Russia’s state mineral exploration agency Rosgeologia has outlined plans for an aggressive new search for oil and gas resources in the Arctic, Moscow business daily Kommersant reports.
The exploration programme, which would run between 2020 and 2045, was proposed by Rosgeologia head Sergey Gorkov in a July 25 meeting of Russia’s state commission for Arctic development, the newspaper stated, citing a copy of his presentation. It would be funded with rubles 292.5bn ($4.6bn) in support from Russia’s sovereign wealth fund and the state budget.
According to Gorkov, finding new Arctic resources would help Russia expand the use of its Northern Sea Route (NSR). Moscow views the Arctic shipping route’s development as a strategic priority, with government officials setting out plans earlier this to expand its cargo trade to 92.6mn mt by 2024, up from 20.2mn mt last year.
The exploration programme would involve geological studies as well as parametric and appraisal drilling. Its first phase between 2020 and 2024 would cost a projected rubles 89.3bn, while the second between 2024 and 2035 would cost rubles 104.6bn. The final stage up until 2045 would require 98.6bn rubles.
Following its recent meeting, the Arctic commission’s head, Deputy Prime Minister Yury Trutnev blasted the work of Russia’s natural resources ministry in developing Arctic reserves as “unsatisfactory”.
“Little money is allocated, and geological exploration is carried out in insufficient quantities; fields are not being developed,” he said.
Earlier efforts had depended on bringing foreign technology, which US sanctions banned in the wake of the 2014 unrest in Ukraine. This brought to a close the Rosneft-ExxonMobil Kara Sea programme later that year after one well had been drilled. Russia is therefore working on developing its own technology, both to cut costs and protect itself from outside threats.
Rosgeologia is subordinate to the natural resources ministry. Gorkov took over as its head in April after his predecessor Roman Panov resigned following the arrest of his deputy on fraud charges.
Source: naturalgasworld.com
A cross-section of tanker drivers who lift petroleum products from Ghana’s only refinery, Tema Oil Refinery (TOR), have threatened to stop operation if management of the facility fails to fix its deplorable parking space.
The drivers, on Monday, parked their gas and oil tanker vehicles at the TOR tanker park for hours even when some of their leaders informed them about the refinery’s preparations to work on the park.
According to them, the clay park and passage to the loading gantry, which is about two kilometers, has deep gullies with exposed stones, which become very slippery and risky whenever it rained.
Mr George Nyaunu, Chairman of the National Ghana Petroleum Tanker Drivers Union, told the media that the nature of the park made it difficult for them to commute smoothly to the gantry, a situation he described as very risky.
Mr Nyuanu explained that, even though the tankers park and drove to the gantry empty, it could explode when the master pin detaches and causes it to topple over in the process of keeping sturdy on the slippery galley-riddled park.
He noted that authorities must not wait for such an incident to occur before responding to their needs, stressing that any explosion from a tanker due to the deplorable nature of the park could jeopardize the entire refinery.
He indicated that their action was not politically motivated, therefore, government should see it as an opportunity to fix the park for the general good instead of painting them in other party colours.
Executives of the Tanker Drivers Union
According to him, they had written several letters to the management of TOR, but were yet to get favourable response hence their action, adding that their last letter to TOR was on July 2, 2019, giving them “a seven-day ultimatum to find an amicable solution to the problem. Failure to adhere to this letter, the drivers will advise themselves”.
Mr Shafiu Mohammed, Chairman of the Gas Tanker Drivers Union, on his part, questioned why there were no sheds for waiting drivers, adding that drivers did not even have a place of convenience.
Mr Mohammed added that it was disheartening for them to be treated without dignity as they had to hide in their tankers whenever it rained.
Mr Moses Kwaku Otoo, an officer of the Industrial and Commercial Workers Union (ICU), the mother union of the drivers, appealed to the management of TOR to urgently shapen the park and provide the needed amenities to ensure the safety of drivers, trucks and the refinery.
Meanwhile, Dr Kingsley Antwi-Boasiako, Public Affairs Manager of TOR, says his outfit shared the plight of the drivers and had been interacting with them on the best way to repair the park and the road.
Dr Antwi-Boasiako added that TOR was committed to a safe and smooth transportation of petroleum products from the refinery.
He indicated that they were currently mobilizing logistics including trucks and bulldozers, to begin work on the park and the road leading to the gantry.
Source:GNA
Power development company, Ncondezi Energy (Ncondezi), has signed a Joint Development Agreement (JDA) with China Machinery Engineering Corporation (CMEC) and General Electric Switzerland (GE) to co-develop and construct the integrated Ncondezi 300MW coal-fired power project and coal mine in Tete, Mozambique.
This agreement follows the project’s recent inclusion by Chinese and Mozambique governments on the list of key infrastructure projects in the first half of 2019.
Ncondezi non-executive chairman, Michael Haworth said: “The board welcomes CMEC and GE to the project as partners and co-developers and looks forward to working with two world class companies who will bring complimentary skills, resources and experience to deliver the project.”
CMEC will be the main EPC and O&M contractor for the project, while GE will be the exclusive subcontractor for the power project core technology, including the boiler, steam turbine, generator, and air quality control solutions which will ensure the plant meets the emission standards established by the World Bank.
GE will also supply the required parts and serve as a field advisor for the power plant maintenance.
Ncondezi is expected to hold a 40% equity interest in the project.
A company statement noted that the JDA is the key outstanding milestone to formally engage with the Mozambican Government and state power utility, Electricidade de Mocambique (EDM), on the electricity tariff and key project commercial agreements such as the Power Purchase Agreement (PPA) and Power Concession Agreement.
According to Haworth, the parties will now finalize and agree on the joint development programme to financial close, with a focus on achieving the development co-funding conditions starting with the submission of an updated electricity tariff to EDM and opening up tariff negotiations over the next six months.
He said: “The tariff and PPA process is expected to leverage off existing development work completed and not require material external cost to the company.
“Whilst key milestones are still to come, the JDA is an important step towards the goal of generating power in 2023,” Haworth concluded.
Source: Esi-Africa.com
South Africa’s Public Enterprises Minister Pravin Gordhan has announced that Jabu Mabuza has been appointed as the acting CEO and the interim executive chairman of the South Africa’s utility company, Eskom.
Mabuza will serve at the head of the embattled national power utility for at least three months as Gordhan struggles to find a long-term solution for Eskom’s ongoing leadership crises.
Mabuza’s appointment follows the resignation of Phakamani Hadebe, whose tenure will end on 31 July.
Hadebe announced his resignation as CEO back in May, citing health reasons for his departure.
“I have informed the Eskom Annual General Meeting (AGM) this afternoon [Monday] of my decision to appoint Mabuza as the interim executive chairman for Eskom and acting CEO of Eskom Holdings,” Gordhan said in a statement.
“Mabuza will assume the duty as acting Group Chief Executive Officer (GCEO) for Eskom due to the resignation of Hadebe, who leaves Eskom on 31 July 2019. Within the three month period during which Mabuza will be the Executive Chairman and Acting CEO, the Eskom board will conclude the process of identifying a suitable candidate to become the next Eskom GCEO,” added Gordhan.
Public enterprises spokesperson Adrian Lackay told EWN … “To ensure continuity and to ensure that the board is instructed to really go and embark on a process to find a suitable candidate for group CEO on a permanent basis for Eskom Holdings and to see what the market appetite is for that.”
The Government of Ghana risks being slapped with judgment debts if producers of fuel and power fail to comply with terms of proposals to cancel take or pay clauses in the energy sector.
That is according to the Executive Director of the Kumasi Institute of Technology, Energy and Environment (KITE), Ishmael Edjekumhene.
It follows the disclosure by the Finance Minister, Ken Ofori Atta that the take or pay clause is having a toll on the nation’s finances which is impacting on revenue.
The Minister lamented the impact of the take or pay clauses on the national finances.
The clause means that the government pays for fuel or power produced whether or not it uses them.
For instance, the take or pay clause in the agreement involving oil production by ENI and its partners on the Offshore Cape Three Points (OCTP) is making the government to pay 51 million dollars monthly for unused gas produced at the site.
A situation Mr. Ofori Atta says needs to be stopped.
But Mr. Edjekumhene intimated that this may not come easy.
“If the government is able to get these take or pay contracts reviewed, then that will be a great impact but the question is whether the producers are ready to talk and whether they will agree to the terms and at what extent,” he noted.
Considering the fact that the NPP government inherited about thirty Power Purchase Agreements, it will face a relatively daunting task to get the various producers to agree to their terms.
According to Mr. Edjekumhene, a complete cancellation of the take or pay clause may lead to judgement debts which the government will have to contend with.
“There will only be judgement debt if somebody refuses to reach an agreement but of collectively there is an agreement to buy the terms of the agreement, then that may not be the case as there will be a negotiated settlement,” he added.
Source: Citinewsroom.com
Consumers of LPG in the Republic of Ghana are expected to pay for 8 Ghana pesewas more per kilogram of LPG in order to enjoy the commodity. Thus, consumers who used 14.5kg will be paying almost GHS 1.20p extra on the current price.
Ghana’s Minister for Finance Ken Ofori-Atta announced the 8 pesewas increment when he presented the country’s mid-year budget statement in Parliament, July 29, 2019.
Meanwhile, The LPG Marketing Association, had expected the minister to take advantage of the mid-year budget review, to bring some form relief to Ghanaians.
“We note with grave concern that the product which used to be subsidized, has its price build-up being constituted of more than 23% taxes now.
For instance, in 2015 a typical 14.5kg LPG cylinder cost about ¢48 and a bag of charcoal then was also ¢40 whilst a bag of charcoal is now ¢45 the same 14.5kg LPG cost ¢80,” Secretary of the Association, Justice Adu Mante, said in a statement issued last Thursday.
The Finance Minister also opined that, Government proposes to increase the Energy Sector Levies by GHp 20 per litre for petrol and diesel and GHp 8 per kg for LPG, so as to increase the inflows to enable Government issue additional bonds to pay down our energy sector debt obligations. Based on current indicative prices for petrol and diesel this translates to GHp 90 per gallon.
In addition, Government is also taking steps to relocate the Karpowership to Takoradi to immediately utilize Sankofa gas; Increase power exports by extending the grid to other West African countries; Streamline management of street lighting to ensure accountability and transparency in billing and payments; Increase productive uses of electricity and natural gas to spur industrialization; and engage gas suppliers with a view to reducing the price of natural gas.
Ghana’s Minister for Finance Ken Ofori-Atta has hinted that, government will from August this year do away with take or pay policy in the energy sector which is crippling the sector financially.
The Minister, described the country’s energy sector as being in a ‘state of emergency’ due to some take or pay power contracts the Mahama administration signed with some independent power producers. Therefore, government is set to abolish this policy.
Presenting the mid-year budget statement in Parliament Monday, July 29, 2019 Mr. Ofori-Atta noted that, Ghana is paying so much for unused power and it’s worrying.
“Currently, according to the Energy Commission, our installed capacity of 5,083 MW is almost double our peak demand of around 2,700 MW. Notably, 2,300 MW of the installed capacity has been contracted on a take-or-pay basis. This means that we are contractually obliged to throw away money for this excess capacity which we do not consume.
This has resulted in us paying over half a billion U.S. dollars or over GHS 2.5 billion annually for power generation capacity that we do not need.
“We shall from August 1st 2019, with the support of Parliament, make Take or-pay contracts a beast of the past,” he stated.
The Finance Minister also added that, for gas, Ghana has contracted for around 750 mmscf per day by2023. This is even after this government terminated two other LNG contracts in 2017.
“Current demand is around 250 mmscf per day, and this is projected to rise to between 450 and 550 mmscf per day by 2023. About 640 mmscf of the contracted gas supply is on a take-or-pay basis, meaning we have to pay whether we use it or not. From 2020, if nothing is done, we will be facing annual excess gas capacity charges of between US$550 and US$850 million every year. Thankfully, we have a plan to deal with this,” he said.
Ghana’s Finance Minister, Ken Ofori Atta has attributed the high cost of electricity tariffs in the country to the wasteful expenditure in the energy sector.
According to him, the situation is making Ghana uncompetitive for manufacturing, thus holding back our industrialization and job-creation agenda.
Presenting the 2019 mid-year budget review in Parliament, Ken Ofori Atta said “Mr. Speaker, the total costs in the energy sector that Government had to cover in 2018 amounted to US$520 million (GH¢2.7 billion).
Moreover, by end of June this year, Government had made total payments of US$604 million (GH¢3.14 billion), and if we do not urgently address the problems in the sector, the projected Government payments in 2019 will be at least US$1billion, (GH¢5.2 billion).
“Our top technical experts, assisted by counterparts from the World Bank, have subjected the energy sector to a thorough analysis and produced the Energy Sector Reform Programme (ESRP), which identifies the key issues in the sector and proposes solutions. According to the ESRP, which has been approved by Cabinet, if we continue with business as usual in the energy sector, the costs to Government will increase over time to an accumulated total of over US$12.5 billion by 2023. .”
The Finance Minister stated that “these wasteful expenditures in the energy sector are one of the main causes of increases in end-user electricity tariffs, imposing hardships on Ghanaians. Similarly, this makes Ghana uncompetitive for manufacturing, thus holding back our industrialization and job-creation agenda. What’s more, these wasteful payments are putting pressure on our foreign currency reserves and on the exchange rate.”
Total, the Republic of Benin and the Société Béninoise d’Energie Electrique (SBEE) have signed the Gas Supply Agreement and the Host Government Agreement for the development of a Liquefied Natural Gas (LNG) import floating terminal and the supply of up to 0.5 million tonnes per annum (Mtpa) of regasified LNG from Total’s global portfolio to Benin for 15 years, starting in 2021.
Total will develop and operate the regasification infrastructure that will comprise a floating storage and re-gasification unit (FSRU) located offshore Benin and an offshore pipeline connexion to the existing and planned power plants in Maria Gléta.
“This project is in line with Total’s strategy to develop new gas markets by unlocking access to LNG for fast-growing economies. We are very pleased to have been entrusted by the Benin authorities to develop LNG imports and support a broad adoption of natural gas in the country,” Laurent Vivier, Senior Vice President Gas at Total said.
“Access to LNG will help Benin to meet growing domestic energy demand and add more natural gas to the country’s current energy mix, hence reducing its carbon intensity”.
The Minister of Energy of Benin, Mr Dona Jean-Claude Houssou, stated, “I congratulate the Total Group on its willingness to support the revitalization of the energy sector, which is at the heart of the Government’s Action Plan (PAG), as evidenced by the signing today of the gas import contract. I would like to highlight the Government’s efforts to restore Benin’s energy independence, which is the foundation of the country’s ambitious economic and social development. The new legislative framework fosters the participation of private capital in the energy sector and is manifested in independent thermal, solar and hydroelectric power generation projects. The gas import project will supply plants in Benin, such as the new 127 MW power station at Maria Gléta, with imported liquefied natural gas, on preferential terms and will position Benin, capital of the WAPP (West African Power Pool), as the crossroads for gas and electricity in the sub- region.”
The agreement is subject to conditions precedents.
Qatar Petroleum is further expanding its international reach as it has signed a deal with Total for a share of rights in two blocks offshore Guyana.
The Qatari national oil and gas firm will take hold of 40% of Total’s existing 25% participating interest in the Tullow-operated Orinduik block. Tullow Oil owns a 60% participating interest and EcoAtlantic with a 15% interest in the block.
Also under the farm-in deal, Qatar Petroleum will take 40% of Total’s existing 25% participating interest in the neighboring Kanuku block. Repsol is the operator of the Kanuku block with a 37.5% stake, with Tullow Oil holding the remaining 37.5% interest.
Three exploration wells are planned in these blocks this year: two on the Orinduik block, including the Jethro well which is currently being drilled, and one on the Kanuku block.
“We hope that the exploration efforts are successful. I would like to take this opportunity to thank our partners and the government of Guyana for their collaboration in this effort, and we look forward to working together in these blocks,” Saad Sherida Al-Kaabi, QP CEO said.
The Orinduik block sits 120 kilometers offshore Guyana and has a total area of about 1,800 square kilometers, with water depths ranging from 70 to 1,400 meters. The Kanuku block is located 100 km offshore Guyana and has a total area of about 5,200 square kilometers, with water depths ranging from 70 to 800 meters.
Al-Kaabi said: “We are pleased to expand our global exploration footprint into Guyana together with our valuable, long-term partner, Total, in these offshore blocks in this prospective basin.”
Qatar Petroleum is increasing its overseas reach, as the company just last week signed agreements with Eni and Total to acquire a 25 percent stake in three blocks in the frontier areas offshore Kenya.
The company has in the past years acquired rights in the acreage offshore South Africa, Mexico, Morocco, Cyprus, Mozambique, and Oman as well, with partners being Eni, Total, and ExxonMobil.
Source: offshoreenergytoday.com
Tanzania’s Minister of Energy, Hon. Dr Medard Kalemani has confirmed his attendance at the Tanzania Oil and Gas Congress in October this year.
A statement copied to energynewsafrica.com, said Hon. Dr Medard Kalemani will give updates on the recently announced plans for a syndicate of oil companies to commence construction of the $30bn LNG project in 2022.
In March, the government stated that it planned to complete negotiations with a group of international oil companies in September to develop the project.
Led by Norwegian energy firm, and Platinum Sponsor of the Congress, Equinor, the group also consists of Royal Dutch Shell, ExxonMobil, Ophir Energy and Pavilion Energy.
These international companies will work closely on the project, alongside the state-run Tanzania Petroleum Development Corporation (TPDC).
In a budget presentation to parliament, the Honourable Minister stated that the project aims conclude in 2028 and will have capacity to produce 10 million tonnes per annum of LNG.
Currently, each individual investor of the project is holding separate talks with the government negotiation team. These talks are expected to be finalized within seven months.
According to the Bank of Tanzania, work on the project will increase annual economic growth, which currently stands at around 7%, by another two percentage points.
Those keen to learn more about the movements in Tanzania’s gas market would find it beneficial to attend the Tanzania Oil & Gas Congress, which brings together key players in Tanzania’s oil and gas value chain.
Delegates at the high-profile event, which takes place in Dar es Salaam on 2 – 3 October 2019, will be the first to hear about Tanzania’s exciting investment opportunities directly from the Minister of Energy, Government representatives, regulators and industry leaders.
A consumer advocacy group in the Republic of Ghana, Chamber of Petroleum Consumers, has said that it will fiercely resist any attempt by the government to increase fuel taxes in the 2019 Mid-year Budget.
There are speculations that among the key components of the mid-year budget review expected to be presented in parliament on Monday, July 29, 2019 will be an increment in taxes on petroleum products.
But the Executive Secretary for COPEC, Duncan Amoah argued that the general cost of living in the country has increased as a result of high fuel prices, thus an increment in the taxes will only worsen the plight of Ghanaians.
“Any attempt to foist on us any additional increases by way of taxes instead of the rather general expectations of reductions will be fiercely resisted.”
In a press statement ahead of the budget reading, Mr. Duncan Amoah said Ghanaians will not be able to bear that cost of an increment.
“A section of members of Ghana’s Parliament are already pretty certain of a potential hike in the already choking levels of taxation on the petroleum price build-up affecting Ghanaian pockets.”
“General cost of living within the country has been pushed steeply upwards as a result of high fuel prices but little has been done to reduce the taxes although policymakers and the government acknowledges the difficulties people within the country are facing as a result of these super high fuel prices at the pumps.”
COPEC said increasing petroleum taxes will be “easiest route in squeezing additional revenue from an already frustrated petroleum consumer.”
COPEC said although it believes that there is the need to broaden the country’s tax net, it will be insensitive to increase taxes considering the general hardship in the country.
The Chamber urged the government to focus on illegal fuel smuggling activities happening across the country which leads to revenue leakages instead.
“Provisional figures of Revenue lost by the country according to the NPA for last year alone was in excess of $ 200 million whiles our conservative calculations around the same period points to a revenue loss of about GhS 1.6 billion to the State…. These figures are expected to be even higher by close of year 2019 if nothing is done to stop the illegal fuel smuggling within the country,” COPEC said.
A former Deputy Minister of Energy and Petroleum in the Republic of Ghana, John Jinapor, is urging citizens of the West African nation to resist any hike in cost of electricity or petroleum products that may be announced by the country’s Finance Minister during the mid-year budget review.
The former deputy minister, who is currently the Member of Parliament for Yapei Kusawgu, argued that the need for increased revenue is a result of the government’s mismanagement of the energy sector.
According to him, the government plans to either increase specific Energy Sector Levies or convert the specific levy to ad-valorem.
He noted that the government has earned more than GH¢6 billion from the Energy Sector Levies since assuming office and has projected an additional GH¢3.9 billion for the 2019 financial year.
The legislator insists that revenue struggles were self-inflicted and “responsibility should not be shoved off to the already burdened citizens.”
“For instance out of the over GH¢1.3 billion realized from the 2018 Road Fund Levy as captured in the 2018 ESLA (Energy Sector Levy Account) Report, only GH¢685.50 million was released for road-related expenditure while the rest went into other non-road-related activities.”
In addition, Mr. Jinapor complained that the Finance Minister has so far “failed to account for over GH¢250 million from the total collection of GH¢3.1 billion as captured in the 2017 ESLA Revenues Account.”
“I, therefore, wish to serve notice to the government that we will not countenance any attempt to increase the specific levies or change it from specific to ad-valorem or whatever name they may choose to call it.”
“Indeed, the time has come to send a clear and unambiguous signal to President Akufo-Addo and his Government that we shall use whatever legitimate means possible, both in and out of Parliament to resist any attempt to further burden the citizenry with any tax increment,” Mr. Jinapor warned.
Ghana’s Finance Minister Mr Ken Ofori-Atta is expected to present a mid-year budget review in Parliament on Monday, July 29, 2019.
Find below his full statementUpward tax increment will lead to unbearable hardships for Ghanaians – John Jinapor
Ghanaians must totally reject any further Tax increases from the Akufo-Addo-led NPP Government in the 2019 Mid-year budget review expected to be presented to the nation on Monday, July 29th.
It will be recalled that in the lead up to the 2016 general elections, the NPP under then-candidate Akufo-Addo made a promise to scrap the Energy Sector Levy if voted into power.
Since assuming political office close to three years, not only have the levies remained, but revenues accruing to the fund has been grossly misappropriated and managed in the most abysmal manner.
For instance, out of the over GH¢1.3 billion realised from the 2018 Road Fund Levy as captured in the 2018 ESLA (Energy Sector Levy Account) Report, only GH¢685.50 million was released for road-related expenditure while the rest went into other non-road-related activities.
As if this was not enough, the Minister of Finance, Hon. Ken Ofori-Atta has so far failed to account for over GH¢250 million from the total collection of GH¢3.1 billion as captured in the 2017 ESLA Revenues Account.
From the records, this Government has realised more than GH¢6 billion from the Energy Sector Levies since assuming office and projecting to collect an additional GH¢3.9 billion for the 2019 financial year.
As a result of mismanagement of this levy, the Deputy Minister of Finance Mr. Charles Adu Boahen recently hinted during the debate on ANNUAL REPORT ON THE ENERGY SECTOR LEVIES AND ACCOUNTS FOR THE YEAR 2018 in parliament, the intention of the Akufo-Addo government to do the following:
Increase the specific ESLA Levies or
Convert the Specific Levy to Ad-valorem
The Minister for Information Kojo Oppong Nkrumah whiles addressing Journalists in Accra also stated that the mid-year budget review will afford government the opportunity to take a second look at revenue mobilization as highlighted in the 2019 budget.
Obviously, having failed to achieve anything substantial in the infrastructure sector despite all the revenue and loans contracted since 2017, the NPP government has adopted a sinister plan of subtly preparing the minds of Ghanaians for tax increases and further burden the ordinary Ghanaian, knowing very well the people will resist and revolt against any further imposition of hardship on them.
The abysmal record of this government in the infrastructure sector can only be as a result of bad policy decisions and poor management of the Nation’s resources.
It will be recalled that this same Government against caution from industry experts and stakeholders decided to pursue a populist but unwise decision by usurping the functions of the PURC with some deceptive claims of a so-called 17% Tariff reductions which eventually turned out to be a ruse.
The poor management of the economy has also culminated in a sharp decline of the Cedi against the United States Dollar and other foreign trading currencies in recent months leading to a very poor financial state of the Energy Sector Agencies.
Innocent Ghanaians should not be made to shoulder the consequences of poor policy decision from the NPP government especially coming on the heels of the recent Electricity and water tariff increment.
I, therefore, wish to serve notice to government that we will not countenance any attempt to increase the specific levies or change it from specific to ad-valorem or whatever name they may choose to call it. Indeed, the time has come to send a clear and unambiguous signal to President Akufo-Addo and his Government that we shall use whatever legitimate means possible, both in and out of parliament to resist any attempt to further burden the Citizenry with any Tax increment. The quagmire we find ourselves in as a nation presently is self-inflicted and responsibility should not be shoved off to the already burdened citizens.
God bless our homeland Ghana
Thank you.
John Abdulai Jinapor
Former Deputy Minister of Energy and Petroleum
Nigeria, Africa’s biggest oil producer, could attract more U.S. investment if the oil and gas sector becomes less opaque and a fuel-price peg is removed, a US official has said.
“Nigeria needs to think strategically about what is going to make it a more attractive destination,” Brent Omdahl, commercial counselor at the U.S. Department of Commerce, said in an interview in Lagos.
“Our investors are willing to compete on fair terms for new investments if there’s a transparent process to try to win new oil opportunities. What is difficult or a disincentive to investors is when deals are done and then the contracts are not honored,” he added.
Controls on energy prices are also constraining investment, according to Omdahl, who is leaving Nigeria this month.
The country’s National Petroleum Company imports most gasoline under a swap program and has capped the pump price at 145 naira ($0.40) per liter – one of the lowest prices worldwide. Yet that system cost the government almost $2 billion in subsidies last year, according to the International Monetary Fund, which has called for the cap to be lifted.
The controls “perpetuate a system where only certain people benefit,” Omdahl said. “Why not open it up and let everybody benefit from it. That is money that can be used in making investments in refineries and all of a sudden you are paying less for imported fuel and your price goes down.”
Omdahl further said that an accumulation of “easy” loans from China risks increasing debt-servicing costs, and warned against missing out on financing opportunities from multilateral development banks with more stringent requirements.
Nigeria has increased borrowing from China in recent years to finance railways, airports and power plants. Loans from China stood at $2.55 billion as of March 31, which is about one-tenth of Nigeria’s external debt stock, according to the country’s debt management office. While Nigeria has a relatively low 19% ratio of debt to gross domestic product, debt servicing takes up about 69% of government earnings, IMF data show.
“Nigeria needs to ask, money isn’t free, somebody has to pay,” Omdahl said. “So you might as well do what is necessary to earn transparent money.”
