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Nigeria’s Forte Oil awards $90m Power plant contract to Siemens Nigeria … acquires100 petroleum product distribution trucks

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 JOHANESBURG-FORTE Oil Nigeria Plc, a major Oil marketing Company in Nigeria with diverse interest in the energy industry has awarded a 90 million dollars contract to Siemens Nigeria for the total overhaul of 414 megawatts Geregu Power plant in Kogi state, As part of measures taken to ensure adequate distribution of petroleum products in the country, Forte oil an indigenous oil company in Nigeria has unveiled 100 out of the 200 petroleum tanker trucks.
The Chief Executive Officer of Forte Oil, Mr. Akin Akinfemiwa who disclosed this in Lagos while unveiling the trucks said the estimated value of them falls within the range of about N2.5 billion.
‎Akinfemiwa said the successful launch of the first barge of the truck was made possibly by the dynamic team of Forte oil, effective and consensus building and complete confidence in the continuous investment in the down stream petroleum sector.
Financed by Heritage Bank, Forte Oil CEO explained that the first barge is expected to boost customer service through effective and efficient distribution of petroleum products across the country noting that ‘customer is the kings’
Commenting on the efforts put in place by ‘Team Forte’ Akinfemiwa said ‎”am celebrating a great dynamic team which is ‘Team Forte’ starting from the chairman, board of directors, the executive management team, the management team and all the staff of Forte oil. 
 
“Without them, what we are celebrating today will not be possible because if you look back in 2012 down to today, we have done so many things and without these dynamic team, nothing will be successful. 
“The second thing we are celebrating is ‘Effective and Consensus Building’. What this means is that the successful 100 trucks is as a result of lots of bargain, lots of understanding, lots of negotiations. What am trying to say is that if you have an effective consensors building, you can bring all parties involve on a table and achieve what you want to achieve.
“The third thing we are celebrating is the confidence in the continuous investment in the down stream petroleum sector at a time when investors are taking a walk. It takes a lots of confidence to invest 200 trucks and 100 of them are ready, we have seen loss confidence in the sector, some no longer commit funds in the sector.
“And at a time when the sector is undergoing transform, you can rarely see a company doing this.
“So it means we are looking at a greater tomorrow, we want our transporter to believe in us much as we believe in the sector so that more trucks can come and revenue earned from it.”
Akinfemiwa also disclosed that adequate training has been given to the truck driver that will guarantee the safety of lives, properties and the trucks.
According to him, the training of the truck drivers indicate that health and safety is part of the company’s key component of its transformation strategy.
He also explained that impact of the truck investment on it stock market price means that more customers will come on board which will drive more revenue and translate into roburst returns of dividend to share holder. He added that when return and dividend are high, the company’s share price will be high.
Forte oil CEO also explained that although the company has lost its top spot ‎as the highest retail outlet in the country, it is looking at volume not number.
“Our acquisitions are strategic in the sense that there is no need of having 700 stations and dispensing one million liters for example but we will rather have 500 stations that will give us two million liters.
“So we want a strategic acquisition that will increase volume and ultimately it will drive our operating and maintaining of these station,” he said.
Commenting on its power sector investment, Akinfemiwa said “what we have done to our investment is that we have awarded a contract to Besa Siemens approximately what I will say as $90 million and it is for the major overhaul of the Geregu power plants.
“Once the major overhaul is carried our in Geregu power plant, and the inception of the transition of  electricity market, power will contribute to approximately 40 percent   ‎and it is something we look forward to as a business and it is something that is expected to drive our revenue and ultimately our share holder return or value for a meduim term.
“The overhaul has started and it is going to last for 18 months ‎but we are trying to shut it down to 12-15 months. We bought a new plant, we are not expanding it but consolidating on what we have to be able to get the kind of result we need.
“Gas is till subject of the inception of the electricity transition market. We have not been able to sign the appropriate GSA and the GTA for us to guarantee maximum supply of gas to the plant . We are not able to sell everything that we generate because of the existing market dynamics in the market, once the TEM is introduced, we will then call for enough gas for us to generate inline with GTA. We are still looking at 414mw install capacity.
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Nigeria To Face Increase In Electricity Tariffs From July

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According to reports, Nigeria’s population may face more challenging times ahead as electricity tariffs are projected to increase by over 40 percent in the near future.

 

This rise in tariffs could ultimately result in the elimination of all energy subsidies in the country.

 

Currently, the electricity sector relies on a monthly subsidy of approximately N50 billion, stemming from a shortfall in revenue.

 

The tariff hike, scheduled to take effect from July 1, will pose another significant test for President Bola Ahmed Tinubu’s administration and its ongoing market reforms.

 

The government has already taken steps to remove subsidies on Premium Motor Spirit (PMS) and implemented a floating exchange rate for the national currency.

 

These decisions have added complexity to the price-setting process of the Nigerian Electricity Regulatory Commission (NERC) and its 2022 Multi-Year Tariff Order (MYTO).

 

Despite power sector players failing to meet the target of supplying a minimum of 5,000 megawatts, even after signing contracts with the Nigerian Electricity Regulatory Commission (NERC), the current Service Based Tariff (SBT) is based on an exchange rate of N441/$ and an inflation rate of 16.97 percent.

 

According to NERC’s directives in 2015, the average tariff for distribution companies (DisCos) and different categories of end-users was N25 per kilowatt, as per Order 198/2020, which came into effect on September 1, 2020.

 

However, in the MYTO for 2022, the average tariff increased to N60 per kilowatt across all customer categories, and in the most recent update, it stands at N64 per kilowatt.

 

The determination of the 2015 tariff relied on a foreign exchange rate of N198.97/$, which increased to N383.80/$ in 2020 and further to N441.78/$ in 2022. In terms of inflation, the 2015 MYTO utilized an 8.3 percent rate, which rose to 12 percent in 2020 and reached 16.97 percent in 2022.

 

Currently, the inflation rate stands at 22.41 percent, and experts predict it could reach 30 percent by the end of June, considering the floating of the naira and the removal of subsidies on Premium Motor Spirit (PMS).

 

The tariff determination process takes into account various factors, including the significant metering gap of over seven million, gas prices, losses within the system, and the actual generation capacity. These elements play a role in determining the final tariff.

 

As anticipated, NERC had projected that the tariff for July 2023 would eliminate subsidies and introduce increases to the previously frozen tariff bands D and E.

 

These adjustments were intended to raise the bands from N54.59/kilowatt to N62.16 for band D and from N48.37/kilowatt to N61.16 on average. Moreover, the average increase across all bands was expected to reach N67/kilowatt.

 

However, due to the ongoing floating of the naira and the significant inflationary pressures, it is now projected that the new average tariff will need to be approximately N88/kilowatt for the power sector to recover its costs.

 

According to energy lawyer Madaki Ameh, the continuous and frequent increases in power tariffs are akin to a form of blackmail against electricity consumers.

 

Amen said “Indexing the cost of electricity on the dollar is a huge mistake because most of the inputs for electricity supply are local. The DisCos are also holding Nigerians to ransom by failing to increase the supply base, thereby spreading the tariffs across a broader spectrum of consumers to reduce the unit cost of electricity.”

 

He insisted that as long as there remain many unmetered consumers and many others not connected to the grid at all, the few consumers on the grid would continue to be subjected to unjust tariffs, which are not reflective of the quality of service delivered.

 

Ameh hoped that the signing into law of the new Electricity Act would mark “the beginning of light at the end of the long tunnel of inefficient and epileptic power supply in Nigeria.”

 

Segun Ajibola, the former President of the Chartered Institute of Bankers of Nigeria (CIBN) and a professor of Economics at Babcock University, highlighted that there remains a gap between the cost of electricity and the value it provides in exchange.

 

“Nigerians are still struggling to keep pace with the cost of energy for business and household use. If the electricity tariff goes up as envisaged, the question remains if there will be value for the quantum of electricity so paid for.

 

“The truth remains that if electricity supply is constant, of the right quantity and quality, the envisaged upward review in the tariff will be gladly absorbed by the populace,” he said.

 

Lanre Elatuyi, an Electricity Market Analyst, expressed that the recently implemented tariff rate would have significant implications. He emphasized that the devaluation of the Nigerian currency poses a major challenge for companies with dollar-denominated loans to repay.

 

He said “They will need more naira today to buy a dollar. They need to manage their exposure to foreign exchange risk. Even operators of hydro plants pay their concession fees in dollars. So, wholesale electricity price will be adjusted upward and this will get to the end users’ tariffs too.”

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Buhari’s Gov, State Governors Secretly Sold 5 Power Plants – Shehu Sani

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Senator Shehu Sani, a prominent Nigerian lawmaker has accused President Muhammadu Buhari’s government and state governors of secretly selling five power generating plants without disclosing the utilization of the funds received.

 

He disclosed this in his Twitter handle on Monday.

 

Senator Sani, known for his outspoken nature and activism expresses his concerns over the alleged undisclosed sale of the power plants.

 

He claimed that the government, in collaboration with state governors, had carried out the transactions without informing the Nigerian public about the purpose of the funds acquired from the sale.

 

The post reads “Buhari’s Government in collaboration with the State Governors quietly sold the five power generating plants without telling the country what the money was used for.

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Nigeria’s VP Inaugurates 240MW Afam 3 Fast Power Project

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The Vice President of Nigeria, Prof. Yemi Osinbajo, has inaugurated the Afam 3 Fast Power 240-megawatt turbine project in Rivers State.

 

The project, which is a subsidiary of the Transcorp Group located in Oyigbo, on the outskirts of Port Harcourt in the state, was unveiled during a ceremony that took place on Tuesday.

 

The event, which was attended by several dignitaries, including the Chairman of Transcorp Group, Tony Elumelu, and other top officials, saw the Vice President arriving at the venue in a chopper at exactly 11:35 am.

 

Upon his arrival, he was escorted into the premises where he officially inaugurated the project.

 

During his speech at the event, he disclosed that the acquisition of the project was approved by the National Council on Privatisation (NCP) and the acquisition cost was ₦105.3 trillion.

 

Osinbajo further emphasized that the successful completion of the project is a significant breakthrough in Nigeria’s power sector.

 

In his address, Osinbajo said, “In 2020, electricity subsidies reached N584 billion, but service-based tariffs have led to a doubling of collection in the Nigeria Electricity Supply Industry from N40 billion in 2020 to N80 billion in the first quarter of 2023.

 

“If this trajectory continues, the Nigeria Electricity Supply Industry will be able to pay for itself. Our administration has also created programs for off-grid for electrification. Rural Electrification Agency now has the capacity to provide electricity supply on a first-class basis.

 

“We are on track to electrify all Nigerians in the next decade. However, we will not make progress if our gas supply does not improve. The gas supply challenges are hampering improvements.”

 

He further lauded General Electric, the National Council on Privatization (NCP), and the host communities for their contribution to the completion of the Afam 3 Fast Power 240-megawatt turbine project in Rivers State.

 

Osinbajo highlighted that the successful completion of the project will significantly increase the country’s power supply capacity, leading to a better quality of life for Nigerians.

 

In November 2020, the federal government and the Transcorp Power Consortium signed a share sale and purchase agreement in relation to Afam Power Plc and Afam 3 Fast Power Limited.

 

The National Council on Privatization approved the privatization of the Afam Power Plant back in August 2017, which triggered a competitive bidding process involving 12 prospective investors.

 

After careful consideration, Transcorp Power Consortium emerged as the preferred bidder with a combined offer of N105 billion.

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