Friday, December 11, 2009
PIB may not be passed by the end of the year
Senator Lee Maeba, the chairman of the senate committee on upstream petroleum, according to Next has chastised Emmanuel Egbogah, the senior special adviser to the president on petroleum matters for stating that the PIB would be passed by the end of the year. According to Maeba, the executive cannot speak for the legislature in terms of when a bill would be passed. Whilst we agree with this statement in principle, we must nevertheless reiterate that the delayed passage of the PIB has significantly impacted oil and gas investment in Nigeria. We encourage the legislature to use their best efforts in ensuring that a good bill is passed as soon as possible.
Saturday, December 5, 2009
More from Law Inter Alia Blog
Ayisha from Law Inter Alia;s response to our comments and our follow up.
Ayisha
"Creative Energy you are right about power generation being decentralised under the 1999 Constitution but isn't the interpretation of the relevant sections in doubt if State generating and distributing power have to go through a federal agency such as NERC? what was the story between Lagos and FGN regarding the Enron barge during TInubu and Obasanjo's time? Why is there a limit to what states and IPPs can generate and distribute outside of the national grid? I also agree about unbundling but as long as we do not solve the gas problems and the 'price of electricity' problems (the FGN is the largest customer and I dare say biggest debtor of NEPA) and have a proper legislative framework in place...unbundling will do little for us."
Creative Energy
There is actually no limit to what the States can generate and distribute outside the national grid. The main problem is that the cheapest (and probably the most efficient) way to distribute power generated is through the existing national grid. The costs of developing another grid, which is isolated to a particular state or neighboring states is likely to be very high (perhaps prohibitive), which is why States like Lagos, who have tried to organise power generation, have passed this power on to the national grid for transmission and distribution. The controversy between Lagos and the Federal Government was essentially that Lagos wanted the power being generated by Enron (and being transmitted to the national grid) to be isolated to Lagos State i.e. that Lagos State should get the additional 300 or so MW being generated. My vague recollection was that the FG initially agreed to this but later reneged. The problem appears to be that the FG (being in control of the national grid) may want to allocate electricity in a politically expedient fashion.
Ayisha
"Creative Energy you are right about power generation being decentralised under the 1999 Constitution but isn't the interpretation of the relevant sections in doubt if State generating and distributing power have to go through a federal agency such as NERC? what was the story between Lagos and FGN regarding the Enron barge during TInubu and Obasanjo's time? Why is there a limit to what states and IPPs can generate and distribute outside of the national grid? I also agree about unbundling but as long as we do not solve the gas problems and the 'price of electricity' problems (the FGN is the largest customer and I dare say biggest debtor of NEPA) and have a proper legislative framework in place...unbundling will do little for us."
Creative Energy
There is actually no limit to what the States can generate and distribute outside the national grid. The main problem is that the cheapest (and probably the most efficient) way to distribute power generated is through the existing national grid. The costs of developing another grid, which is isolated to a particular state or neighboring states is likely to be very high (perhaps prohibitive), which is why States like Lagos, who have tried to organise power generation, have passed this power on to the national grid for transmission and distribution. The controversy between Lagos and the Federal Government was essentially that Lagos wanted the power being generated by Enron (and being transmitted to the national grid) to be isolated to Lagos State i.e. that Lagos State should get the additional 300 or so MW being generated. My vague recollection was that the FG initially agreed to this but later reneged. The problem appears to be that the FG (being in control of the national grid) may want to allocate electricity in a politically expedient fashion.
Friday, December 4, 2009
Recent comment on Law Inter Alia Blog
Please see below our recent comment to this post on Law Inter Alia.
"To a large extent Power generation is already decentralised under the constitution. Under Nigeria's constitution, legislation in relation to power is a concurrent issue - the Federal Government can legislate on national grid related power, whilst state governments can legislate on off-grid power. Therefore under the current structure, states can improve their power base by installing distributed energy across their states. Granted, this would be an expensive exercise, but under the circumstances it is the only option left for states. In terms of restructuring the industry, I think the federal government should also focus on finishing the unbundling process started by the Electric Power Sector Reform Act. Additionally, it should seek to establish a credit worthy offtaker or offtakers for new private power plants."
"To a large extent Power generation is already decentralised under the constitution. Under Nigeria's constitution, legislation in relation to power is a concurrent issue - the Federal Government can legislate on national grid related power, whilst state governments can legislate on off-grid power. Therefore under the current structure, states can improve their power base by installing distributed energy across their states. Granted, this would be an expensive exercise, but under the circumstances it is the only option left for states. In terms of restructuring the industry, I think the federal government should also focus on finishing the unbundling process started by the Electric Power Sector Reform Act. Additionally, it should seek to establish a credit worthy offtaker or offtakers for new private power plants."
Tuesday, December 1, 2009
Oil majors and Nigerian Government agree on IJVs
Businessday reports that the international oil companies and the Federal Government of Nigeria have recently agreed on the IJV structure. My understanding of the situation, from attendance at several fora where this issue has been discussed, is that the oil majors do not particularly disagree with the proposed IJV structure, but appear to be concerned by the detail of how these entities would operate in practice. In order to be able to secure the necessary funding, it is critical that the IJVs are not merely seen as instruments of the government. Additionally, these entities may require waivers from legislation such as the Public procurement Act and the Fiscal Responsibility Act. In the absence of these issues being addressed appropriately, it is difficult to see how the objections of the international oil companies would not remain.
Monday, November 30, 2009
Tax Incentives for Mining Companies
The Minister of Mines and Steel Development, Mrs. Diezani Alison-Madueke, according to Thisday, has announced new incentives for mining companies including a 3 year tax holiday and the reduction of company income tax from 35% to 30%. It is not quite clear whether the tax holiday would fall under the existing "pioneer industry" scheme or whether it is a newly created scheme specifically for the mining industry. If it is the latter, new legislation would be required to bring this scheme into fruition. I am not aware of any proposed legislation before the National Assembly in this regard.
Tuesday, November 24, 2009
Information Minister gets lecture on managing oil wealth from Venezuelan Ambassador
The Venezuelan Ambassador to Nigeria has injected himself into the ongoing petroleum products deregulation debate by advising the Dora Akunyuli, the Information Minister that Nigerians currently pay significantly more for petroleum products than Venezuelans.
Nigeria Licenses First Solar Plant
The Nigerian Electricity Regulatory Commission ("NERC") recently licensed Wedotebary Nigeria Limited for the generation of 5 megawatts of electricity in Plateau State. Wedotebary plan to start supplying electricity by the first quarter of 2010. See Next for more details.
Monday, November 23, 2009
Dr Omonbude on Domestic Refining in Nigeria
Our Dr Omonbude has today published a paper on "Prospects for Domestic Petroleum Refining in Nigeria: A Note of Caution" in the Nigerian Energy Intelligence. The paper poses critical questions regarding the "robustness of plans for the establishment of domestic private petroleum refineries in Nigeria". The paper is well worth the read. I will post the link to the article once it becomes available.
Saturday, November 21, 2009
Nigeria renews Exxon Mobil Leases
Thisdayonline reports that the Federal Government of Nigeria has renewed three shallow water oil licences jointly held by the Nigerian National Petroleum Corporation and Exxon Mobil for a further twenty years. Although it is reported that ExxonMobil paid US$600million as signature bonus for these leases, by not reserving a portion of the interest in these leases for indigenous oil companies, the Federal Government may have missed an opportunity to deepen indigenous ownership of oil and gas resources. The move does suggest that the proposed acquisition of expiring or expired oil and gas assets by CNOOC, the Chinese state oil company may not fully materialise.
Subscribe to:
Posts (Atom)