PHCN: $1bn to be generated from privatization

Nigerian Government is expected to generate $1,001,654,534 from the sale of the five generation companies (gencos) unbundled from the Power Holding Company of Nigeria (PHCN) but the entire sum must be paid by the various successful bidders before the assets are handed over to the new core investors. Chairman of the Technical Committee of the National Council on Privatisation (NCP), Mr. Atedo Peterside made this clarification.

Peterside stated that Amperion Power Distribution Company Limited would pay $132,000,000 into the Federal Government’s treasury for the acquisition of the Geregu power station, while Transcorp and its partners – Woodrock, Symbion, Medea, PSL and Thomassen – would pay $300,000,000 for Ughelli Power Station. For Sapele Power Station, CMEC and Eurafric JV would pay $201,000,000, while $257,000,000 would be paid by Mainstream Energy Solutions Limited for Kainji Power Station.

He further stated that the Federal Government would earn $111,654,534 from the concession of Shiroro Power Station to North South Power Company. However, unlike the gas-fired power stations, the transaction for Kainji-Jebba hydro power station is a 15-year concession and not an outright sale, he said. Also, for the Shiroro hydro power plant, North-South Power Limited will manage the station under a concession.

NGO launches Oil industry enlightenment campaign

The Campaign for Growth in the Nigerian Oil and Gas Industry (CGNOGI) has launched a nationwide public enlightenment crusade aimed at providing public education and promote informed discourse on issues affecting the oil & gas industry.

The non-governmental organization which published the maiden edition of the public enlightenment campaign on Wednesday, said the initiative became imperative in view of the need to ensure that all stakeholders have all the facts and can meaningfully contribute to public debate on issues. The NGO argued that for too long a small group of individuals and corporate bodies have consistently monopolized the discussion of issues for selfish interests, arguing that in this age of information explosion, there is need for citizens to be adequately informed.   

Explaining the rationale for the campaign, the Group said the oil and gas sector is strategic to the aggregate economy; pointing out that anything that happens in the industry will easily have multiplier effect on other sectors.

In view of this, the Executive Secretary of the Group, Mallam Abubakar Kalto noted that rather than expedite the reform required to move the industry forward, the current debate over the provisions of the draft PIB, which is before the National Assembly is aggravating the challenges in the sector.

According to him, the PIB is very important as it aims to overhaul the industry that has not been blessed with such legislation for several years. Contrary to the view of many operators that the PIB will scuttle their operations if allowed to pass into law, Kalto explained that the overhaul will touch on indigenous and foreign operators in the sector.

The CGNOGI boss therefore stated that the goal of the Public Enlightenment Series is to put the record straight by educating the operators and investors alike about the critical issues that are causing what he called undue delay in the passage of the bill into law by the National Assembly.

In its message released to the public on Wednesday, CGNOGI highlighted the fact that Nigeria has an estimated 37.1 billion barrels of oil in reserves and produces an average of over 2 million barrels per day in compliance with the allocated production quota from the Organisation of Petroleum Exporting Countries (OPEC). His words: “The gas reserves are in excess of 165 trillion cubic feet and like its oil, Nigeria’s gas is rich in liquids and low in sulphur.”

According to Kalto, the legal framework that has guided the industry to date is the Petroleum Act, which was enacted in 1969. The Act, he stated, vests the entire ownership and control of all petroleum in, under or upon any lands within the territory of Nigeria in the State. The legal framework, Kalto said, gives the power to grant the minister the exploration, prospecting and production rights. Aside the Petroleum Act, CGNOGI identified the Deep Offshore and Inland Basin Production Sharing Contracts Act No. 9, Laws of the Federation of Nigeria 1999 as another laws that govern the industry.

Kalto said the modern legislation that is expected to bridge the gap is the draft 2012 PIB that is intended to spell out a new legal framework that will govern the operations and activities of the oil and gas industry. He therefore advised that Nigerians and her business partners, the international oil companies to embrace the PIB because it is designed for the benefit of everyone.

Excess Crude Account: FG gets New Settlement Terms from states

States have proposed new conditions to resolve the lingering dispute between them and the Federal Government over illegal deductions from the Federation Account. Counsel to the Federal Government, Mr. Austin Aleghe, informed the Supreme Court of the new development when hearing resumed in the suit filed by the states seeking, among others, an order of the court to stop further deductions from the ECA to fund payment for fuel subsidy pending the determination of the suit.

According to the proposed new terms of agreement, the Federal Government will undertake and agree that upon the execution of the terms of settlement, it shall cause all sums standing to the credit of the ECA to be transferred to the Federation Account and distributed within 10 days from the execution of the terms of settlement to the three tiers of government—federal, state and local governments.

Under the new terms, the states are demanding that a limited liability company be established to take over the operations of the National Integrated Power Projects (NIPP) and the $8.425 billion invested in it. They are also demanding that the shares be allotted to the Federal Government, the states and the 774 local government areas with the rights and obligation of each shareholder spelt out.

Similarly, the states are demanding that the $250 million invested in the railway modernisation projects be transferred to a limited liability company, to be formed, in which the Federal Government, the states and the local government areas shall be the shareholders.

Gulf OPEC members want Brent oil at $100/barrel

Gulf members of the Organization of Petroleum Exporting Countries, led by Saudi Arabia, would like to see oil prices stabilize around $100 a barrel as high prices could slow down economic growth and hit demand. The price of a barrel of Brent--the most widely used benchmark globally--rose near $117 a barrel mid-September and has remained above $100.

Saudi oil minister Ali al-Naimi said that the world's top oil exporter is concerned about oil price levels given that they are not being caused by supply shortages and that the Gulf state will take all necessary steps to moderate them.

Mr. Naimi has previously said he considered $100 a barrel to be the ideal price for Brent to balance the needs of consumers and producers. He stressed that the Arab world's largest economy will continue to work with other Gulf countries and OPEC to defend the stability of the oil market.

High Saudi output helps keep oil prices down, benefiting fragile economies in the U.S. and Europe, which rely on the kingdom to keep up supply as they implement sanctions intended to press Iran over its nuclear program.

Nigerian content fund hits N15.7 billion

Oil companies in the country have contributed $100 billion (N15.7 billion) to the coffers of the Nigerian Content Development Fund (NCDF) since inception of the scheme in 2010. The Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Ernest Nwapa, said the contribution level was as at this month.

Nwapa said at Nigeria Oil and Gas Trade and Investment Forum 2012 organised by the Federal Ministry of Trade and Investment and Orlean Invest West Africa Limited, in Port Harcourt  that designated accounts for NCDF and procedure for payment of one per cent sum had been set up for the initiative. According to him, the fund would be managed by the board of NCMB and was different from the $350 million Local Content Fund, which was put together by NNPC in 2007 to serve as a working capital for Nigerian companies that got service contracts in the industry.

Nwapa said the vision of the NCMB was to grow the fund and use it to attract other financial players who would leverage on it such that Nigerian service providers would do business knowing that the fund was available for them to use. He called on Nigerian investors to take advantage of the immense opportunities which the Nigerian Content Act had created for them.