India: EESL Cancels Smart Meters Order To Chinese Firm For Failing To Comply With Local Content Norms
India’s State-run Energy Efficiency Services Ltd (EESL) has cancelled Rs 500 crore contracts placed on a China-backed PT Hexing as it failed to comply with the local content norms.
EESL is expected to conduct fresh bidding for about 30 lakh smart meters in which, Indonesia-based PT Hexing that is backed by a Chinese firm, and other foreign firms will have to seek approval from the Department for Promotion of Industry and Internal Trade (DPIIT), as per the latest public procurement norms to participate in the tenders.
The Managing Director of EESL Saurabh Kumar said the cancellation of the contract has “nothing to do with the origin of investment. They failed in the terms of contract for domestic manufacturing.”
EESL had not begun deployment of the initial batch of smart meters that arrived from PT Hexing.
The tender for procurement of two million smart meters was won by PT Hexing under global bidding about two years ago.
The Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry on June 4 modified public procurement norms to give preference to companies whose goods and services have more than 50% local content.
The revised order on public procurement classifies suppliers into class-I, II and non-local suppliers, based on which they will get preference in government purchases of goods and services.
India recently barred non-local suppliers in bidding for contracts for supply of about 110 goods and services to power plants.
The non-local suppliers are manufacturers with less than 20% local content.
These tenders, in respect of which there is sufficient local capacity, will be open to only “class–I local suppliers” or those vendors who have more than 50% local content.
The power ministry has issued public procurement order with separate lists of products with adequate manufacturing capacity in India and those being manufactured locally under technology license from foreign countries.
The ministry’s latest order dated July 28 mandates that tenders for these 110 equipment and works can be awarded only to local companies with high localisation.
The equipment includes transformers, switch gears, cables and insulators, which are imported in large numbers in India despite available local capacity.
The ministry’s order is based on the June 4 order of the Department for Promotion of Industry and Internal Trade (DPIIT) that provides for compulsory purchase preference to local suppliers.
Nigeria: UBA Boosts Nigeria’s Oil Production With $200M Facility
The United Bank for Africa Plc (UBA) has announced a $200 million facility support to boost Nigeria’s crude oil production capacity.
The facility is part of a $1.5 billion Pre-Export Finance Facility provided by consortium of Nigerian commercial and international banks, with UBA as the lead arranger, for the Nigerian National Petroleum Corporation (NNPC) and its upstream subsidiary, the Nigerian Petroleum Development Company (NPDC).
According to the Vanguard, a statement from the bank said the deal will provide $200 million to support investment growth and liquidity requirements.
“The facility will provide much needed capital for investment in NNPC’s production capacity, which is of strategic importance to the Nigerian economy and the country’s leading source of foreign exchange earnings. UBA’s position as Lead Arranger recognises the Group’s strength in structuring and deploying financing to the oil and gas sector, and the depth and liquidity of the Group’s balance sheet.
Nigeria: NNPC Allays Fears Of Possible Fire On Dripping Lagos Pipeline“The $1.5 billion facility is structured in two tranches. The first tranche of $1 billion, to be repaid over a period of five years, will be provided in dollars, with UBA acting as the Facility Agent Bank. The second tranche of $500 million, will be provided in local currency, over seven years, with UBA acting as Lead Bank, providing $200 million in naira equivalent. “Both facilities will be repaid from an allocation of 30,000 barrels per day of NPDC’s crude oil. UBA has a strong track record in the resources sector across Africa, having facilitated oil prepayment deals with the NNPC, including its 2013 $100 million participation in the PXF Funding Limited transaction, and a further $60 million in the 2015 Phoenix Export Funding Limited transaction. In Senegal, UBA was responsible for the EUR 240 million revolving crude oil financing facility for the Société Africaine de Raffinage and in Congo Brazzaville co-funded the $250 million crude oil prepayment facility for Orion Oil Limited,” the statement noted. The Nigerian electric power industry (‘NEPI’) report – Agusto “Other participants in the NNPC deal include Standard Chartered Bank, Afrexim Bank, Union Bank and two oil trading companies, Vitol and Matrix.” Speaking on this development, UBA Group Chairman, Tony O. Elumelu stated “This has been one of the most economically challenging years that Nigeria has witnessed. With the sharp drop in the price of oil and the ensuing hardship that followed the onset of the Covid-19 pandemic, the private sector must come together and contribute meaningfully to the economy.
India: Fuel Demand Likely To Take 6-9 Months To Reach Normal Levels
India’s fuel demand may take 6 to 9 months to rebound to normal levels as several states impose lockdown to curb the spread of coronavirus, Indian Oil Corp (IOC) Director-Finance S K Gupta has said.
Fuel sales had fallen by a record 45.8 percent in April when a nationwide lockdown was in place to check the coronavirus infections. Lockdown restrictions have been progressively eased beginning May but now several states are imposing lockdown to curb record daily infection rates.
Speaking at an investor call on first-quarter earnings, Gupta said it was difficult to predict the demand recovery rate given the rising infections in India and around the world.
“It may take 6 to 9 months to return to normal,” he said.
After making a smart recovery in May, fuel sales have dipped from the second-half of June.
Diesel, which accounts for two-fifths of the overall petroleum product demand in India, fell 13 per cent to 4.85 million tonne in July from the previous month and by about 21 per cent from a year earlier, according to provisional PSU sales data.
Petrol sales fell 1 percent to 2.03 million tonne in July from June, and by about 11.5 per cent from a year ago, while jet fuel sales in July rose 4 per cent from the previous month to about 218,000 but fell 65 per cent from July 2019 as air travel curbs continued.
The only fuel that has consistently seen a rise in demand is cooking gas (LPG) which at 2.27 million tonne was 10 percent more than June and 3.5 per cent higher than a year ago sales, the data showed.
A tough initial lockdown was imposed beginning March 25 but dreams of a V-shaped recovery after it was eased in May have been obliterated by a surge in cases and new lockdowns.
Last week, IOC Chairman Shrikant Madhav Vaidya had stated that demand would begin to rebound only by year-end.
New lockdowns in India had knocked capacity utilisation at refineries down from 93 per cent in early July to 75 per cent by the end of the month but it was predicted to stabilise in the coming months.
“The number of lockdowns states are now announcing, that is taking its toll on the demand numbers,” he had said on July 31. “One thing is sure, we aren’t going back to the normal times at least in the near future.”
New lockdowns are hitting the country’s economic recovery as there appear no signs of the infection rate slowing.
Gupta said a capital spending of Rs 26,233 crore is planned in fiscal year 2020-21 (April 2020 to March 2021). Of this, around Rs 4,200 crore is planned to be spent on refinery upgrades and pipelines, Rs 5,000 crore on marketing infrastructure, Rs 2,200 crore on petrochemical projects, and Rs 5,000 crore on group companies.
“We want to complete this capex spending as there is no point in deferring capex already approved,” he said. “We want all the schemes (approved) to be taken on priority and spend Rs 21,000 crore capex (standalone for IOC, excluding group companies). To what extent we will be able to achieve (the target), that has to be seen (in view of COVID-19 spread). We are doing our best to spend.”
“As on date, plans stand. As we go forward things can be different depending on ground realities,” he said.
He said the planned expenditure on refineries is for completing BS-VI fuel upgradation spillover work while greater investment is planned in pipelines and marketing infrastructure that will reduce transportation and logistics cost.
The company has an ambitious plan to add more than 1,000 petrol pumps to its market-dominating presence of 29,368 outlets.
IOC, which saw its first-quarter net profit tank 47 per cent due to inventory losses, is likely to record inventory gains in the current quarter but core refinery margins are likely to remain subdued.
Source:www.energynewsafrica.com
2020 Africa Oil Week Goes Virtual On October 8
Organisers of Africa Oil Week have announced that it will host this year’s event via virtual online on October 8 in Cape Town, South Africa.
The session will be in partnership with TGS and the Somali Ministry of Petroleum and Mineral Resources.
Somali’s Minister for Petroleum and Mineral Resources, Hon. Eng. Abdirashid Mohamed Ahmed, is expected to open the session with an exclusive address.
Kosmos Energy Losses US$199 Million In Second Quarter 2020Following this, an expert panel would present on security, fiscal terms and seismic data available. The panelists are: • Phil McDonald, Regional Director for Africa, Castor Vali • Scot Fraser, Co-Founder, Ventura International Energy LLC, • Dr Alessio Checconi, Senior Business Development Manager for Africa and the Middle East, TGS The 90-minute session will be the first opportunity to hear directly from the Minister following the official licensing round announcement planned for August 4. Attendees will be encouraged to question the expert speakers directly about above and below ground risks, including offshore security concerns, attractiveness of fiscal terms and other factors that are a consideration for any oil and gas business looking to enter Somalia. There is no doubt that Somalia has become a significantly more attractive prospect since the signing of the country’s Petroleum Law and Revenue Sharing Agreement earlier this year. With up to seven blocks on offer, the round, set to conclude in March 2021, presents Operators with the opportunity to enter one of the last truly frontier passive margins in the world. The “Somalia Licensing Round: Derisking Above Ground Factors” session will be part of AOW Virtual, a two-day online conference recently launched by Africa Oil Week. The free-to-attend conference will aim to reignite the African upstream after a period of global downtime and will feature strategic outlooks from operators, a natural gas vs renewables debate and more. Further announcements are coming soon. To find these, and to learn more about the Somalia session and AOW Virtual, visit: https://bit.ly/3fxC5CX
Kosmos Energy Losses US$199 Million In Second Quarter 2020
Kosmos Energy has reported a second-quarter loss of US$199 million after reporting a profit in the same period a year earlier.
The Dallas-based company said it had a loss of 49 cents. Losses adjusted for one-time gains and costs were 23 cents per share.
Meanwhile, the independent oil and gas company posted revenue of US$127.3 million in the same period.
The company’s shares closed at US$1.61. A year ago, they were trading at US$5.87.
Despite the recent stabilising of oil prices, the COVID-19 pandemic and its economic impact continue to create a challenging environment for the oil and gas sector.
“Kosmos’ response remains focused on safe and reliable operations by protecting the health of our employees and contractors, reducing the risk of the virus spreading in our operations and minimising the impact on our business.
“We are also working closely with the local communities in the countries we operate in around the world to fight the virus,” the company said in a statement.
Commenting on the company’s second quarter 2020 performance, Chairman and Chief Executive Officer, Andrew G. Inglis said: “Kosmos delivered strong operational performance in the second quarter, despite a challenging backdrop for our industry. Production was in line with guidance and we are on track to deliver the cost reductions we set out earlier in the year.
“We have added an additional source of liquidity with the prepayment agreement, and total liquidity stood at over US$600 million at the end of the second quarter. At current oil prices, the company has reached a free cash flow inflection point and we expect to generate positive free cash flow through the second half of the year and into 2021.
“Looking forward, we continue to make good progress in Mauritania & Senegal despite the COVID-19 mitigations, with Phase 1 of the Tortue project now around 40 percent complete, a seven percent increase in the quarter, which supports the sell down process. We continue to mature our exploration portfolio focusing on high return, fast payback opportunities with several proven basin, infrastructure-led exploration targets and a self-funded basin-opening exploration program expected in 2021.”
Source:www.energynewsafrica.com
Ghana: Endemic Corruption Is Widening Poverty Gap In Ghana-Senyo Hosi
The Chief Executive Officer of Chamber of Bulk Oil Distributors (CBOD) in the Republic of Ghana, Senyo Hosi has decried what he described as endemic systemic culture of corruption as the root cause of uneven standard of living in the West African nation.
He said corruption has eaten into every fabric of Ghana’s socio-political systems that, institutions are not working, laws are bent to favour the norm and the system continues to work to favour just select-privileged few at the detriment of the masses.
Mr. Hosi said this in a virtual conference themed: ‘Corruption: Weak Institutions-We Are Going Nowhere’, in Accra, capital of Ghana.
The conference was organised by the Rotary Club of Accra.
Ghana: MiDA Takes Delivery Of Transformers For Pokuase BSP Project“In our industry, we lost GHc8.2 billion in taxes because of illegal trade and theft of taxes. Clearly, anybody who has been found culpable come suggesting that he or she is a member of the party in power.” He explained that the trend makes nonsense, arguing that one does not steal from the people and come and talk about political party. He stressed that the state being milked is not party machinery, but it is the people such corrupt officials are stealing from. Quoting from Section 179, subsection(c) of the Ghana’s Criminal Offences Act of 1960, Mr. Hosi argued that many contracts; be it competitive bidding or sole sourcing, officials and private individuals have ways to succumvent procurement processes to milk the state. Touching on political campaign funding and awarding of contracts as compensation for such businessmen, he observed that until structures were put in place to regulate the norm, the gap between the rich few and the majority poor would continue to widen. The phenomenon, he opined makes nonsense of hard work, education and discipline to the advantage of those who just network in the Ghanaian society. Corruption, Senyo Hosi stressed denies the future of poor people from succeeding or from hoping to transform their existing lives to the advantage of corrupt officials. He further contended that corruption thrives where political governance systems are porous, leadership is poor and institutions are weak. “Unfortunately, in our country, I think all of these exist badly enough and is quite a recurring feature for a long time,” he concluded. Source:www.energynewsafrica.com
Kenya:Safaricom, Kenya Power Partner To Allow Customers Buy Electricity
Kenya Power has partnered with Safaricom to enable its customers pay for electricity through Bonga Points.
Through the partnership, Kenya Power’s 7.1 million domestic customers can now redeem their Bonga Points to purchase tokens or pay for their bills at the rate of 20 cents per Bonga Point.
The partnership gives customers an alternative wallet from which to pay for electricity, thus providing relief to households facing pressure from suppressed incomes due to the economic effects of the Coronavirus pandemic.
At the same time, it provides customers with yet another cash-free avenue through which to pay for power, boosting the Company’s efforts to promote measures to curtail the spread of the Coronavirus. Presently, Kenya Power customers can pay for electricity using mobile money platforms and bank transfers, as alternative to cash payments.
Ghana: VRA Should Lead In Promoting Solar, Wind Energy Generation-Kalitsi“As an organization, we are acutely aware of the impact that this pandemic has had on many Kenyans. We are therefore calling on our customers to take advantage of this opportunity and pay for electricity using Bonga Points,” said Bernard Ngugi, Managing Director and CEO, Kenya Power in a press release. Bonga is a loyalty scheme launched by Safaricom in 2007 to allow its customers accumulate points based on usage of services on its network. Through a recent initiative dubbed ‘Bonga For Good,’ Safaricom saw over 1 billion Bonga Points redeemed towards food and household items. “Over the years, our customers have enjoyed rewards such as airtime, data bundles and affordable devices for their loyalty to the Safaricom network. By partnering with Kenya Power, we hope to give our customers more options and freedom in how they utilize their loyalty points,” said Peter Ndegwa, CEO, Safaricom. Customers paying for electricity using Bonga Points will be subjected to the applicable electricity tariff as stipulated by the Energy and Petroleum Regulatory Authority. Source:www.energynewsafrica.com
Ghana: Fuel Prices To Remain Largely Stable In August-IES
Consumers of petroleum products in the Republic of Ghana will continue to enjoy stable prices of gasoline and gasoil as witnessed in the just ended pricing window.
The average national price per litre of both gasoil and gasoline has stood at GH¢4.80 since July 16.
The current prices are likely to remain unchanged for the next two weeks.
In July, Brent crude sold above the US$44 per barrel for the first time since March 6 when the price tussle between Saudi Arabia and Russia started, but could not break into the US$45 per barrel mark.
In a statement issued by the Institute for Energy Security (IES), it said the positive gain in price can be attributed to the continuous lessening of restrictions in economic activities around the world.
“Following this, Brent crude appreciated by 2.02 percent from US$42.59 per barrel recorded at the end of the first half of July to close at US$43.45 per barrel on average terms at the end of the second half of the month of July 2020,” it added.
S&P’s Platts benchmark revealed average gasoline price gained 1.15 percent to close at US$395.23 per metric tonne from a previous average of US$390.73 per metric tonne. However, the price of gasoil declined by almost 2.8 percent to close trading at US$371.85 per metric tonne from a previous average of US$361.80 per metric tonne over the two weeks’ trading session.
Collated data by the IES Economic Desk from the Foreign Exchange (Forex) market shows the cedi appreciated by 0.35 percent against the U.S. Dollar, trading at an average price of Gh¢5.73 over the period under assessment.
“By virtue of relative stability in prices of Brent crude, gasoline and gasoil on the international market, the Institute for Energy Security (IES) finds prices of fuel on the local market remaining largely fixed. The price stability projection is reinforced by the 0.35 percent appreciation of the local currency against the U.S Dollar, the major trading currency.”
Source:www.energynewsafrica.com
Eni Appoints Francesco Gattei As Chief Financial Officer
Italian energy major Eni has appointed Francesco Gattei as the new chief financial officer (CFO) of the company.
Eni announced the appointment in a statement issued on Monday, August 3, 2020.
Gattei is tasked with supporting the CEO in developing and implementing Eni’s economic and financial strategy during the company’s accelerated decarbonization plan.
Namely, Eni announced a major overhaul of its business in June as it stepped up efforts toward energy transition.
The company decided to create two business units with one focused on oil and gas called Natural Resources and the second new unit would focus mainly on renewable energy named Energy Evolution.
Halliburton Books $1.7bn Loss In Q2 2020Eni’s current head of upstream Alessandro Puliti took on the lead role in Natural Resources while the company’s previous CFO Massimo Mondazzi took over as head of Energy Evolution. Mondazzi stayed on as the company’s chief financial officer until 1 August 2020. As for the new CFO, Gattei, he joined Agip S.p.A. in 1995. From 2001 to 2005 he was head of negotiations and commercial planning in Libya activities during the start-up and then the construction phases of the Western Libyan Gas Project. In 2009, he was appointed head of upstream M&A, contributing to the rationalization of the portfolio, particularly in the UK and United States. He then became the SVP of market scenarios and strategic options in Eni, where he was also appointed Secretary of the Scenario and Sustainability Committee, a post he held until 2019. He moved to Houston in 2019 to become the Eni’s upstream director of the Americas, managing the E&P business in the USA, Mexico, Venezuela, and Argentina. As for other endeavours, he was a member of the board of directors of Saipem from 2014 to 2015. Source: www.energynewsafrica.com
Ghana: COVID-19 Pandemic: We’ve Retained All 700 Employees Despite Low Activity-CEO Of Horgle Transport
Petroleum haulage and transportation company, JK Horgle Transport and Company Ltd says it has retained its 700 workers despite the outbreak of Covid-19 pandemic which has affected business activities in the Republic of Ghana.
The company’s CEO, Joseph Kweku Horgle said his company decided to maintain all the staff for a good reason.
Speaking in an exclusive interview with energynewsafrica.com, Mr Horgle said the coronavirus pandemic is having a dire impact on the company’s revenues yet it prefers to keep workers because it has invested so much into them by way of training.
“On our side, we train our drivers and we spend huge sums of money in training them. We can’t give them all this training and ask them to go home. We will lose. People even try to poach our drivers because they are well trained,” he said.
He said the only thing that would send any worker out of the company is when an employee goes contrary to the laid down rules.
He, however, lamented that their business has gone down by 40 percent due to the coronavirus “and so the company is incurring additional cost by buying hand sanitizers, liquid soaps, thermometer guns to ensure that workers observe the covid-19 safety protocols.”
Mr Horgle, who was hopeful of business activities bouncing back in the future, urged industry players to remunerate and also invest in the training of their staff to enable them prevent industrial accidents.
“Don’t just buy a vehicle and not pay the driver well. Pay them well and invest in their training to know how to fight fire,” he advised.
Source:www.energynewsafrica.com
South Africa: Sasol Invites Bidders For Two 10MW Solar Photo-Voltaic (PV) Projects
Sasol, a global integrated chemical and energy company is inviting interested Bidders to participate in a Request for Proposals (RFPs) process for the development of two embedded 10MW Solar Photo-Voltaic (PV) facilities at Secunda, Mpumalanga and Sasolburg, Free State in South Africa.
A statement issued by the company on Monday explained that the move is part of its response to climate change.
Interested Bidders are expected to submit their bids before or on Friday, 02 October 2020.
Sasol Chief Sustainability Officer, Hermann Wenhold, said: “We are excited to launch the RFP which forms part of our broader Greenhouse Gas (GHG) emission reduction aspiration and moves us forward on our journey to achieving our target of a 10% GHG emission reduction by 2030.”
In May this year, Sasol invited the Bidders to participate in a Request for Information (RFI) process for the supply of renewable energy to its South African operations.
The RFPs for the development of the two embedded 10MW Solar PV facilities at Sasol’s Secunda and Sasolburg operations come at the back of that, and are a first step towards Sasol realising its commitment and objective to eventually procure 600MW of renewable energy capacity.
The successful Bidder(s) will be expected to design, finance, construct, operate, maintain and own the Solar PV facilities and their associated connection infrastructure to supply 10MW of power to each of Sasol’s operations at their own cost. The successful Bidder(s) will supply electricity from the Solar PV facilities as Independent Power Producer(s) to Sasol as part of a long-term Power Purchase Agreement.
Interested Bidders may apply for access to the RFP by forwarding their company profile together with contact details to: [email protected] .
Source:www.energynewsafrica.com
Chevron Turns To Renewables To Power Own Facilities
Chevron USA and Algonquin Power & Utility Corp have announced an agreement to co-develop renewable power projects to provide electricity to Chevron’s global portfolio.
Under the four-year agreement oil and gas multinational Chevron plans to generate more than 500MW of existing and future electricity demand, using renewable sources, to power their operations in the US Permian Basin, Argentina, Kazakhstan and Western Australia.
The 500MW capacity outlined in the agreement is equivalent to the energy used to power 400,000 US households in a year and construction is planned to start in 2021.
President of Chevron Pipeline & Power Allen Satterwhite said the agreement “advances Chevron’s commitment to lower our carbon footprint by investing in renewable power solutions that are reliable, scalable, cost efficient and directly support our core business.”
Projects will be jointly owned and co-developed by both parties. Algonquin, parent companies of Liberty Utilities and Liberty Power, will lead the design, development and construction of the projects. US multi-national oil industry company Chevron will purchase the electricity from the jointly owned projects through power purchase agreements.
Algonquin CEO Arun Banskota says continuing to invest in renewable energy solutions is fundamental to their business strategy: “By working with sustainability champions like Chevron we maximise the positive impact of the low carbon technologies we offer to communities across the US and Canada, and internationally.”
Source:www.energynewsafrica.com
Ghana: GRIDCo’s Debt Recovery From The ECG Worsens: IES Analysis
From data collated by the Institute for Energy Security (IES), the debt of GH¢850.993 million owed to the Ghana Grid Company (GRIDco) by the Electricity Company of Ghana (ECG) in December 2019 has shot up by almost 31 percent to GH¢1.114 billion as of end June 2020.
The Institute’s trend analysis of cash receivables of the GRIDCo in the first half of year 2020 (HY1/2020) indicate that the receivables profile of the power transmitter is growing worse. The analysis revealed that as of January 2020 the total debt owed to the GRIDco by ECG was GH¢902.865 million, from December 2019’s figure of GH¢850.993 million.
The monthly analysis done for the HY1/2020 showed that the amount owed by the ECG to GRIDCo totalled GH¢451.468 million. However, the ECG paid only GH¢188.198 million representing 41.69 percent of total invoices issued. For instance, at end January 2020, GRIDCo invoiced the ECG GH¢74.872 million, made up of GH¢68.558 million in Transmission Service Charge (TSC) and GH¢6.314 million as Regulatory (PURC) Levy for power transmitted for the ECG in January, sending total outstanding debt to GH¢902.865 million. Out of total monthly invoice of GH¢74.872 million, the ECG paid only GH¢23.0 million, representing 30.7 percent of invoiced amount, as shown in Table 1 and Graph 1 below.
Month Total Bill (Gh¢ ‘000’) Total Paid (Gh¢ ‘000’) % Paid
Jan 74,872 23,000 30.72
Feb 75,460 30,000 39.76
Mar 78,825 37,000 46.94
Apr 72,564 14,753 20.33
May 78,231 37,175 47.52
Jun 71,516 46,270 64.70
451,468 188,198 41.69
The payments of February to June invoices by the ECG followed a similar pattern; suggesting a huge payment gap. The analysis shows that the ECG currently piles up close to GH¢11.0 million debt per week, as GRIDCo’s outstanding receivables rises to GH¢1.114 billion at end June 2020. Meanwhile GRIDCo bills ECG about GH¢19 million per week, of which they pay roughly GH¢8.0 million per week. Compared to 2017 when the GRIDCo used to receive close to GH¢8.0 million per week from a billing rate of GH¢13.0 million per week, the current debt recovery rate is nothing but worse.
Because of the increasing payment gap, the outstanding debt of ECG to the GRIDCo is found to be increasing at an astronomical rate. Data shows GRIDCo’s receivables from the ECG is increasing despite government clearing its indebtedness to the ECG at end 2019, leaving a credit in excess of GH¢500.0 million, enough to cover its bill for January 2020 to April 2020.
In March 2020, the Government committed to fully absorbing the electricity bills for all lifeline consumers for 3 months beginning April 2020. It also offered to pay 50 percent of the electricity bill for residential and commercial consumers for the period, using the March 2020 bill as the benchmark. Therefore, the logical expectation was at least 90 percent full debt recovery for both the ECG and GRIDCo, if the Government committed to his promise of paying for the electricity used by the people of Ghana. That was not to be, and Government has proceeded to extend the freebies to the aforementioned category of consumers, for an additional 3 months.
IES’ provisional projection based on the trend analysis, depicts that the debt position of ECG to GRIDCo could hit roughly 1.4 billion by the end of December 2020 should the ECG continue to pile up debt of close to GH¢11.0 million debt per week. The projected figure could be higher if government fails to pay fully the bills it has committed to take for consumers.
The IES is not against providing social protection programs for Ghanaians in these times of hardship caused by the COVID pandemic. In fact, the IES is strongly for it. However, the IES abhor policies that are targeted to see vital institutions whose contribution promotes economic development go down the drain due to political decisions that can go wrong.
Impact On GRIDCo
Aside the ECG, the indebtedness of the Northern Electricity Distribution Company (NEDCo), the Volta Aluminum Company (VALCO) and some mining companies to the GRIDCo, coupled with the depreciation of the Ghana cedi, contributes to the financial woes of the GRIDCo.
The debts owed by these companies to the GRIDCo is rising to unprecedented levels, and may likely render GRIDCo incapable of executing its critical projects that would make the national transmission system robust and improve reliability of power supply. It could negatively influence the day-to-day operations of the company, and could lead to the stalling of the many key projects undertaking by the company to improve on operations and efficiency, if not checked. The increase debts that translate into financial constraints may also make it difficult for the transmitter to meet its financial obligations to financiers, contractors, suppliers and service providers among others. The bad financial state of the company induced by increased receivables could result in increased payables and deterioration of its working revenue, and by extension produce financial losses.
Ghana: GRIDCo To Undertake Mass COVID-19 Test After A Staff Tested PositiveFor three consecutive years, GRIDCo has been recording losses with a net loss of GH¢114.3 million in 2019. Even in 2015 when the GRIDCo produced a good financial results, with total revenue of GH¢472.345 million and net profit of GH¢44.797 million, most of the profit recorded was in debt. The current happenings thus clearly indicate that the year 2020 may experience another round of losses for State power utilities. Remedial Actions The Institute of Energy Security (IES), fears that the toughest leadership test is approaching, where government and its allied institutions in the power sector would have to show how they intend to bring back power utilities into cost-effective and profit ways. The most appropriate module could be for the Government to reimagine its approach in dealing with debts in the sector, should it be willing to return power sector institutions to profit ways. Most critically, Government must proffer new ways in which to recover revenues owed the GRIDCo from institutions, whether private or state, and from the Energy Sector Levy Act (ESLA) Fund. The ECG must deal with the high commercial and technical losses in its system, and must commit to clearing all the debt owed GRIDCo, to guarantee reliable power supply to its distribution network. While the GRIDCo waits to receive payment from the ECG, or better still receive revival from the sharing of the ESLA Fund to help boost the finance of the company, Management of the company must focused on pursuing the debts owed by the ECG and other defaulting customers. GRIDCo must also consider cutting back on some of expenses (including CAPEX), focusing on those that are necessary to produce a robust transmission system, to manage the current challenges.
German Energy Investors Have A Bright Future In A Post-Covid 19 Africa
The Germany-Africa Business Forum (GABF) will on Thursday, August 6, 2020, organise an exclusive webinar to encourage new deals between German and African public and private energy stakeholders.
In a statement issued Monday, African Energy Chamber said “This is an extremely timely initiative.”
Covid-19 has accelerated several major trends and dynamics within Africa’s energy sector which are set to significant increase the demand for German capital and technology on the continent.
Energy has been identified by most African governments and financial institutions as a key sector able to support Africa’s economic recovery post-Covid-19. In parallel, global trends toward a cleaner energy transition are now accelerating and Africa is no stranger to the game.
The reshaping of the continent from 2021 onwards provides a great opportunity for German companies and technology to fight energy poverty in Africa and support the natural gas monetization and valorization drive from Mozambique to Senegal, Nigeria, Equatorial Guinea and Tanzania.
Eni Books $8.6 Billion Loss In First Half 2020“The African Energy Chamber is calling on Germany to work with African businesses to lower carbon emissions and support Africa’s path to a net zero future. From gas flaring to gas-to-power and cleantech, Germany has the capital and technology Africa needs to build an inclusive and sustainable energy future,” declared Nj Ayuk, Executive Chairman at the African Energy Chamber. By engaging not only with African governments but with the continent’s entrepreneurs and private companies, German stakeholders can structure the deals who will ensure a successful future for the German-African energy cooperation. German technical know-how and technology is increasingly looked after when it comes to assessing climate change risks and opportunities in business planning, and supporting public policies embracing decarbonization. Germany’s appetite for Africa has already translated into landmark projects and deals across the continent. In West Africa, Siemens is currently supporting Nigeria in raising its electricity capacity of 25GW under the country’s Presidential Power Initiative. Meanwhile, Voith Hydro and the Commerzbank recently joined Angola’s Caculo-Cabaça Hydropower hydroelectric project to support CGGC in completing the 2172MW power facility by 2024. An increasing number of German SMEs are also involved in landmark gas and power projects, including the Akinokien LNG receiving terminal in Equatorial Guinea. “We need to foster a candid and constructive dialogue with a broad range of German and African stakeholders on investment, energy poverty, the creation of an enabling environment for private businesses and the implementation of free market policies that benefit the poor and emerging African middle class,” concluded Nj Ayuk. Register for the webinar here: https://bit.ly/30oT8m9 Source:www.energynewsafrica.com