is how the oil business has worked. Producers carefully control production to try to match supply to demand. But there’s a lag between these decisions and their effects, creating the boom and bust cycles so typical in the business.
In reaction to this freeze, oil prices not surprisingly jumped 5%. But the next day, they promptly fell back below $30. One week later, the oil minister of Iran, a country that had no intentions to join the freeze, and in fact still plans to double its oil production,called the freeze “a joke.”
Nobody really knows what oil prices will be in the future, but we think countries and companies should prepare for oil to hover around $50 per barrel for the foreseeable future. Historically this wouldn’t be shocking at all. In fact, today’s oil prices that we think of as low are actually near the real average price of a barrel of oil for the last 150 years: $35 (2014 US dollar reference year).
What is surprising though, is the fundamental shift we think is happening. The current low oil price environment is not an “oil bust” that will be followed by an “oil boom” in the near future. Instead, it looks as if we have entered a new normal of lower oil prices that will impact not just oil and gas producers but also every nation, company, and person depending on it.
This new normal is the result of the oil business being disrupted.
In the past, it was assumed that conventional oil reserves would be developed by national oil companies and major oil and gas companies to supply virtually all of the world’s oil demand. And it would take them as long as 5 to 10 years to explore, develop, and then bring production to market after investing billions of dollars into new fields. These are some of the basic assumptions behind the model that has guided the oil and gas industry for decades.
But during the past decade, American shale oil and gas producers pioneered a new business model that shattered the incumbents’ approach. U.S.-based shale oil producers have improved their drilling and fracturing technology, and they can ramp up production in an appraised field in as few as six months at a small fraction of the capital investment required by their conventional rivals. As a result, shale oil has soared from about 10% of total U.S. crude oil production to about 50%. That has enabled the U.S. oil industry as a whole to produce roughly 4 million more barrels of crude oil every day than it did in 2008, closing the gap between U.S. oil production and the world’s other two top producing countries, Russia and Saudi Arabia. In January this year, the U.S. lifted the 40-year-old ban on exporting American oil, and the maiden shipments are finding their way to global markets allowing U.S. oil producers to take advantage of markets that provide higher netbacks.
These “unconventional oil and gas producers” in the U.S. are acting as a quasi swing producer, the counterweight to traditional spare capacity held mostly by OPEC heavyweight Saudi Arabia. At the same time several other countries such as China and Argentina are beginning to develop their shale oil and gas resources by adopting the technology and business model as well as building an investment and supply chain ecosystem that supports this development. Saudi Arabia, with its excess capacity, used to be a swing producer that could bring production on- or offline to control market prices.
But now, that leverage is significantly reduced. If the price goes up, the disruptors can counteract the big producers’ decisions to cut production in a matter of months, rather than years. That’s why the big producers’ decision to freeze production in February — completely predictable according to the old industry business model — was problematic. If traditional producers freeze production and allow prices to go up, shale disruptors will become competitive and simply rush in to fill the void and eat up their market share.
So what could a decade of lower oil prices mean?
New challenges for producers
Depending on how nations react, a lower per-barrel oil price could result in a new balance of power in the oil industry. We recently conducted a study to test the impact of sustained $50 oil on oil-producing countries. The results showed that $50 oil puts some producing countries under considerable stress as they grapple with less oil revenue in their national budgets. Venezuela, Nigeria, Iraq, Iran, and Russia could be forced to address substantial budget deficits within the next five years.
Gulf Cooperation Council (GCC) producers such as Saudi Arabia, the United Arab Emirates, Kuwait, and Qatar have amassed considerable wealth during the past decade through cash reserves and sovereign wealth funds. But even these countries could come under stress in the next decade if they continue to follow their status quo.
As a result, some of those better-off-but-still-threatened nations are gearing up to make a break from their past practices. The U.S. shale revolution will be difficult to replicate, but traditional oil producers like Saudi Arabia are diversifying into shale-gas production and other forms of renewable energy so that they can diversify their energy mix and continue to export oil in spite of their soaring domestic demand for power.
Newcomers such as South Africa, China, and Argentina are also getting ready to attempt to develop their reserves in a bid for energy independence. Argentina, which is furthest along, holds about 801 trillion cubic feet of shale gas and 27 billion barrels of technically recoverable “tight” oil reserves. China holds an estimated 1,115 trillion cubic feet of shale gas and 32 billion barrels of oil equivalent. By comparison, the U.S. has 622 trillion cubic feet of shale gas and 78 billion barrels of “tight” oil, according to the U.S. Energy Information Administration.
National oil companies and major oil and gas firms are also starting to change their ways. To compete with shale drillers, conventional oil players are improving their field productivity by focusing their resources on more easily recoverable reserves while integrating their technology, operations and organizations more closely.
Incumbent companies and the nations behind them should expect a rebalance. Countries deeply dependent on traditional oil must diversify their economies, and many have started. Same with the large oil companies. For example, Shell’s acquisition of British Gas makes it hard to even consider Shell a classic incumbent oil company anymore. Their strategy has clearly shifted.
New gains for consumers
At the other end of the spectrum, net oil importing nations are benefiting from a significant boost to their fiscal strength and current account balance. India’s fiscal deficit has improved since the country saved nearly $70 billion on importing crude and other petroleum products in 2015. The government was able to reduce petroleum subsidies and increase its excise duty on petrol and diesel, and can now redeploy that $70 billion into productive efforts.
Energy-intensive industries ranging from farming to airlines are also profiting. Thanks largely to the decline in energy prices, the US airline industry is enjoying operating margins above 15%, according to a recent economic analysis that our firm conducted. That’s a strong margin for any industry, but a particularly big deal for airlines that have struggled in years past to turn a profit at all.
One other interesting issue is what consistently affordable oil means for renewable energy. Many national policies and growth projections on increasing the use of renewables were made under the assumption of very expensive, depleting oil reserves. While this changes the value proposition of renewables and countries may be tempted to reassess their strategies, two trends continue to favor renewables: first, the continuous technological advancement and cost reduction in renewable sources such as solar and onshore wind keeps those sources of energy competitive; second, the commitments of both developed and developing countries to cut CO2 emissions during the recent COP21 summit in Paris would require a balanced energy mix that includes renewables.
We have entered an era of more affordable oil that is likely to last for the foreseeable future. In fact, the disruptive force of unconventional oil and gas has caused the world to shed its concern about “peak oil.” The focus is no longer on running out of fossil fuel in the foreseeable future, but rather who will control its future and how and when will the world transition away from it. The impact of this disruptive force on the earnings of companies that produce oil, and those that consume it, is likely to be substantial and sustained. Leaders of not just businesses, but also countries, must act now to make the best of what will soon be considered the new ways of doing things.
The country has been losing an average of 3,630 mega watts (mw) of electricity due to gas, frequency, line limitations and water management constraints.
Indeed, the power generating capacity slide has in recent times become more pronouced. For instance, the country lost 3,136mw to these constraints on April 11, which increased to 3,497mw the next day, followed by 3,604mw; 4,222mw; 3,611mw; 3,613mw and 3630mw on April 17, 2016.
Worried by the unsavoury trend, the Vice President, Prof Yemi Osinbajo, has called for an expedited repair of the strategic Forcados pipeline to ameliorate the gas supply deficit to power plants in the country.
Speaking during his visit to the Forcados Terminal in Delta State, Osinbajo said President Muhammadu Buhari is concerned about the damage done to the terminal in February and asked him to visit and assess the situation which has been responsible for the recent drop in electricity supply in the country.
“The damage done to Forcados affects our oil earnings but also as important is the power aspect. Forcados is a major source of gas, about 40 per cent of our gas supply is affected leading to the problem of power supply in the country”, he added.
Osinbajo pointed out that few months ago, power supply in the country had peaked at an unprecedented 5000mw, but now has dropped significantly including instances of system collapses, showing that this is “a real problem.”
He said: “I came here on the instruction of the President who is concerned about the damage done to Forcados. I came here to see for myself and underscore the great implication for the nation’s economy. Many people don’t even know that power supply is hampered by what is going on here.”
Meanwhile, the Bureau of Public Enterprises (BPE) has attributed the current electricity challenges in the power sector to lack of over 40 years investment in the industry.
The Acting Director-General of BPE, Dr. Vincent Onome Akpotaire, said that the lack of investment in the sector in the past 40 years had now come to the fore with the privatization of the sector and that immediate solutions would not be achieved within two years of privatization.
He however said with the steps taken by the Federal Government so far to address the prevailing challenges there was a hope of efficient and effective power supply in the country.
Akpotaire maintained that continuous interactions coupled with the commitment of the power operators and the political will of the Federal Government were critical to resolving the emerging challenges in the sector.
The Acting BPE boss who stated this during an interactive session with the Chief Executive Officers (CEOs) of the 11 Power Distribution Companies (DISCOs) in Abuja recently, noted the challenges in the power sector but opined that with concerted efforts by all critical stakeholders in the sector, these were surmountable.
He called for an enhanced synergy between the Successor Companies (SCs) of the defunct Power Holding Company of Nigeria (PHCN) and the Bureau to boost efforts towards actualising the full objectives of the power sector privatisation.
While acknowledging that there were fundamental challenges within the sector, he stated that these were not insurmountable if given time; inter-agencies collaboration; and adequate investment.
He enjoined the SCs to improve on their efforts to honour the performance agreement in the power privatization, stressing that “I am optimistic that with the required synergy, periodic reviews with stakeholders and commitment to the performance agreement, the objectives for the nation’s power sector would be achieved.”
On the prayers sought by the SCs, the Acting Director informed them that the Bureau was not an approving agency but the Secretariat of the National Council on Privatisation (NCP). He said the essence of the interaction was to look at the contending issues with a view to escalating them to the NCP.
Speaking on behalf of the Successor Companies (SCs), the Managing Director of the Ibadan Electricity distribution Company (IBDEC), Mr. John Donnachie, acknowledged the Federal Government’s efforts at managing the issues militating against the sector.
He said that the DISCOs and GENCOs had benefited from such efforts through the National Integrated Power Project (NIPP), Niger Delta Power Holding Company (NDPHC), Nigerian Bulk Electricity Trading Plc. (NBET) and the Central Bank of Nigeria’s (CBN)’s N213 Billion intervention fund.
On the implementation of a cost reflective tariff, the MD. IBDEC said that it was a step in the right direction but that the deadline by the Federal Government to the DISCOs to meter 1million customers within a year was not realistic.
He added that the cap on the DISCOs’ Capital Expenditure (CAPEX) was a hindrance to meeting the deadline.
The IBDEC Chief Executive explained that metering was a capital intensive venture and a key component for implementing the new tariff which only massive investment in the sector would bring Nigeria closer to the Promised Land.
As we’ve discussed before, the great crew change is a real concern in the oil & gas industry. Another obvious concern is the slow pace of technology adoption. The oil & gas industry has historically relied upon rudimentary paper-based technology and really had no need to think outside of the box because companies were too busy developing resources and making money.
Just a year ago, WTI was over $100 a barrel, and since the economics worked so well, there was no real push toward finding efficiencies. And in the oil and gas industry, there was no real precedent for updating products and tools when compared to other industries where the pace of technology adoption is widespread.
Faster, Better, Cheaper is the Norm
The technology industry grew up on a foundation of innovation, and even “leapfrog” products are not really that surprising. Whether it is a consumer product, network security infrastructure or semiconductors, the technology industry is well-versed in the concept of obsolescence, and there is the expectation that something new and better will always be just around the corner.
For example, after Ultra HD 4K televisions were announced, many consumers were either buying them or had a plan to buy one when prices dropped. Suddenly, early adopters began abandoning 1080p and retailers dropped prices on the current, but now “old” technology, to help move inventory and introduce televisions that still did not have content to support it. What? That’s right, 4K content is rare, so even if you have this high-end piece of gadgetry in your home entertainment system, companies are still working on delivering something you can actually watch in 4K.
In this tech-frenzy world, consumers and businesses alike will always eagerly await the latest shiny object. From smart phones & wearables to virtual meeting rooms to high performance computing platforms, new technology offerings can provide a competitive edge, enhance productivity and sometimes most importantly, amp up the cool factor.
As the nation continues to struggle with constant blackouts and the rancour between the organised labour and the Ministry of Power heightens over electricity tariffs and other issues, Solomon Elusoji writes about the prospect of reaching the milestone in electricity megawatts by the President Muhammadu Buhari-led administration, if the execution of Phase II of the National Integrated Power Projects (NIPP), which covers the construction of 11 hydro dams in Northern Nigeria to add and diversify the country’s power generation, transmission and distribution capacities, is accorded urgent priority
On the morning of April 5, Emmanuel Idibe, a 27-year-old writer in Lagos, switched on his soon-to-be-dead phone and put up a post on Facebook. The post narrated his dejection at not being able to work due to an incessant lack of power supply.
“I woke up as a writer, but my tools, I cannot use them,” he wrote. “The government won’t give me light to power on my laptop and think.”
Emmanuel’s case is not a peculiar one. Nigeria’s power problems have dragged on for decades, destroying fertile, successful industries and shooing away profitable investors.
It is a cancer that continues to grow, despite the billions of dollars that have been devoted to curing it. On March 31, around 1pm, data from the country’s System Operator showed that no power generation company in Nigeria produced a single megawatt of electricity.
Recently, there has been a face off between the Nigerian Labour Congress and Mr. Babatunde Fashola, the Minister of Power, Works and Housing, over the increase in electricity tariffs.
This has triggered a huge debate on the exact improvements that have been made in the power sector since 2005, when the National Integrated Power Projects (NIPP) was conceived, and since the establishment of the Niger Delta Power Holding Company Limited (NDPHC), a special purpose company owned by the three tiers of government tasked with the responsibility for implementation of the NIPP.
The NIPP was initiated in response to the deplorable state of power infrastructure and the inappropriate framework for private sector investment in the Nigerian electricity industry pre-2005. The scope of the NIPP covers the entire value chain in the power sector, namely generation, transmission and distribution, including building from the scratch a national gas infrastructure to power 10 gas-fired power plants across the country.
The Niger Delta Power Holding Company (NDPHC) was incorporated in 2005 as the Special Project Vehicle (SPV) for the NIPP. The Nigerian National Petroleum Corporation (NNPC), the Nigeria Gas Company (NGC) and the defunct Power Holding Company of Nigeria (PHCN), among others, were an integral part of the NIPP project development.
The NDPHC is domiciled in the Presidency and its budget is drawn by a high-power board whose chairman is the Vice President of the Federal Republic of Nigeria and has, as statutory members of the board, six state governors and four federal ministers.
The NIPP has been funded via the Excess Crude Savings Accounts and its capital funding sum till date is $8.46 billion. Disbursement of fund to the NDPHC funds is ratified by the Federal Government and the Houses of Assembly of the 36 states of the Federation.
Before 2005 and the advent of the NIPP/NDPHC, Nigeria had a transmission capacity of 4,495 Kilometre (km) on its 330kv lines. The country’s transformer capacity on the 132/33kv band was 5,700MVA and on the 330/132kv Transformer Capacity, Nigeria had 5,300MVA.
In terms of distribution projects before the NIPP/NDPHC came on stream, Nigeria, for instance, had 33/11KV sub-stations of 8,148MVA and 33KV and 11/0.41KV substation with 32,000MVA capacity.
And before the NIPP/NDPHC, Nigeria could barely generate 2,000MW of electricity. The country neither had any gas-fired power station nor even the gas infrastructure to generate electricity.
However, with the formulation of the NIPP and its implementation by the NDPHC over a mere 10-year period, Nigeria’s transmission capacity on its 330Kv lines increased to 6,932Km or 46 %.
In the same period, the NDPHC increased the country’s transformer capacity on the 132/33Kv band to 11,118MVA or by 42% and today Nigeria’s transformer capacity on the 330/132Kv band is 11,590MVA, an increment of 93%.
The NIPP/NDPHC has also had a huge impact on Nigeria’s distribution infrastructure in the period under review. Today, Nigeria has 33/11KV sub-stations of 11,649MVA, up by 43% and 33KV and 11/0.41KV substation with 84,170MVA capacity, up by a mammoth 163% increment.
Under the NIPP and in only 10 years, the NDPHC has built 10 gas-fired power stations, an average of one power station per year, with a combined installed capacity of 4,528.5MW. These are Alaoji, Benin, Calabar, Egbema, Gbarain, Geregu II, Ogorode, Olorunsogo II, Omoku II and Omotosho II power plants.
The NIPP/NDPHC have also built for Nigeria gas pipelines, gas metering and regulating stations grouped into 7 lots for the delivery of natural gas to these power plants; Within 10 years, the NDPHC, which is headed by Managing Director, Mr. James Abiodun Olotu, has also expanded the country’s power transmission capacity through 25 lots as follows: 5,590MVA of 330/132Kv transformer capacity; 3,313MVA of 132/33Kv transformer capacity; 2,194km of 330Kv lines; 809km of 132kv lines; 10 new 330Kv substations; 7 new 132Kv substations; and expansion of 36 existing 330Kv and 132KV substations.
In the third leg of the power chain – distribution – the NDPHC, under Olotu, has executed 296 distribution projects in 43 lots spread over every state of the Federation, which has given the country 3,540MVA injection substation capacity; 2,600Km of 11Kv lines for HVDS; 25,900 CSP distribution transformers and 1,700km of 33Kv lines.
The NIPP/NDPHC has also delivered on the provision and integration of grid-wide telecommunication and Tele-protection infrastructure.
Eight of the 10 power plants are fully completed with installed capacity of 3,696 MW and the last two – Egbema and Omoku, 563MW – are on course for completion and commissioning by the fourth quarter of this year.
Presently, the NDPHC-built power plants contribute an average of 900MW to the national grid, with about 820MW idle for reasons of evacuation capacity but always available for immediate deployment.
Because of the country’s harrowing experience of inefficiency under the government-owned National Electricity Power Authority (NEPA, now defunct), initiators of the NIPP thought it wise to include a divestment plan in the power sector reform framework.
However, rather than pulling out completely and leaving the Nigerian People at the mercy of private sector operations in this critical sector, the three tiers of government have only divested 80% of their equity in one leg of the tripod only – the NIPP Generation Assets – to private investors.
To also make room for private sector participation and efficiency in the power distribution sector, the three tiers of government have sold their distribution assets to private distribution companies (DISCOs), with $1.5 billion recoverable from the DISCOs over a period of 10 years.
The three tiers of government still have intact their transmission assets (historical cost $2 billion as at December 2015) and gas assets (historical cost $500 million as at December 2015), which equities they would divest to the private sector in the future to make more profits from their initial joint $8.46 billion investment in NIPP Phase I.
What these translate to is that under NIPP Phase I, the three tiers of government have invested $8.46 billion to expand Nigeria’s generation, transmission and distribution capacities as well as build a gas infrastructure to power 10 new gas-fired power plants from the scratch, all under 10 years. In the process, the NDPHC has recouped$7.1 billion $8.46 billion investment out of only selling 80% of government shares in generation only. The proceeds from this divestment in the generation assets – $7.1 billion – is to be reinvested in NIPP Phase II.
Since the total assets of the NIPP currently stand at $11 billion, it therefore means that the NDPHC has turned in at least $2.5 billion in profit and assets for the country in 10 years. Only the oil sector matches this level of return on investment for government in the period under review.
Selling off government’s 80% equity in the NIPP generation assets only has ploughed back $7.1 billion – out of the country’s $8.46 billion investment in NIPP Phase I – into the joint coffers of the federal, state and local government. Rather than squander the $7.1 billion on other government projects in other sectors, the three tiers of government agreed under the power sector reforms programme to reinvest these huge sum in expanding the country’s power infrastructure under NIPP Phase II.
The second phase of the NIPP aims to change the country’s power infrastructure in other locations not fully captured under the first phase of the NIPP, especially in the northern region.
Candidate projects under NIPP Phase II are as follows: 43 critical transmission projects to resolve transmission bottlenecks; 51 transmission projects to improve wheeling capacity to 12,000MW; 31 other transmission projects as foundation for increase of capacity to 16,000MW plus communication and national control centre, etc; Large hydropower – Mambilla, Gurara, Itisi with total capacity to generate 3,450MW; Small hydropower at 10 sites in the north to generate 83.25MW;
Already, the NDPHC has received proposals from the State Grid of China, AK-AY and other interested foreign investors for partnership and financing of the NIPP Phase II projects.
The clear achievements recorded under the NIPP by the NDPHC were attained in spite of the infamous “Nigerian Factor” which raised its ugly head all the way and continues to assail the process 10 years on. However, the NIPP gains are also testaments to the often maligned “can do” spirit of Nigerians, including those driving the NIPP process, especially at the Presidency, the Senate, state and local governments, the Ministry of Power, the NDPHC and the Bureau for Public Enterprises (BPE).
This momentum must be sustained despite the change of personnel at the federal level, many states and in the ministry of power and the BPE.
Currently, the NIPP/NDPHC grapple with a number of challenges, which all three tiers of government and other stakeholders should close ranks to solve in order to move the power sector forward for the betterment of the country.
These challenges include inadequate gas for full commercial operations; inability to execute long-term General Service Administrations (GSA) and Power Purchase Agreements (PPA); partial payment of energy invoices, leading to the NDPHC alone being owed over N77 billion as at the end of November 2015; litigation in respect of bids for Alaoji, Gbarain and Omoku power plants; and NNPC/NGC plans to divert gas on the western axis and 240mmscf to Omotosho and Geregu.
There are also investors’ concern in the sector bordering on credit enhancement for Nigerian Bulk Electricity Trading (NBET); put call option agreement with party acceptable to lenders; 100% divestment of NDPHC equity; misalignment between term of PPA and GSA; possible review of bid to reflect delays in acquisition; impact of regulatory risks and naira devaluation.
Others are policy inconsistencies, which has been the bane of the Nigeria Electricity Supply Industry (NESI) for far too long; Generation Companies (GenCos) and the industry in general are concerned about the capacity for transmission and distribution, whereas the investment opportunity presented on the platform of the NDPHC are good options for resolving these infrastructure deficit; and the monthly revenue gap of N20 billion needs to be closed irreversibly as a matter of urgency since efficiency and revenues drive the power industry; increasing acts of vandalism on NIPP/NDPHC facilities, especially bombing of gas pipelines and other power infrastructure in the Niger Delta.
Still, despite all these, the NDPHC plans to accomplish a number of projects under the NIPP. These include: the commissioning of Gbarain, Egbema and Omoku power plants; contracting of O and M services for completed power plants; completion of all distribution projects captured under the original scope of the NIPP; completion of prioritised transmission lines and substations, thus improving evacuation capacity and grid stability; closing transaction for the divestment of 80% equity in Omotosho and Geregu generation companies; review and preparation of Project Documents – designs, bankable project documents, etc) for candidate projects under NIPP Phase II.
To achieve these and more, stakeholders in the power sector look up to the Ministry of Power leadership of Mr. Babatunde Fashola, for policy guidance and leadership in the sector. They suggest that the Ministry engage all state governments with a view to collaborating on the acquisition of the right of way compensation for the NIPP. They also want the Ministry of Power to create a “one-stop point of contact” for investors in the power sector because many investors are currently feeling frustrated by the complexity of the industry.
While some do not agree with plans by the Federal Government to borrow in order to finance the 2016 budget, stakeholders in the power sector, however, are unanimous in asserting that taking loans – domestic or foreign – to build the country’s power infrastructure is the way to go, as the NDPHC has demonstrated that borrowing to build power infrastructure is self-liquidating and profitable for the country in both the long and short terms.
Oil and Gas facilities are always at risk of corrosion or erosion and the subsequent risk of failure, which may impact the integrity of the facility, the environment or personnel. The consequential financial, operational and reputational damage can be serious.
Furthermore periodic inspections do not by nature deliver continuous condition data which can be correlated with corrosion drivers or operational use to enable understanding of the impact of process decisions and operations on the integrity of the facility. Manual acquisition of wall thickness data is also frequently associated with repeatability limitations and data logging errors.
Permanently installed monitoring systems show that where corrosion or erosion are taking place, the rates vary, depending on the operating conditions. To move beyond simply knowing whether corrosion or erosion are taking place to understanding what is driving them is thus essential to be able to correlate thickness data over time with process and/or other parameters.
While there are various established techniques for the periodic assessment of process equipment integrity they are not without risk to personnel. The accessibility of locations and the marine environment also affect the feasibility of manual inspection.
A major challenge in the offshore industry is the effective monitoring of assets while minimising the exposure of personnel to challenging and potentially hazardous working environments.
Asset and integrity managers are utilising continuous corrosion monitoring systems, as a critical integrity and safety tool, to monitor both corrosion and erosion, to increase reliability and to reduce personnel requirements offshore.
The Unique Permasense system
Permasense provides complete sensor-based solutions, based on wall thickness measurement, for continuous corrosion monitoring in inhospitable and inaccessible environments. The systems can be configured to meet the demands of all offshore facilities, particularly gas platforms and FPSOs and their unique capabilities provide very significant benefits to users.
At the core of all Permasense systems is an ultrasonic sensor mounted on stainless steel waveguides. The waveguides guide the ultrasonic signals to the pipe/vessel surface and back and isolate the sensor electronics from damaging temperature effects. The sensors are battery powered (lasting up to 8 years), and transmit their data by wireless and therefore require no cabling.
In the mesh system, suitable for facilities with a radius of up to half a kilometre, each sensor communicates to other sensors and a gateway (base station) to form an independent mesh or wireless network. Each sensor can act as a relay, or repeater, enabling the network to span hundreds of metres from the gateway.
Highly accurate data to desk
With this system very accurate data is continuously streamed to users, which provides a valuable insight into the impact of operating parameters on corrosion/erosion activity. Moreover, the data highlights whether prevention or mitigation strategies are effective.
Sophisticated data management and viewing software is an integral part of the Permasense solution to support the interpretation of data provided from continuous monitoring. The system’s data management and visualisation suite, Data Manager, offers an overview of all locations monitored, direct to desk.
With drill-down functionality, the latest version of Data Manager, offers additional analysis features including rates over various periods of time, remaining wall thickness to retirement and seven-day average measurement.
Automatic classification of data by locations indicating where corrosion rate thresholds – as determined by the user – have been exceeded allows a quick and easy determination of where corrosion activity is occurring across the facility.
Newly-improved measurement checks ensure excellent data validation and simple diagnostics. Functionality and display features can be easily tailored by the user. The new full waveform (ultrasonic a-scan) viewing feature allows manual data interpretation, for example at those locations where the data indicates short-term changes in corrosion rate.
Permasense has also recently designed solutions for customers tailored to specific monitoring requirements and operating environments. This is possible because of the multiple sensor and gateway variants that Permasense now offers.
Such modular systems – bespoke solutions – enable continuous corrosion monitoring to be integrated into existing systems. This is a result of Permasense’s significant ongoing commitment to development to enable system – hardware and software – compatibility with an ever-increasing range of user system configurations.
Typical location areas
These sensors can be installed in any location but typical locations for sensor installation are on elbows, known thin spots, and areas of particular turbulence. Furthermore, older units, particularly those operating outside of design specification, are especially worthy of attention.
The sensors can be deployed on wall thicknesses up to 150mm and are typically deployed on process equipment, production, transfer and flow lines.
Most service temperatures typically do not exceed 60°C, but compressor discharge temperatures can reach up to 190°C in operation.
Permasense has already supplied systems for offshore gas production platforms.
The sensors are installed on the platform above water level with the gateway situated in the control room on the platform. Data can then be viewed remotely from the user’s office onshore.
The Permasense system can be installed anywhere on FPSO topsides (and potentially below deck, utilising a cabled version of the sensors).
The systems provide continuous corrosion data to the users from all sensing points, particularly those remote and difficult-to-access locations which would be impossible to monitor using conventional systems.
The drivers of corrosion and erosion – process conditions, crude constituents and abrasive solids – and the inhibitors to hold corrosion rates in check, are familiar, but understanding the levels and rates at which damage may be occurring is an ongoing challenge. Sand erosion in these environments is often a major issue, for instance on platform risers. The Permasense system gives a direct and early measurement of such erosion.
Sand erosion is a specific area where a direct wall thickness capability enables users to remotely monitor erosion in real time and relate the measurements to their respective process operations. These systems are therefore being utilised on offshore gas platforms, particularly unmanned facilities, where the very accurate real time measurements are used to modulate processes to maximise production during potential high wear conditions.
Permasense has already supplied systems for FPSOs and offshore gas production platforms. Users have a more accurate, and real time, understanding of corrosion and erosion rates.
The real-time provision of data allows potential corrosion hotspots to be remotely monitored and at time intervals of the operator’s choosing, from as frequent as every few minutes if necessary. This insight allows asset managers to make more informed decisions to the benefit of integrity, safety and operating costs.
It allows operators the freedom to choose monitoring locations irrespective of how inaccessible they are, thanks to the use of wireless networks for data retrieval.
This innovative solution for real-time monitoring has been tried and tested in some of the most inhospitable oil and gas environments, and continuously delivers high integrity data, reliably and securely. The risk to personnel in collecting data is eliminated, together with the cost of offshore visits.
The significant benefits provided by these systems reduce danger to personnel, increase safety and integrity, and improve operational performance and reliability.