Another New Post

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.

Sed ut perspiciatis unde omnis iste natus error sit voluptatem accusantium doloremque laudantium, totam rem aperiam, eaque ipsa quae ab illo inventore veritatis et quasi architecto beatae vitae dicta sunt explicabo. Nemo enim ipsam voluptatem quia voluptas sit aspernatur aut odit aut fugit, sed quia consequuntur magni dolores eos qui ratione voluptatem sequi nesciunt. Neque porro quisquam est, qui dolorem ipsum quia dolor sit amet, consectetur, adipisci velit, sed quia non numquam eius modi tempora incidunt ut labore et dolore magnam aliquam quaerat voluptatem. Ut enim ad minima veniam, quis nostrum exercitationem ullam corporis suscipit laboriosam, nisi ut aliquid ex ea commodi consequatur? Quis autem vel eum iure reprehenderit qui in ea voluptate velit esse quam nihil molestiae consequatur, vel illum qui dolorem eum fugiat quo voluptas nulla pariatur?

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.

Sed ut perspiciatis unde omnis iste natus error sit voluptatem accusantium doloremque laudantium, totam rem aperiam, eaque ipsa quae ab illo inventore veritatis et quasi architecto beatae vitae dicta sunt explicabo. Nemo enim ipsam voluptatem quia voluptas sit aspernatur aut odit aut fugit, sed quia consequuntur magni dolores eos qui ratione voluptatem sequi nesciunt. Neque porro quisquam est, qui dolorem ipsum quia dolor sit amet, consectetur, adipisci velit, sed quia non numquam eius modi tempora incidunt ut labore et dolore magnam aliquam quaerat voluptatem. Ut enim ad minima veniam, quis nostrum exercitationem ullam corporis suscipit laboriosam, nisi ut aliquid ex ea commodi consequatur? Quis autem vel eum iure reprehenderit qui in ea voluptate velit esse quam nihil molestiae consequatur, vel illum qui dolorem eum fugiat quo voluptas nulla pariatur?

Hello World this is a Demo

Hello world this is the website Demo for FO Akinrele

Demo Session

Hello FO! This is a demo session!

The Nigerian Oil & Gas Sector in the 1st Quarter of 2020: The Impact of oil price fluctuations on the Nigerian Economy

In the 4th quarter of 2019, Nigeria amended the Production Sharing Contract (PSC) Act to unlock the premium rights due to the Nigerian Government from crude oil produced under the PSC arrangement. The expected returns due to the Nigeria, a net oil exporter was expected to increase in 2020 with oil prices encouraging higher inflows of export earnings into the economy of Nigeria. However, the first quarter of 2020 has witnessed fluctuations in the oil price representing the largest source of instability in exchange rates in Nigeria.

Nigeria’s 2020 Appropriation Act was initially based on crude oil production volume of 2.18 million barrels per day, with a $57 benchmark per barrel. The downward trajectory in oil prices was initially triggered by the disagreement between Saudi Arabia and Russia and then compounded by the economic slowdown due to measures taken across the world to combat the Covid19 pandemic. The result has been a dramatic drop in oil prices as evidenced by the April 15, 2020 price of Brent Crude (the international benchmark pricing for Nigeria’s Bonny light crude oil) at $27.69 per barrel.

OPEC has sought to address this situation with output cuts but experts predict that this will not be enough. Last week OPEC and its allies agreed to deeper output cuts in a bid to save declining oil prices. Following the deal, Nigeria’s Minister for Petroleum, Timipre Sylva, announced that the country will now be producing 1.412 million barrels per day, as against 1.829 million barrels per day. With this volume, if crude oil is sold at an average price of $25 bpd in April, then the country would be earning N13.41 billion per day as against the N17.29 billion that was earned prior to the cut.
The International Energy Agency’s projection is that global oil demand in April will be 29 million b/d lower than a year ago; down to a level last seen 25 years back (1995). This demonstrates that cuts in output by producers may not fully offset the near-term falls facing the market.

Nigeria is currently confronted with revenue generation concerns and faces a number of challenges in order to quickly address the revenue shortfall of the budget. This will have an effect on the exchange rates and the value of the Naira will be under pressure vis a vis international currencies including the dollar and pound sterling.
Equally, the government would still find it difficult to close the revenue gap with tax, as the commercial hub centre of the economy, Lagos, has been lockdown for about three weeks to control the spread of COVID-19. If the lockdown is prolonged for 2-3 months, 2020, the revenue and funding gap could be seriously compounded.
If the lock down is not prolonged, there is some light at the end of the tunnel and the industry opinion of experts and the IEA is that there is hope for a rebound in the second quarter of 2020. An excerpt from the IEA report reads as follows:

“Demand is expected to be 23.1 million b/d below year-ago levels. The recovery in 2020 will be gradual; in December demand will still be down 2.7 million b/d.
“If production does fall sharply, some oil goes into strategic stocks, and demand begins to recover, the second half of 2020 will see demand exceed supply. This will enable the market to start reducing the massive stock overhang that is building up in the first half of the year. Indeed, our current demand and supply estimates imply a stock draw of 4.7 million b/d in the second half.”

In the meantime, the global capital expenditure by exploration and production companies has been forecast to drop by about 32% to $335 billion in 2020. This will mark the lowest level since 13 years. Unfortunately, this will come with some negative implications as you can see in the quote below:

“This reduction of financial resources also undermines the ability of the oil industry to develop some of the technologies needed for clean energy transitions around the world.”

Nigeria’s Oil & Gas Sector in Review – 4th Quarter 2019 Deep Offshore and Inland Basin Production Sharing Contract (PSC) Amendment Bill Passes Into Law 2019

On Monday 4 November 2019, President Muhammadu Buhari signed the historic Deep Offshore and Inland Basin Production Sharing Contract (PSC) Amendment Bill into law. There is a consensus of opinions that the legislation promises to significantly increase Nigeria’s share of earnings earned from its oil wells offshore. The Act is seen a victory for the campaign for Tax Justice in the oil and gas sector.

The Deep Offshore and Inland Basin Production Sharing Contracts Act’s provisions of stipulate that the law shall be subject to review to ensure that if the price of crude oil at any time exceeds $20 per barrel, the share of the revenue to the Nigerian government shall be adjusted under the PSC.

In 2017, Dr. Ibe Kachikwu the then Nigerian Minister of State for Petroleum Resources disclosed that Nigeria had lost approximately $21 billion due to its failure to implement the premium element governing the country’s oil and gas production sharing contracts (PSCs) as provided under the Deep Offshore and Inland Basin Production Sharing Contracts Act. Under the Act, the Nigerian government was entitled once the price of crude oil exceeded $20 per barrel to exercise rights over a “premium element”, which would have been distributed in accordance with the PSCs between the government and IOCs under an agreed formula in a manner that the Nigeria would have derived more value for its oil.

In 2013, there was a notice to oil companies that we were going to do this, but the Nigerian government did not follow through in terms of going to the Federal Executive Council (FEC) the decision making body of the executive arm of the Nigerian federal government, to get approval. Due to the inertia of the Nigerian government in not taking the required steps in the past 20 years had cost a considerable amount, thus prompting the then Minister to seek the FEC’s approval in 2017 to amend Section 15 of the Act.

Accordingly, since 2017, the federal government initiated moves to amend the Deep Offshore Act, in order to increase the government’s revenue from crude oil sales when prices exceed $20 a barrel.
The Deep Offshore and Inland Basins PSC Act enacted on March 23, 1999, with its commencement backdated to January 1, 1993 to provide the fiscal framework for foreign investments in deep offshore and inland basin acreages in the oil and gas sector.

It was also targeted at addressing the challenges confronting the joint operating agreements (JOA), which paved the way for the Nigerian National Petroleum Corporation (NNPC) to become the concession holder while the international oil companies (IOCs) became the contractors.
Following the agreements entered into by NNPC with eight IOCs in 1993, the country was able to attract foreign investments running into billions of dollars to develop oil acreages located in deep waters offshore Nigeria.

Some of such oil fields include the 225,000 barrel per day (bpd) Bonga oil field operated by Shell, the 250,000bpd Agbami oil field operated by Chevron, and the 180,000bpd Usan oil field operated by Total. Others are the Total’s Egina field, which started production on 28 December 2018, Eni’s Zabazaba and Etan fields located in oil prospecting lease (OPL) 245 offshore Nigeria in the Gulf of Guinea.

The Zabazaba and Etan fields are estimated to hold a combined total of 560 million barrels of oil equivalent (Mboe).
The Niger delta of Nigeria is estimated to contain 34.5 billion barrels of recoverable oil and 93.8 trillion cubic feet of recoverable gas reserves, is spread over an area of 300,000km². The world’s 12th biggest oil and gas resource. It lies in the Gulf of Guinea and is surrounded by the Cameroon volcanic line to the east and the Dahomey basin to the west.

The delta is estimated to contain 34.5 billion barrels of recoverable oil and 93.8 trillion cubic feet of recoverable gas reserves and has a sediment volume of 500,000km³ and a sediment thickness exceeding 10km in the basin depocenter. The primary source rock in the delta is the Akata formation.

On Monday 4 November 2019, President Muhammadu Buhari signed the historic Deep Offshore and Inland Basin Production Sharing Contract (PSC) Amendment Bill into law.
The Deep Offshore and Inland Basin Production Sharing Contracts Act was last The provisions of the Act stipulate that the law shall be subject to review to ensure that if the price of crude oil at any time exceeds $20 per barrel, (even when prices were in triple digits decades after!) the share of the revenue to the Nigerian government shall be adjusted under the PSC.
There is a consensus of opinions that the legislation promises to significantly increase Nigeria’s share of earnings earned from its oil wells offshore. The Act is seen a victory for the campaign for Tax Justice in the oil and gas sector.

In view of the total losses of $21 billion due to the government’s failure to exercise its rights under the Act. It is noted that it would be difficult to recoup past losses, given that oil companies that were not paying the government a premium for sales over $20 a barrel were not breaking the law. However, attempts by the government to recoup money lost cannot be completely precluded. This is viewed by the Nigerian government as a necessary step towards greater transparency and accountability in the oil and gas sector as envisaged by the Petroleum Industry Bill (PIB). It may well also speed up the passage of the PIB and herald the unbundling of the Nigerian National Petroleum Corporation (NNPC).

There are some concerns about the implications of the amended Deep Offshore and Inland basin Act, namely, that all PSC productions will now attract royalty based on combination of water depth and oil price and this will lead to some decline in investments. The amendment will end the incentive of 0% royalties from offshore production such as Agbami, Akpo, Bonga, Erha, Nigeria’s biggest producing fields.
However, the government is optimistic concerns about a decline in investments are overrated and that the amended Act will correct the revenue deficit the Nigerian government has suffered in the sector for a considerable period of time.

Big Wins! – Nigeria’s Oil and Gas Sector in Review – 2017

With crude oil prices remaining robust throughout 2017 and now reaching trading highs of $ 64-$65 per barrel, the international Oil Companies (IOCs) namely ExxonMobil and Royal Dutch Shell Plc (the latter being slightly ahead of the former) are leading other IOCs in global operational profitability and flourishing under current global oil prices.
In the same vein, the Nigerian oil industry seeks to re-position itself, having recovered from the low crude oil price volatility in 2016 punctuated by interruptions to key production sources arising from militant activity in the Niger Delta. The Nigerian government now seeks to attract more investment in the oil & gas sector, improve production activity, currently 1.85 million barrels per day (mbpd) and ensure that the oil sector continues to perform its traditional role of supporting the Nigerian economy.

The 2018 budget was presented to the Nigerian federal legislature on 7 November 2017. The budget proposal presented by the Minister of Budget and National Planning Mr. Udoma Udo Udoma provides that the government plans to fund the budget with N6.6 trillion (approx. $ 18.3 billion) in revenues from various sources particularly the oil and gas sector amongst which signature bonuses (funds paid by oil companies to the Federal Government upon their successful bid for oil blocks in the oil sector) will contribute 1.7% amounting to N112 billion (approx. $ 311m). Such signature bonuses arise from the planned marginal field bid round, in respect of which guidelines were released in September 2017. With 46 acreages on offer. No specific date has yet been fixed for this bid round and it is hoped that a process which has suffered several setbacks in recent years will finally be concluded in late 2017 or early 2018. The outcome of this bid round shall be an important litmus test of the current indigenous appetite for investment in the upstream oil and gas sector.

Further encouraging signs have come from the Nigerian National Petroleum Corporation (NNPC). The NNPC has stated, in endorsement of the 2018 budgetary projection, that the 2018 crude oil national production projection (for Joint Ventures, Modified Carry Arrangement or External Financing, Production Sharing Contracts, Independents, Marginal Fields and Service Contracts) that about 2,298,000 barrels per day is achievable and realistic in view of the renewed security in the Niger Delta. Such projections are based on price scenarios of $35 (low), $45 (medium – the benchmark used for the 2018 budget) and $55 (high)

This outlook is reassuring given the positive global economic growth and the improved compliance with the Organization of the Petroleum Exporting Countries’ (OPEC) current production cuts for 2017, which cap Nigeria’s crude oil production (excluding condensates) to 1.8mbpd. It however remains to be seen, how much of an impact, OPEC’s production caps on Nigeria will have on Nigeria’s 2018 budget projections.

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has on the back of the budgetary projections and highlighted key aspects of the roadmap policy unveiled in 2016 by President Muhammadu Buhari titled ‘7 Big Wins’ in the oil and gas sector said that the government would begin the implementation of some fiscal policies to generate about $2 billion yearly in the short term and $9 billion in the long term.

The other big wins have been the delivery of zero fuel availability since 2015/2016; exiting the cash call system giving the multinational oil firms more belief in the need to invest in the country (investments which could be in excess of $ 15 billion). Examples of such investments are Agip and Shell’s Zabazaba Deepwater project and Shell’s Bonga extension project. Other big wins are the improved transparency in NNPC’s operations and deeper engagement and resultant stability in the Niger Delta region through the office of the Vice President, the Niger Delta Ministry, the security forces and the Presidency.

In 2018/2019, the government plans to rehabilitate the refineries and end or severely diminish the importation of refined petroleum products and reveal a package of fiscal policies, which will be subject to the Federal Executive Council approval and thereafter transmitted to the federal legislature for requisite legislative backing. The Minister of State for Petroleum Resources has predicted that this will expand federal government income in the short-term by over $2 billion a year and then on to over $9 billion in the long-term.

The federal legislature continues its work, commenced at the beginning of this year (2017) as regards ensure the passage into law of the entire aspects of the Petroleum Industry Governance Bill PIGB (a bill for the establishment of the institutions that will govern the Nigerian oil and gas sector). It is widely understood that the PIGB will need the strong support of the executive arm of the federal government to make it functional for the long-term stability of the oil industry.

To Appeal or Not to Appeal: That is the question

Appealability of National Industrial Court decisions on civil matters: the case of Skye bank Plc v. Victor Anaemem Iwu

Before the recent Supreme Court decision in Skye Bank Plc v. Victor Anaemem Iwu (2017) 16 NWLR (Pt. 24) 1, the issue of whether the decision of the National Industrial Court (NIC) on civil matters outside fundamental rights was appealable or not was sharply divided between two divergent decisions of the Court of Appeal. The two Divisions of the Court of Appeal interpreted the provisions of Sections 240, 241, 242, 243(2)- (4); 254C(5) and 254C(6) of the 1999 Constitution as amended.

The Ekiti Division of the Court of Appeal in four judgments: Local Government Service Commission, Ekiti State & Anor. v. Jegede (2013) LPELR – 21131 (CA); Local Government Service Commission, Ekiti State & Anor. v. Bamisaye (2013) LPELR – 20407(CA); Local Government Service Commission, Ekiti State & Anor. v. Olamiju (2-013) LPELR- 20409 (CA) and Local Government Service Commission, Ekiti State & Anor. v. Asubiojo (20130 LPELR – 20403 (CA), held that the decision of the NIC are appealable while the Lagos division of the Court of Appeal in Coca-Cola Nigeria Ltd v. Akinsanya (2013) 18 NWLR (1386) 225 and Lagos Sheraton Hotel & Towers v. HPSSA (2014) 14 NWLR (Pt. 1426) 45, held that the decisions of the NIC are not appealable, other than decisions on fundamental rights and criminal matters.

The Appellant in Skye Bank Plc v. Victor Anaemem Iwu (supra) at the Court of Appeal faced the quagmire that the panel of Justices constituted to hear the appeal may concur with either the views of the Lagos Division or the Ekiti Division of the Court of Appeal and still leaves the issue not fully settled. It was therefore apposite and commendable that Appellant’s counsel filed an application seeking the Court of Appeal to state a case on the appealability or otherwise of the judgment of the NIC to the Supreme Court in view of the constitutional issues and substantial points of law involved.

The Court of Appeal granted the application and formulated three issues for determination by the Supreme Court namely:

The Court of Appeal granted the application and formulated three issues for determination by the Supreme Court namely:

“(1) Whether the Court of Appeal as an appellate court created by the Constitution of the Federal Republic of Nigeria, 1999 (as amended) has the jurisdiction to the exclusion of any other court of law in Nigeria to hear and determine all appeals arising from the decisions of the National Industrial Court of Nigeria?

(2) Whether there exists any constitutional provision which expressly divested the Court of Appeal of its appellate jurisdiction over all decisions on civil matters emanating from the National Industrial Court of Nigeria?

(3) Whether the Court of Appeal’s jurisdiction to hear civil appeals from the decisions of the National Industrial Court of Nigeria is limited to only questions of Fundamental rights.

The Supreme Court in a full panel of seven Justices out of which only one Justice gave a dissenting judgment, and after considering all the relevant laws including the organic law and the Third Alteration to the Constitution 2010, the Court of Appeal Act and Rules s establishing the Court of Appeal and the National Industrial Court as well as the various decided cases, led to rest the divergent views that held sway prior to 30 June 2017. The Supreme Court in an illuminating judgment held as follows:

“In all, then, on a holistic interpretation of sections 240 and 243(1) of the 1999, appeals lie from the National Industrial Court to the Court of Appeal, that is, all decisions of the trial court are appealable to the Court of Appeal: as of right in criminal cases – Section 254C (5) and (6) and fundamental rights cases –section 243(2); and with the leave of the Court of Appeal, in all other civil matters where the National Industrial Court has exercised its jurisdiction, section 240 read conjunctively with section 243(1) and (4).

The apex court therefore answered the questions posed above as follows:

(a) The Court of Appeal has the jurisdiction, to the exclusion of any other court in Nigeria, to hear and determine all appeals arising from the decisions of the National Industrial Court;
(b) no constitutional provisions, expressly, divested the said Court of Appeal of its appellate jurisdiction over all decisions on civil matters emanating from the National Industrial Court, and
(c) as a corollary, the jurisdiction of the Court of Appeal to hear and determine civil appeals from the decision of the National Industrial Court is not limited, only to fundamental rights matters.”

We opine that the above decision of the Supreme Court has removed all barriers and assumptions that shrouded the issue of whether the judgment of the National Industrial Court is appealable or not and has stated in unequivocal terms that the decisions of the National Industrial Court on civil matters apart from fundamental rights are appealable but only with the leave of the Court of Appeal.

Review of Government Policy- Anti- Corruption and Financial Cases: Curbing inordinate delays and lawyers’ dilatoriness

President Muhammadu Buhari in his electioneering campaigns promised to stamp out graft in Nigeria and to this end, will set up special courts to speed up the trial of corruption cases. The President then sought the co-operation of the Judiciary in his administration’s fight against corruption and financial crimes in Nigeria.To redeem the battered image of the judiciary before the Nigerian public, the Chief Justice of Nigeria (CJN), Justice Walter Onnoghen, GCON in his speech at the Special Session of the Supreme Court of Nigeria to mark the commencement of the 2017/2018 Legal Year, emphasised the need to avoid all forms of dilatoriness by lawyers in prosecution of corruption and financial crimes cases and/or determination by the Court.

Consequently, on 27 September 2017, the CJN directed the Heads of Courts in Nigeria to set up Special Courts to speedily hear and determine corruption and financial crimes cases and forward the comprehensive list to the Nigerian Judicial Council. The Heads of Courts are to designate one or two courts in their jurisdiction as Special Courts for the hearing and speedy determination of corruption and financial crimes cases and pegged the number of legal appearances for each party to five.

The CJN also announced major reforms in the criminal justice system to effectively monitor and enforce the new policy. The National Judicial Council (NJC) approved the setting up of an Anti-Corruption Cases Trial Monitoring Committee with the mandate to among other things ensure that “both Trial and Appellate Courts handling corruption and financial crime cases key into and abide by the renewed efforts at ridding our Country of the canker worm.” The CJN also directed all heads of courts to clamp down on lawyers who deploy delay tactics in criminal matters before them.

The Committee is made up of 16 members and chaired by Hon. Justice Suleiman Galadima, CFR, a retired justice of the Supreme Court. Other members of the Committee include:

1. Hon. Justice Kashim Zannah (OFR), Chief Judge, Borno State
2. Hon. Justice P.O. Nnadi, Chief Judge, Imo State
3. Hon. Justice Marshal Umukoro, Chief Judge Delta State
4. Hon. Justice M. L. Abimbola, Chief Judge, Oyo State
5. Mr. A.B Mahmoud OON, SAN, President, Nigerian Bar Association,
6. Chief Wole Olanipekun OFR SAN, Former NBA President
7. Mr. Olisa Agbakoba OON SAN, Former NBA President
8. Mr. J.B Daudu SAN, Former NBA President
9. Mr. Augustine Alegeh SAN, Former NBA President
10. Dr. Garba Tetengi SAN, Member, NJC
11. Mrs. R.I Inga, Member, NJC
12. Mrs. Hajara Yusuf Representative, Ministry of Justice
13. Alhaji Kabiru Alkali Mohammed, mni Representative, Institute of Chartered Accountants of Nigeria (ICAN).
14 Olanrewaju Suraju Representative, Non-Governmental Organisations
15 Ahmed Gambo Saleh, Esq., Secretary, NJC – Secretary.

The Terms of Reference of the Committee include:

i). To monitor and regularly evaluate the progress and activities of courts designated to try corruption a financial/economic crime cases;
ii). Advise on Practice Directions for approval by the Chief Justice of Nigeria to be applicable in all such courts across the country with a view to eliminating procedural and administrative bottlenecks militating against speedy disposal of such cases;
iii). Advise on the trainings, re-trainings and other refresher programmes for Judges and staff of the designated courts aimed at enhancing their capacities to function effectively;
iv) Come up with an effective feedback mechanism from Heads of Courts to the Council on the activities and progress of cases before designated courts;

We hope that this Committee will swing into action and bring to bear the necessary expeditiousness, such that corruption and financial crimes cases and indeed all cases in court will be heard and determined expeditiously. This will in no small measure redeem the tarnished image and independence of some of our courts.

Unshackling the Power Sector- New Eligible Customer Regulations 2017

The Nigerian Electricity Regulatory Commission (NERC) on Monday 6 November 2017 released the newly-approved eligible customers’ regulations and outlined the terms that would guide the direct purchase of electricity by end-users from power generation companies.

In May 2017, the Minister of Power, Works and Housing, Babatunde Fashola, declared that eligible power consumers would be free to purchase electricity directly from the Generation Companies (GenCos).
These regulations have been opposed by the Distribution Companies (DisCos) however, NERC on Monday 6 November 2017 presented the approved terms to the Honourable Minister in Abuja, and announced that the 11 electricity distribution companies had been designated as suppliers of last resort in the trading framework of the new regulations.

OPEC has sought to address this situation with output cuts but experts predict that this will not be enough. Last week OPEC and its allies agreed to deeper output cuts in a bid to save declining oil prices. Following the deal, Nigeria’s Minister for Petroleum, Timipre Sylva, announced that the country will now be producing 1.412 million barrels per day, as against 1.829 million barrels per day. With this volume, if crude oil is sold at an average price of $25 bpd in April, then the country would be earning N13.41 billion per day as against the N17.29 billion that was earned prior to the cut.
The International Energy Agency’s projection is that global oil demand in April will be 29 million b/d lower than a year ago; down to a level last seen 25 years back (1995). This demonstrates that cuts in output by producers may not fully offset the near-term falls facing the market.

The NERC explained that the regulations were a product of extensive consultations with relevant stakeholders in Lagos, Kano, Yola, Jos, Port Harcourt, Enugu and Abuja. The objective of the regulations was to permit high end-customers the freedom to purchase power directly from the GenCos and as a result, the DisCos may eventually lose a good number of their high demand customers and become standby suppliers of electricity to eligible customers, where such consumers’ contract suppliers fail to meet up with the required supply.

Time will tell the effects that these regulations will have on the industry. What is clear is that the new regulations will break the monopoly DisCos currently have on distribution of Power and this will inevitably create more competition and drive prices down.

Brightening Lights in the Nigerian Power Sector: But How Much Brighter Can They Get?

The major trend witnessed in the Nigerian Energy and Utilities sector over the last 12- 18 months is increased government intervention through policy and regulation. There has been a focus on strong market regulation and a cost reflective tariff system, as evidenced in the Nigerian Electricity Regulatory Commission’s (“NERC”) new electricity tariff, called the Multi-Year Tariff Order (MYTO 2015) effective from February 1, 2016. The MYTO 2015 eliminates fixed charges and prescribes a robust mechanism which ensures that electricity distribution companies fully meter their consumers and eliminate baseless billing within one year.

Improvements in the performance of the Nigerian power sector in the past 2 years have dramatically increased power delivery by 35% and have bought breathing space for major reforms required to attract the investment needed to transform Nigeria’s power sector. Nigerian national power supply has reached new peaks with a daily average of 4,000 MW being achieved with a significant decrease in major blackouts. The improved service delivery in power has produced savings to Nigeria estimated by industry and infrastructure experts as worth over $1.2bn in a full year.

Nevertheless, the 4,000MW now being generated for Nigeria’s population of 180 million is grossly inadequate. In contrast, Brazil generates 100,000MW of grid-based power for 201 million and South Africa generates 40,000MW for 50 million.

Annual public sector investment averaging US$2bn between 2006-2009 leading to only moderate increases in power supply resulted in the Nigerian Government taking the logical decision to privatise the bulk of its power. This culminated in the execution of Share Sale Agreements and Concession Agreements, signifying the hand-over of power sector assets to 14 Preferred Bidders for 15 of the 17 Companies created out of the Power Holding Company of Nigeria on 21 February, 2013.

The current benefits are the outcome of the establishment in 2010 by the Nigerian government of a Power Programme Support Unit (PPSU) in collaboration with and management by the DFID-funded Nigeria Infrastructure Advisory Facility (NIAF), which is managed by Adam Smith International. The PPSU’s mandate was the rehabilitation of under-performing assets, adding more generating and transmission capacity to the grid, as well as stabilising the network by reducing the alarming number of system collapses. This resulted in the development of a comprehensive rehabilitation plan, with over 10,000 lines of activity, involving repairs and upgrades on plant and equipment across Nigeria, some of which had not been adequately maintained for decades.

However, with average annual per capita power consumption at only 155 kWh, Nigeria ranks amongst the lowest in the world. In contrast to its status as a leading global oil producer. Nigeria’s per capita electricity consumption is 7% of Brazil’s and 3% of South Africa’s. At the same time, at least 50% of Nigerian households have no connection whatsoever to the grid. Self-generation (diesel or petrol generators) in Nigeria is estimated to be 6,000MW.

According to DFID-NIAF estimates, Nigerians and the Nigerian economy pay unduly for the power gap in demand and supply. The poor currently pay more than N80 ($0.38)/kWh burning candles and kerosene, whereas manufacturers pay in excess of N60 ($0.28)/kWh on diesel generation. Meanwhile, everyone else who can afford it pays around N50-70 ($0.24-0.33)/kWh for self-generation. By contrast, grid power, if available, costs between N18 and N23/kWh.

The absence of adequate power is the most significant barrier to economic growth in Nigeria. If the current power situation continues as is until 2020, the Nigerian government estimates that some $97 bn (US dollars) in GDP would be lost every year.