Business

Experts Urge FG to Provide Bailout Funds for Marginal Oil Field Awardees

Published

3 years ago

May 5, 2022

By Derrick Bangura

As the 2020 marginal oil field awardees currently struggle to raise fund to commence the development of their respective assets and eventually hit first oil production, some industry experts have advised the federal government to consider providing intervention funds for cash-strapped companies.

The experts said the excessive cost of participation during the marginal field bid round and the expensive signature bonus they were asked to pay have eroded the commerciality of the assets, making it difficult for them to raise fund to proceed to drilling after one year of issuing them award certificates.
Speaking at the Arbiterz marginal oil field conference in Lagos, with the topic, “From License to Oil: Fundraising for Marginal Fields,” the Subsurface Manager, Energy and Mineral Resources Limited (EMR), Mr. Collins Ibekwe, said the government should consider providing bailout funds to the companies either in form of returning the signature bonuses or through any other form of financial assistance to them.

Ibekwe explained that his call for bailout fund for the awardees was based on the fact that there had been instances where government had to intervene to help businesses that were going through financial difficulties just to help them recover and continue to contribute to the nation’s economy.

He maintained that such intervention was needed for the current marginal oil field awardees to enable the companies have fund to proceed to drilling and help to achieve the nation’s aspiration of increasing oil production to three million barrels per day, raise the reserves to 40 million barrels and in turn boost government’s revenue and job creation.

Expressing pessimism about the companies achieving first oil quick enough, as recorded by a couple of the 2003 awardees, Ibekwe maintained that such government financial intervention was necessary to enable the companies recover from the huge burden they were made to suffer by paying the outrageous $125,000 as marginal fields bid round participation fee and the exorbitant $5 million to $40 million for signature bonus per oil field.

Ibekwe lamented that the government’s charges for the 2020 marginal field bid round participation and signature bonus were astronomically higher than the fees paid by companies during the 2003 bid round and even the fees that were to be paid by companies in the botched 2013 marginal oil field bid round.

He argued that the components of the 2020 bid process including the financial, regulatory, legal, international and other components were designed to essentially make the process very expensive for the bidders, saying the expensive nature of the bid process has eroded the commerciality of the assets.

The 2020 marginal oil field bid round started in June 2020 and by May, 2021, 161 companies were shortlisted as winners of the 57 marginal fields put on offer.

In May, 2021, the then industry regulator and organisers of the 2020 marginal field bid exercise, the defunct Department of Petroleum Resources (DPR), which has been replaced by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), presented award certificates to 80 of the awardees.

DPR had put the total value of the 57 marginal oil fields at not less than $500 million, having pegged the bid participation fee at $125,000 per company and between $5 million and $40 million as the signature bonus per field.

However, the NUPRC had disclosed that 80 per cent of the awardees had complied in terms of payment while closed to 90 per cent of the companies had complied in forming the Special Purpose Vehicles (SPVs).

The commission had also disclosed that the marginal oil fields awarded to 33 companies had been revoked following their inability to meet the 45 days deadline required to pay the signature bonus for the fields.

But in his intervention on how to make the marginal field licenses to producing oil, Ibekwe said, “My opinion is this: If we have to be truthful to ourselves, then we have to look at this holistically -think outside the box. What really should be done? Because I think those who put the process together were not long-term-focused. I think they were too short-term focused.

“But it should not be too late to say, let’s reverse this process. Let’s return this money; because to be honest with you, you may say, okay, my interest is to raise money for government. But really, is that an optimal expectation? Should it not be better for our expectation to be: let’s grow new businesses; let’s grow these marginal fields and have many new indigenous operators that are capable.

Also contributing at the session, Chief Executive Officer, Tritekk Consulting Limited and former Geoscience Business Manager, France, Schlumberger, Mr. Ayodele Fasakin, who equally observed that the signature bonus for the marginal fields was too expensive, adding that the NUPRC should be an active partner to the point of ensuring that operators secure funding to proceed to first oil rather than being interested in raising revenue for government.

In his remarks, Chief Executive Officer, NUPRC, Gbenga Komolafe, who was represented by the commission’s Head of Basinal Assessment and Lease Administration, Mr. Edu Iyang, said the commission had engaged awardees to resolve issues arising from the 2020 marginal field award and had also concluded drafting of model licence document, which he said was critical for issuing the Petroleum Prospecting Licences (PPL) to the awardees.

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Businesses count losses amid power outage in Bauchi, Gombe, and Jigawa

Published

4 weeks ago

October 28, 2024

Matthew Eloyi

Business owners in Bauchi, Gombe and Jigawa are recording losses due to week-long blackout ocassioned by vandalism of the power transmission line in parts of northern Nigeria.

The sudden disruption in electricity supply in the past days, also affected essential services such as water, sanitation, street lighting and healthcare delivery as most hospitals have been operating without light.

Some of the affected businesses including shop keepers, millers and artisans, who spoke while reacting to a survey by the News Agency of Nigeria (NAN), described the situation as “pathetic”.

The survey examined the perennial collapse of national grid and the need for alternative power supply in the country.

Rice millers in Gombe had decried the impact of the erratic power supply on their businesses.

A Miller, Musa Arab, at Nassarawo Industrial Layout in Gombe, said the trend was crippling their operations as they relied on electricity supply from the grid to process paddy.

He said the mills were not operational power outage as they could not afford exorbitant pump prices of petrol or diesel to run their machines.

This, he said, reduced the volume of rice supply to the market and posed serious challenge to food security.

“We must invest in power because it is the biggest determining factor for industries to thrive.

“I have over 20 workers in my mill, and we have 100 mini rice mills here, so you can imagine those who have no jobs for the past 10 days.

“Government must go tough on those responsible for the perennial grid collapse because some persons may be benefitting from it,” he said.

Also, Yusuf Ibrahim said the situation might trigger the already fragile inflation, as prices of local varieties would shot up ocassioned by the diminish supply.

He said that some had jerked up their charges to cover the expenses on diesel thereby affecting rice prices.

A check by NAN at the Gombe Main market showed that a 100 kilogramme of rice was sold for between N120,000 and N160,000, as against N110,000 and N150,000, before the blackout.

Mr Usman Sani, a rice dealer, attributed the hike in price to low supply of the produce to the market in spite of the number harvest recorded this cropping season.

He said the prices had decreased slightly at the onset of the harvest, however, it showed sprawling increase due to power outage.

“The price of rice is already dropping as a result of harvest but the trend reverse since the blackout in the past days “ he said.

Ugochukwu Daniel, a bartender in Bauchi, decried the epileptic power supply in the country, adding that lack of durable energy supply would retard Nigeria’s quest to attain social and economic greatness.

Daniel said that she spent much on fuel to run power generator for refrigrator and lightening the beer parlour, to enable her to keep the business running.

He said that businesses could only thrive in an enabling environment with stable electricity supply, to enhance wealth creation and reduce poverty among Nigerians.

“My trade is about chill drinks and it survives on electricity to operate otherwise you will out of bussiness.

“Without electricity there is nothing you can do, and not only business but about everything. We depend on it,” he said.

Similarly, Samuel Adamu, said the persistent power outage had forced him to patronised charcoal for ironing clothes in spite of its high cost and cumbersome processes.

He said that most cleaners in the area had resorted to fabricated iron charcoal in spite of hike in its prices which suddenly jumped from N5,000 to N15,000.

Adamu said the situation also encouraged division of labour in laundry to cut cost and make some gains.

“Presently, I do wash the cloth, and engage someone for ironing. The charge is N300 per set as against N150”.

While advocated development of renewable energies to enhance power supply in the country, Adamu urged security agencies to entensify efforts towards electrical installations in the country.

In the same vein; Mr Muhammad Adamu, Chairman, Jigawa State House Assembly Commitee on Power and Energy, said the Jigawa Electricity Law 2024, made sound provisions to improve power generation and distribution in the state.

This, he said, was an offshoot of the devaluation brought about by the 5th alteration of the constitution, where removed power from the executive legislative list and to the concurrent list.

“It empowered the state houses of assembly to enact laws on power.

“The committee has also carefully pursued the bill and reviewed its structure and the promise it holds for the state power sector, infrastructure and the overall economy of the state.

“The new law will pave way for the establishment of Jigawa Electricity Commission, to regulate the state’s electricity market,” he said.

According to Adamu, the law will protect residents and investors in the energy sector through ensuring prepaid meter installation and possibility of recouping investor’s funds as well as address vandalism.

“The law will lead to provision of reliable, affordable and sustainable power, essential for development of all sectors of the economy, particularly in rural areas,” Adamu said.

“Vandalism will be over because we pay Kano Electricity Distribution Company (KEDCO) money for powered supplies, but whenever there is problem of damages or broken down transformers, it is either the communities or individuals that pay for the repairs”.

Business

Mercedes urges delay of EU tariffs on Chinese electric vehicles

Published

1 month ago

October 21, 2024

Matthew Eloyi

Mercedes urges delay of EU tariffs on Chinese electric vehicles

The head of German luxury carmaker Mercedes-Benz, has called for the European Union to de-escalate the dispute with China over tariffs on electric cars.

“We need more free trade instead of new trade barriers.

“That is why it is important to find a solution that suits both the EU and China,” chief executive Ola Källenius told the Monday edition of Bild newspaper.

“The negotiations for this take time. In order not to jeopardise them, the EU should postpone the enforcement of the planned tariffs,’’ he said.

At the start of the month, a majority of EU countries paved the way for additional tariffs of up to 35.3 per cent on battery-powered electric vehicles imported from China.

Germany, however, voted against the measure amid concerns over retaliatory actions which could hurt the country’s giant car industry.

The European Commission had pressed for extra tariffs after an investigation accused Beijing of subsidising domestic electric car manufacturers, and thus distorting the market in the EU.

But whether the import tariffs would actually come into force at the beginning of November is still up to the commission.

The plans can still be dismissed if Brussels reaches a solution with China at the negotiating table.

Business

ACCI moves to promote business connections, balance work-life

Published

1 month ago

October 16, 2024

Matthew Eloyi

ACCI moves to promote business connections, balance work-life

The Abuja Chamber of Commerce and Industry (ACCI), is taking innovative steps to enhance professional relationships and promote a healthy work-life balance.

The President of ACCI, Dr Emeka Obegolu, said this in a statement on Tuesday in Abuja.

Obegolu said ACCI was committed to creating environments where professionals could connect beyond the confines of traditional boardrooms.

He said the upcoming “Business Meets Golf’’ Tournament epitomises this vision.

“Scheduled for Oct. 18 to Oct 19 at the IBB Golf Club, the tournament will gather industry leaders, top executives, and key decision-makers for a unique networking experience.

“This two-day event aims not only to strengthen business ties but also to foster partnerships that can drive economic growth.

“The ACCI’s initiative reistates the importance of maintaining a balance between professional achievement and personal well-being.

“By encouraging corporate cultures that prioritise relaxation and self-care, the Chamber acknowledges that such balance is vital for productivity and overall success,” he said.

According to Obegolu, the event will feature a range of activities designed to facilitate both business engagement and relaxation.

“Highlights include a Business-to-Business (B2B) cocktail on the first day, followed by the golf tournament and additional networking opportunities on the second day.

“The tournament will culminate in an awards ceremony recognising outstanding golfers among the participants.

“‘Business Meets Golf’ exemplifies our dedication to fostering innovative networking opportunities.

“We aim to create spaces for meaningful discussions that can lead to impactful collaborations,” Obegolu said.

The ACCI boss said in addition to promoting business connectivity, the council aimed to restate the importance of relaxation and a balanced lifestyle.

Obegolu said through events like this, the Chamber continued to play a pivotal role in supporting trade and industry in Nigeria while driving sustainable growth within the private sector.

He said to raise awareness about this landmark event, ACCI was partnering with the News Agency of Nigeria (NAN) and Media Trust Limited, to ensure broad visibility and engagement from leading brands.