Business
Cement companies in Nigeria decries shortage of power supply
ABUJA-The Chairman of the Cement Company of Northern Nigeria Plc, Alhaji Abdulsamad Rabiu, has decried the high cost of electricity to power production equipment in his factory.
Rabiu, who spoke with newsmen on the sideline of the company’s 35th Annual General Meeting, AGM, in Abuja, regretted that despite the high cost, the company is finding it difficult to access the Low Pour Fuel Oil, LPFO, to power the plant. He said,
“Energy is a very important variable and as you all know, the cost of energy to us is very high and it is ourbiggest expense even though we are located in a unique area where we enjoy some advantages.“Our expenses on energy are becoming a bit of an issue to us and not just the price but the availability because we don’t get LPFO from the refinery every day and for us to import LPFO to our plant is prohibited.
That is why we depend on Kaduna refinery to have LPFO and that is becoming a very critical issue due to the cost on a monthly basis which is about N600 million.
“What we are looking to do now is to convert to coal, and if we are able to import pet-coke which is inexpensive for now and blend it with our local coal, which has high sulphur concentrate because we may not be able to just use the local coal unless we blend.
“With that, the only challenge that I see here is transportation of the pet-coke from any port in Nigeria to Sokoto;that can be quite expensive but I think it is cheaper for us to convert to coal and hopefully by next year. “We will be able to divert parts of our energy to coal otherwise it will be very challenging for us, as Ashaka which is our biggest competitor in that part of the country has already converted to coal and they are doing very well with it. We just have to otherwise we will not be competitive and we are not far from each other.
”On expanding the plant’s capacity to 1.5 million tonnes, he noted that, “there are a lot of talks on expanding the plant because what we have even though it is doing very well is not enough.
We have an installed capacity of 600,000 tonnes, which we are doing now in the plant that is about 30 years old and still producing at that capacity. “What we are doing is that we will look at all the options on the table to continue with the expansion plan.
At a time it was very prohibitive for us to actually go to the bank and borrow money because of the high rate of interest. In any case, the kind of money we are asking for will be very challenging to get from the banks, which is about $300 million.
“We looked at the options and decided that it was a no go area because we cannot borrow $300 million at an interest rate that will eventually result to $50-60 million per annum and the project will take about three years to complete.
“The second option was to go to the market but the market at that time was very dull and right issues would have been impossible. But then again, some of our shareholders were not happy and rightfully so because the share prices were not doing well, and secondly it is in a state where nobody knew what was going to happen.”
Savannah Energy has shared a trading update on its Nigerian operations and other markets in Africa, including up-to-date cash collections in its Nigerian business.
According to the update, made available on Thursday in Lagos, its gross production in Nigeria averaged 23.1 Kboepd for FY 2024, broadly in line with the prior year’s 23.6 Kboepd, of which 88% was gas (FY 2023: 91%).
On the update, CEO of Savannah Energy, Andrew Knott, said, “I am pleased to provide a FY trading update which demonstrates the continued progress we have made in 2024, a year which saw the highest level of cash collections ever recorded by our Nigerian business. 2025 is expected to be an exciting year for our Company: we have a large planned operational programme in Nigeria which is anticipated to enhance both our oil and gas production levels and capacity; we intend to progress our R3 East oil development project in Niger; we continue to pursue key acquisitions in the upstream oil and gas space; and we continue to seek to build our power business.
“Fundamentally, Savannah remains unequivocally an “AND” company, seeking to deliver strong performance both for the short AND long term across multiple fronts, and pursuing growth opportunities in both the hydrocarbon AND power sectors.”
The update It also shows that it generated a Total Income of US$393.6 million in 2024, compared to FY 2023’s US$289.8 million. This consists of Total Revenues of US$258.7 million and Other operating income of US$134.9 million.
The report also shows that Savannah’s FY 2024 Total Revenues were ahead of the previously issued financial guidance of greater than US$245 million, while FY 2024 financial guidance is reiterated for Operating expenses plus administrative expenses at ‘up to US$75 million’. The company expects its FY 2024 capital expenditure to come in lower than planned (previously guided at ‘up to US$50 million’) due to the phasing of spend.
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According to the update, Savannah’s cash collections in 2024 amounted to US$248.5 million, a slight increase from the US$206 million it received in 2023. The report further shows that its cash balances as at 31 December 2024 stood at US$32.6 million, compared to the 31 December 2023 figure of US$107.0 million.
The report shows that the company’s midstream subsidiary, Accugas Limited, had as at 31 December 2024 drawn down on its NGN332 billion of the NGN Transitional Facility, with the resulting funds being converted to US$, which, along with cash held, was used to partially prepay the existing Accugas US$ Facility, leaving a balance as at 31 December 2024 of approximately US$212.3 million.
The report also provided new updates on Accugas’ US$45 million Uquo Central Processing Facility (“Uquo CPF”) compression project in Nigeria, noting that its commissioning which will enable the expansion of gas production in the medium term is well underway.
The report highlighted the progress being made in the procurement process of long lead equipment in Nigeria for a potential two-well drilling campaign on the Uquo Field in H2 2025, with an additional gas development well expected to add up to 80 MMscfpd of supplemental production capacity and a potential exploration well targeting an Unrisked Gross gas initially in place (“GIIP”) of 154 Bscf (25.7 MMboe) of incremental gas resources.
The update shows that progress is also being made in the planned Savannah acquisition of Sinopec International Petroleum Exploration and Production Company Nigeria Limited, whose principal asset is a 49% non-operated interest in the Stubb Creek oil and gas field (“Stubb Creek”), with regulatory approval and completion being targeted in Q1 2025. Following the completion of the acquisition, Savannah intends to commence an expansion programme which is anticipated to increase Stubb Creek gross production from an average of 2.7 Kbopd in 2024 to approximately 4.7 Kbopd.
In Niger, Savannah continues to seek to progress its 35 MMstb (Gross 2C Resources) R3 East oil development in South-East Niger, while it continues to push for a potential alternative transaction structure to acquire a material stake in producing oil and gas assets in South Sudan as previously announced on 20 December 2024.
On the renewable energy front, the update shows that Savannah has up to 696 MW of renewable energy projects currently in motion, including the up to 250 MW Parc Eolien de la Tarka wind farm project in Niger and the up to 95 MW Bini a Warak hybrid hydroelectric and solar project in Cameroon. A firm believer in Africa’s transition to renewable energy, Savannah continues to target a portfolio of up to 2 GW+ of power projects in motion by the end of 2026.
The Nigerian Economic Summit Group (NESG) has projected that the country has the potential to achieve a 5.5% growth in Gross Domestic Product (GDP) if critical policy reforms are sustained.
This was disclosed on Thursday during the launch of the NESG’s 2025 Macroeconomic Outlook report.
Speaking at the event, the Chief Economist and Director of Research & Development at NESG, Dr. Olusegun Omisakin, highlighted the need for more efficient policy implementation to unlock Nigeria’s economic potential.
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“We believe at the optimal level, if we embark on more efficient policy reforms, the Nigerian economy has the potential, the GDP to end up at 5.5 per cent, and we believe that this is achievable,” Omisakin stated.
More to follow……….
The Central Bank of Nigeria (CBN) has announced the release of the Nigerian Foreign Exchange (FX) Code, a set of guidelines designed to promote ethical conduct among authorized dealers in the country’s FX market.
In a statement, the apex bank disclosed that the official launch of the Code would take place on Tuesday, January 28, 2025, at the CBN Head Office Auditorium in Abuja.
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“The Central Bank of Nigeria has approved the release of the Nigerian Foreign Exchange (FX) Code as a guideline to the banking industry to promote the ethical conduct of authorised dealers in the Nigerian Foreign Exchange Market,” the statement read.
The introduction of the FX Code is expected to enhance transparency, accountability, and professionalism within Nigeria’s foreign exchange ecosystem, aligning it with global best practices.
The event is anticipated to attract key stakeholders in the financial and banking sectors, as well as representatives from authorized FX-dealing institutions across the country.
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