03 Jul

Daily Watch – National grid collapses 14 times in H1, Oil prices tumble in Q2

  • Oil prices tumbled in the second quarter as many investors who at the start of the year clung to hopes of rapidly shrinking stockpiles finally cut their losses. Crude ended the quarter 9% lower, and sank as much as 21.9% in June from highs in February. A loss of 20% or more typically signals the start of a bear market. Prices fell even after OPEC announced it would extend its cuts into next year and the U.S. Energy Information Administration reported that U.S. stockpiles fell nearly every week during the quarter. At the same time, U.S. output has risen more quickly than many predicted: The EIA is now forecasting that it will average a record of 10 million barrels a day next year. Output from Libya and Nigeria, OPEC members exempt from the production-cut agreements, has ramped up as well.
  • FAAC shared a total of ₦2.27 trillion among the three tiers of government in the first five months of this year. This is an increase of ₦600 billion over the ₦1.69 trillion, which the committee allocated to the federal, state and local governments in the corresponding period of 2016. A breakdown of the ₦2.27 trillion shared in the first five months of this year showed that in January, the three tiers of government got ₦430.16 billion. In February, the federation generated ₦514 billion, which dipped to ₦466.9 billion in March. The allocation declined further by ₦52.07 billion to ₦415.73 billion in April, but went up to ₦462.4 billion in May. Under statutory allocation, the FG gets 52.68 percent of the revenue shared; states, 26.72 percent; and local governments, 20.60 percent. The FAAC framework also provides that VAT revenue be shared with FG getting 15 percent; states, 50 percent; and local governments, 35 percent. Extra allocation is given to the nine oil producing states based on the 13 per cent derivation formula.
  • Nigeria’s electricity grid has collapsed 14 times since the beginning of this year. Based on reports obtained from the TCN, the Punch found that power generation remained unstable in Q2, rising above 4000MW and crashing to around 2000MW on different occasions. The grid collapsed four times in Q2, as against 10 times in Q1. The highest rate of system collapse was recorded in January, when the grid crashed six times. In January, the grid recorded a peak generation of 4160.4MW, but crashed to 10MW, 108MW, 49.2MW, 112.2MW, 147.2MW and 182.1MW on the 15th, 16th, 18th, 25th, 27th and 28th, respectively. It collapsed three times in February and recorded a peak generation of 4777.5MW, which currently stands as the highest electricity generation recorded in the country this year. Grid collapses were recorded on February 1, 4 and 22, as it crashed to 143MW, 25MW and 320.5MW, respectively. Only one collapse was recorded in March, bringing the total number of grid collapse in Q1 to 10. The power grid collapsed from 3069.5MW to 108.7MW on April 9, and moved up marginally to 240MW the next day, while on April 26, it crashed to 113.6MW, down from the 3222.5MW that was recorded the preceding day. After about six weeks without recording a collapse, the grid crashed last Tuesday, dropping from a peak of 4141.5MW to 78.4MW.
  • Petroleum products marketers and depot owners have told ThisDay newspaper that despite the instruction by the Acting President to the Ministry of Finance to pay the marketers their outstanding subsidy claims, which they estimated at about $2 billion, none of them was paid as at close of work on Friday. At the end of a meeting with the Major Oil Marketers Association of Nigeria and the Depot and Petroleum Products Marketers Association on May 22, the Acting President asked the Finance Ministry to pay the marketers all verified claims so that they could resume importation of petrol. The Executive Secretary of DAPPMA, Femi Adewole, said that despite the directive by the Acting President, the marketers had not yet been paid. Adewole pointed out that the delays in the payment of the marketers’ claims could precipitate crisis in the downstream sector as the banks have not backed down on their threats to seize tank farms over the unpaid loans borrowed by the marketers to fund importation during the subsidy regime.