Oil & Energy
Electricity: As Stakeholders Seek Improved Supply…
When the Head, Consumer Services of the Port Harcourt Electricity Distribution Company (PHED), Dr Godwin Orovwiroro recently told a gathering of stakeholders that the company plans to deliver 24 hour-power supply in Port Harcourt, not many of his listeners were moved.
To them, 24-hour services is a tall dream and a feat not realizable in the near future going by the firm’s current performance across the four states of Rivers, Cross River, Akwa Ibom and Bayelsa, where it covers.
A consumer retorted, “how can you talk of 24-hour supply when we hardly see the light? According to him, “for over three weeks, residents of my area have not seen light. Before then, we suffered low current supply for days and now they are talking about 24 hours light, what magic will they apply?
Orovwiroro, who was educating consumers on their rights during a consumers forum held a forthnight ago at Ernest Ikoli Press Centre in Port Harcourt, said as consumers you have right to contest unfair billing, do not have to pay to replace any faulty facility of the distribution company such as poles and transformers.
He explained further that inspite of the efforts of the company, it is confronted by myriad of challenges as inability of consumers to pay their bills promptly, vandalism, energy theft, attack on company staff, amongst others.
He said the aim of the forum which targeted professionals was to brainstorm and to find solutions affecting supply of electricity in the area.
Some participants were surprised that consumers do not have to pay for the replacement of failed equipment of PHED when out there and the field, consumers were being made to contribute money to pay for bad transformers, wires and other accessories. They accused staff of PHED of asking innocent consumers to pay.
A youngman, Chituru Ibe, said in Etche, consumers were asked to contribute fund to buy transformers and also for installing same.
“The entire people using the transformer were asked to buy transformer. It is common in many places, does it mean such money only gets into the pocket of the fraudulent staff instead of the company’s account?
The head consumer services, however fought back, he accused desperate power consumers of attempting to corrupt PHED’s staff as a way of getting back supply in event of any outage.
Noting that consumers should be patient as the company would rectify and replace faulty equipment, he urged consumers not to be desperate and attempt to lobby or bribe the company’s field staff.
Orovwiroro urged consumers to report any company staff demanding money to replace any faulty equipment as appropriate sanction awaits such workers.
The implication is that those light committees which gather consumers within their various domains to contribute money running into millions or several hundreds of thousands of Naira are fraudsters.
On several occasion, the light committees who always have sweet and persuasive story would brain wash the gullible neighbours into paying so that they would get supply because the PHED workers would not attend to their issues as quickly as they need it done.
This story of not paying for faulty facilities by consumers has been emphasized by the government but, in practice, it has persisted. It requires a strict monitoring by PHED to arrest and deal with erring field engineers who benefit from the crime.
Some consumers are always desperate and in a hurry to get their disrupted electricity supply restored, hence fall prey to the antics of the fraudulent people who are said to have their members amongst PHED staff, community leaders, power or electricity committees and atimes landlords. It is only by dealing with the culprits that the trend will be checked.
PHED would be doing itself a great deal of good if those erring staff are dealt with. Apart from defrauding the poor consumers, they give the firm a serious image problem.
The issue of over billing or crazy billing was also one of the issues in contention. Consumers who do not have the prepaid meters always cry of crazy billing since there can never be any acceptable measurement of services enjoyed other than the meter.
The failure of PHED to provide customers or consumers with prepaid meters helped in compounding the situation. In spite of the directive from the Nigeria Electricity Regulatory Commission (NERC) to DISCOS across the nation to provide meters to consumers, some DISCOS do not appear to observe the directive.
While few DISCOs are providing prepaid meters, PHED cannot be said to be serious on this issue of meters, if you remember its promise of providing 250,000 prepaid meters since last year.
The company has been giving one excuse after the other thereby dashing the hope of consumers. Some consumers claim to have paid long ago but that the company was yet to provide them with the meters.
They believe that absence of the prepaid meters was for unfair billing system to keep flourishing.
A resident of Ojoto street in Diobu Ugo Henry, said, “the PHED staff merely come to the yard, look around and fix any amount of bill the staff wants you to pay.
“You just begin to wonder how he determines what volume of energy you consumed without meters. I have never seen a situation where a party to the bargain would demand high price for services that are hardly there”.
In search of improved service delivery, NERC should give ultimatum to DISCOs to meter all and sanction erring DISCOs. The era of crazy billing should end. Apart from being suspicious, it does not reflect any modern business transaction. Only the NERC can save the poor electricity consumers from the DISCOs who are out to make profit not minding the standard of services it renders to its customers.
Though, the popular belief is that estimated billing is targeted against consumers, staff of PHED believe that ironically, it is the firm that loses under estimated billing because most times, customers were billed below what they enjoyed.
According to them, most consumers who get prepaid meters after agitations, turn round to complain that the meters read faster and plead they be reverted to the estimated billing because it is lower.
Which ever side that wins the argument is immaterial as what is important is for meters to be provided consumers. This is the standard for measuring energy consumption world over. If all customers are metered, there would be more confidence that bills issued to them are transparent and commensurate with the energy consumed.
Chris Oluoh
The Federal Government has expressed optimism in attracting more investments by International Oil Companies (IOCs) into Nigeria to foster growth and sustainability in the energy sector.
This is as some IOCs, particularly Shell and TotalEnergies, had announced plans to divest some of their assets from the country.
Recall that Shell in January, 2024 had said it would sell the Shell Petroleum Development Company of Nigeria Limited (SPDC) to Renaissance.
According to the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, increasing investments by IOCs as well as boosting crude production to enhancing Nigeria’s position as a leading player in the global energy market, are the key objectives of the Government.
Lokpobiri emphasized the Ministry’s willingness to collaborate with State Governments, particularly Bayelsa State, in advancing energy sector transformation efforts.
The Minister, who stressed the importance of cooperation in achieving shared goals said, “we are open to partnerships with Bayelsa State Government for mutual progress”.
In response to Governor Douye Diri’s appeal for Ministry intervention in restoring the Atala Oil Field belonging to Bayelsa State, the Minister assured prompt attention to the matter.
He said, “We will look into the issue promptly and ensure fairness and equity in addressing state concerns”.
Lokpobiri explained that the Bayelsa State Governor, Douyi Diri’s visit reaffirmed the commitment of both the Federal and State Government’s readiness to work together towards a sustainable, inclusive, and prosperous energy future for Nigeria.
While speaking, Governor Diri commended the Minister for his remarkable performance in revitalisng the nation’s energy sector.
The Federal Government has assured investors in the nation’s gas sector of the security and safety of their investments.
Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, gave the assurance while hosting top officials of Shanghai Huayi Energy Chemical Company Group of China (HUAYI) and China Road and Bridge Corporation, who are strategic investors in Brass Methanol and Gas Hub Project in Bayelsa State.
The Minister in a statement stressed that Nigeria was open for investments and investors, insisting that present and prospective foreign investors have no need to entertain fear on the safety of their investment.
Describing the Brass project as one critical project of the President Bola Tinubu-led administration, Ekpo said.
“The Federal Government is committed to developing Nigeria’s gas reserves through projects such as the Brass Methanol project, which presents an opportunity for the diversification of Nigeria’s economy.
“It is for this and other reasons that the project has been accorded the significant concessions (or support) that it enjoys from the government.
“Let me, therefore, assure you of the strong commitment of our government to the security and safety of yours and other investments as we have continually done for similar Chinese investments in Nigeria through the years”, he added.
Ekpo further tasked investors and contractors working on the project to double their efforts, saying, “I want to see this project running for the good of Nigeria and its investors”.
Earlier in his speech, Leader of the Chinese delegation, Mr Zheng Bi Jun, said the visit to the country was to carry out feasibility studies for investments in methanol projects.
On his part, the Managing Director of Brass Fertiliser and Petrochemical Ltd, Mr Ben Okoye, expressed optimism in partnering with genuine investors on the project.
Crude oil prices recently logged their second monthly gain in a row as OPEC+ extended their supply curb deal until the end of Q2 2024.
The gains have been considerable, with WTI adding about $7 per barrel over the month of February.
Yet a lot of analysts remain bearish about the commodity’s prospects. In fact, they believe that there is enough oil supply globally to keep Brent around $81 this year and WTI at some $76.50, according to a Reuters poll.
Yet, like last year in U.S. shale showed, there is always the possibility of a major surprise.
According to the respondents in that poll, what’s keeping prices tame is, first, the fact that the Red Sea crisis has not yet affected oil shipments in the region, thanks to alternative routes.
The second reason cited by the analysts is OPEC+ spare capacity, which has increased, thanks to the cuts.
“Spare capacity has reached a multi-year high, which will keep overall market sentiment under pressure over the coming months”, senior analyst, Florian Grunberger, told Reuters.
The perception of ample spare capacity is definitely one factor keeping traders and analysts bearish as they assume this capacity would be put into operation as soon as the market needs it. This may well be an incorrect assumption.
Saudi Arabia and OPEC have given multiple signs that they would only release more production if prices are to their liking, and if cuts are getting extended, then current prices are not to OPEC’s liking yet.
There is more, too. The Saudis, which are cutting the most and have the greatest spare capacity at around 3 million barrels daily right now, are acutely aware that the moment they release additional supply, prices will plunge.
Therefore, the chance of Saudi cuts being reversed anytime soon is pretty slim.
Then there is the U.S. oil production factor. Last year, analysts expected modest output additions from the shale patch because the rig count remained consistently lower than what it was during the strongest shale boom years.
That assumption proved wrong as drillers made substantial gains in well productivity that pushed total production to yet another record.
Perhaps a bit oddly, analysts are once again making a bold assumption for this year: that the productivity gains will continue at the same rate this year as well.
The Energy Information Administration disagrees. In its latest Short-Term Energy Outlook, the authority estimated that U.S. oil output had reached a record high of 13.3 million barrels daily that in January fell to 12.6 million bpd due to harsh winter weather.
For the rest of the year, however, the EIA has forecast a production level remaining around the December record, which will only be broken in February 2025.
Oil demand, meanwhile, will be growing. Wood Mackenzie recently predicted 2024 demand growth at 1.9 million barrels daily.
OPEC sees this year’s demand growth at 2.25 million barrels daily. The IEA is, as usual, the most modest in its expectations, seeing 2024 demand for oil grow by 1.2 million bpd.
With OPEC+ keeping a lid on production and U.S. production remaining largely flat on 2023, if the EIA is correct, a tightening of the supply situation is only a matter of time. Indeed, some are predicting that already.
Natural resource-focused investors Goehring and Rozencwajg recently released their latest market outlook, in which they warned that the oil market may already be in a structural deficit, to manifest later this year.
They also noted a change in the methodology that the EIA uses to estimate oil production, which may well have led to a serious overestimation of production growth.
The discrepancy between actual and reported production, Goehring and Rozencwajg said, could be so significant that the EIA may be estimating growth where there’s a production decline.
So, on the one hand, some pretty important assumptions are being made about demand, namely, that it will grow more slowly this year than it did last year.
This assumption is based on another one, by the way, and this is the assumption that EV sales will rise as strongly as they did last year, when they failed to make a dent in oil demand growth, and kill some oil demand.
On the other hand, there is the assumption that U.S. drillers will keep drilling like they did last year. What would motivate such a development is unclear, besides the expectation that Europe will take in even more U.S. crude this year than it already is.
This is a much safer assumption than the one about demand, by the way. And yet, there are indications from the U.S. oil industry that there will be no pumping at will this year. There will be more production discipline.
Predicting oil prices accurately, even over the shortest of periods, is as safe as flipping a coin. With the number of variables at play at any moment, accurate predictions are usually little more than a fluke, especially when perceptions play such an outsized role in price movements.
One thing is for sure, though. There may be surprises this year in oil.
lrina Slav
Slav writes for Oilprice.com.
