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Lawan Urges FG To Reverse Privatisation Of Power Sector

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Senate President Ahmad Lawan on Tuesday called on the Federal Government to review or reverse the privatisation of the nation’s power sector.

Lawan made the call while contributing to a motion on the “Power Sector Recovery Plan and the Impact of COVID-19 Pandemic” sponsored by Senator Gabriel Suswam (Benue North East)

Lawan said: “We gave them our common patrimony and they still come back as DisCos and GenCos to look for money from the public.

“The time has come to review and probably reverse this privatisation, if we leave them for the next 10 years there would be no power in Nigeria.

“Like I said before this motion was taken, the privatisation has so far not been successful.

“We expected efficiency, effectiveness in power supplies but probably on both sides, maybe the purchase agreements were not adhered to on both sides.

“What is obvious is that the DisCos particularly have no capacity at the moment to supply us power.

“The GenCos have challenges too. It is not good that we give them money we sold – these are businesses.

“If there are areas we must intervene as a government must be seriously justified.

“The way it is I think there is need to review this privatisation to see what has happened. Something is certainly not right.

“In the event that this thing does not work properly, there will be need for the government to look into it.”

Meanwhile the Senate after its debate on the motion resolved to “Commend the Federal Government for the proactive initiative to establish the N1.7 trillion COVID-19 Crisis Intervention Fund to cater for issues that are critical to effective management of the Pandemic and to stimulate gradual return to normal socio-economic activities in the country.

“Urge the Federal Government through the Federal Ministry of Finance to include the Nigerian Electric Power Sector in the disbursement of the proposed N500 billion COVID-19 Crisis Intervention Fund.

“This was in order to ameliorate the financial hazards and operational challenges such as the enumeration of metering of actual consumers and recent problem arising from the pandemic.

“Urge the Federal Government to suspend the planned tariff increase which is scheduled to take effect from 1st of July, 2020 bearing in mind the increased hardship resulting from the COVID-19 Pandemic.

“Mandate the Senate Committee on Power to investigate all Federal Government interventions in the power sector since the privatization of the sector to date with a view to ascertaining the adequacy of such interventions and other desired impact, and to report back within four weeks.

“Mandate the Senate Committee on Power to investigate all market participants in the power value chain and ascertain the level of corporate governance compliance in the Nigerian Electricity Supply Industry (NESI) and to report back within four weeks.

“Urge the Central Bank of Nigeria to allow operators in the power sector access to foreign exchange for procurement and materials like what is done in the aviation and oil industry.

“Urge the Federal Government to consider additional tariff support to cushion the effect of rate shock over a fixed period to allow time required for TCN and DisCos to access funds and implement performance improvements investments that will support increased tariffs to certain classes of customers especially during the pandemic.”

Senator Suswam in his lead debate said that the Senate is aware that at the outbreak of COVID-19 pandemic, “the Federal Government through the Federal Ministry of Finance intimated the leadership of the National Assembly of plans to establish a N1.7 trillion COVID-19 crisis intervention fund to be utilized to upgrade healthcare facilities across the country, stimulate agriculture, solid materials, power sector and also execute social intervention programmes that will benefit the masses.”

He noted that while the appropriate executive bill that will articulate the actual use of the fund is yet to be presented to the Senate for consideration, “the devastating impact of the pandemic on the power sector has necessitated the need for the Senate to draw the attention of the Federal Government to the need to include the sector in the disbursement of the proposed fund.”

He said that this is in view of “the vital role of stable electricity supply to current efforts towards jumpstarting the economy which is till groaning under the impact of the pandemic.”

Suswam added: “The stable and uninterrupted power supply is also a critical factor in the management of COVID-19 patients as well as in the implementation of the proposed upgrade of healthcare facilities across the country after the pandemic.

“Aware that prior to the outbreak of the COVID-19 pandemic, the Nigerian Electricity Supply Industry (NESI) was already facing teething operational constraints including the absence of cost-reflective tariffs, inadequate enumeration and metering of consumers, limited access to funds for investment, poor revenue generation and high levels of aggregate technical, commercial and collection (ATC&C) losses.

“Generation Companies (GenCos) were owed 72 per cent of their revenue in 2019 while the Distribution Electricity Companies (DisCos) reported average ATC&C losses of about 41 per cent in the same year.

“All these constraints prevented the NESI from performing optimally across the power value chain.

“Alarmed that the COVID-19 pandemic has further impacted negatively on NESI as the DisCos reported a 50% loss of their average monthly revenue collection for the months of March and April 2020 respectively even as the Federal Government continues to harp on the need for a stable electricity supply.”

Lawmakers in their contributions supported the motion.

Senator Francis Fadahunsi in his contribution lamented that even though the Federal Government spent huge sums of money between 2006 till date, it has only been able to generate 6000 megawatts of power.

On his part, Senator Abubakar Kyari said: “I am not comfortable with the term cost effective tariff when no one has been able to say how much is spent in producing a megawatt so as to determine how much to charge. Everything is based on assumptions and something must be done about it.”

“The data that is being used to take decisions in the sector are incorrect, Senator Aliyu Sabi Abdullahi said.

Senator Uche Ekwunife noted that “There is no difference between NEPA and DisCos as power is hardly available in the rural areas.”

“I commend the initiative of the Federal Government for a stimulus package of N1.7 trillion in the COVID-19 intervention fund,” Senator Adamu Aliero said.

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Onanuga Advocates Functioning Social Security System In Nigeria

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By Sola Alabadan

In view of the impacts of the COVID-19 pandemic and the ensuing economic crisis, the former Director General of Lagos State Pension Commission (LASPEC) said there is the critical need for a functioning social security system to allow all Nigerians to achieve an adequate standard of living.

Mrs. Onanuga made this call while delivering the theme paper “Covid-19 Impact On Financial Inclusion: Opportunities For Insurance & Pension Sectors” at the sixth edition of the national conference of the National Association of Insurance and Pension Correspondent (NAIPCO) held recently in Lagos.

She said “The World Bank estimates that the covid-19 crisis will result in 10.9 million Nigerians falling into poverty by January 2022. If we have learned anything, the pandemic and the ensuing economic crisis have highlighted the critical need for a functioning social security system to allow all Nigerians to achieve an adequate standard of living.

However, she lamented that “unfortunately, the social security system in Nigeria is next to zero; so you need to plan for yourself so that if anything happens, you need to be able to stand.”

Mrs. Onanuga stressed  that in this era of COVID-19 pandemic, insurance and pension is what Nigerians need to lean on for a hopeful future.

“If you really want to remain in business, you must take insurance, in the event of sudden occurrence like the pandemic, insurance will help you to stand back on your feet; in the event of you finding that because of the pandemic a breadwinner of a family dies, there must be a buffer to ensure that the family is not affected.

“Therefore, more than ever before, you find out that actually there is need for both insurance and pension products to ensure that we continue to live and meet our need of sustainable living, healthy living, wealthy living and of course, continuity in business. That is why it is important for all of us to identify that we have these needs for growth and continuity by taking up both insurance and pension products,” Mrs. Onanuga said.

In her goodwill message, Director General, National Pension Commission (PenCom), Mrs Aisha Dahir-Umar, who was represented at the event by the Commission’s Head, Corporate Communications, Mr. Peter Aghahowa, emphasised the need for Nigerians to embrace contributory pension, as a social security safety net.

He said the issue of gathering retirees physically in various locations across the country for verification is now a thing of the past with the online verification and enrolment portal recently launched by the Commission.

According to him, “Before now, we would congregate several retirees in different centres of the country to do the enrolment for the Treasury Funded retirees, and now that can be done online.

“I’m happy to announce that over 3,000 people have been enrolled through our online portal out of 11,000 expected to retire this year.

Also speaking, the Chief Executive Officer, National Insurance Commission (NAICOM), Mr. Olorundare Thomas, called on Nigerians in all walks of life to embrace insurance as risk-mitigating mechanism.

The Commissioner for Insurance was represented by Assistant Director, Market Development, Adeyemi Abubakar.

He congratulated the NAIPCO members, for their consistency in organising the conference, as a platform to ensure that they reach out to the public with their reportage on the insurance sector to ensure the growth of the insurance business in Nigeria.

The Commissioner for Insurance reminded NAIPCO of their role as purveyors of information, awareness creation and catalysts of economic growth, just as he solicited the continued cooperation of the Association for the growth of the industry.

He said for the Nigerian insurance market to record significant growth and contributes adequately to the nation’s gross domestic product (GDP), all hands must be on deck, noting that the media has a critical role to play in this especially in sensitising the public on the benefits of insurance.

Thomas believes that deepening insurance penetration can only be possible through a deliberate and sustained insurance awareness which, he said, will also lead to the realization of the Federal Government’s financial inclusion initiative.

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FIRS Generated N4. 2 Trillion In First Nine Months Of 2021

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Muhammad Nami, executive chairman of the Federal Inland Revenue Services (FIRS), says the agency generated revenues worth N4.2 trillion in the first nine months of this year.

The senate had in January, approved an upward review of the revenue target for the FIRS from N5.076 trillion in 2020 to N7.61 trillion in 2021.

While speaking on Arise News on Wednesday, Nami noted that the FIRS would have met its N7 trillion revenue target by now but for the challenges in the oil and gas sector, adding that the cut by the Organisation of Petroleum Exporting Countries (OPEC) had impacted the country negatively.

He noted that due to the perennial windfall in the oil sector for a long time, tax sources were ignored, including stamp duty, adding that the tax body has now further embarked on unbundling of its tax administration process.

“We have collected so far N4.2 trillion as at nine months of the year, and out of this N4.2 trillion, N3.3 trillion came from non-oil taxes and the remaining one, which is about N950 billion came from oil taxes,” he said.

“So, if you look at it critically, for the fact that we realised that there’s a problem in the oil and gas sector, the fact that Nigeria government requires these funds to fund the budget, we had to do one or two things differently, making sure we’re able to generate more money for the government.

“It (fall in taxes) has to do with the drop in OPEC quota to Nigeria. It is as low as 1.4 million barrels per day, as against 2.4 BPD that we used to have, and Nigeria is not even able to produce up to that 1.4 million barrels per day. What we currently produce is in the region of 1.2 million barrels and 1.25 million barrels on a monthly basis.

“So, you can imagine the difference of the impact that 1 million barrels a day will have on the revenue of this country and also on the taxes that come from that revenue,” he explained.

TheCable understands that Nigeria’s oil output increased marginally in September to an average of 1.25 million barrels per day from the lowest hit in August — 1.24 million. Nigeria has also been performing below the OPEC quota — from an average of 1.36 million barrels per day in January 2021 to the current 1.25 million.

Speaking further, Nami said that the passage of the Petroleum Industry (PIA) was the right thing to do because the current petroleum profit tax being collected remains very low due to losses declared by oil companies owing to the COVID-19 pandemic.

“Those losses are as a result of the policy that gave these oil-producing companies investment allowance as against production allowance. So, whatever you spend, if you like, you spend money on a chartered flight from Abuja to my village, you still pass it to the company’s cost,” Nami said.

“Charter a plane from Nigeria to Egypt or anywhere a meeting is taking place and those become liable to deductions. But with the new petroleum industry act, that ceases to be the case, the reason being that their allowances are now based on the total volume of production that is carried out.

“So if we have this fiscal regime, we’re going to be able to realise two goals. One, oil companies would focus their attention trying to produce which will lead them to making their own money and also translating to revenue and taxes for Nigeria.

“This is opposed to giving them the power or liberty of taking out or deducting all expenses whether it is exclusively or not necessarily in the ordinary course of their business from the profit that they’re supposed to pay taxes from. It is going to be based on the production of oil. This is a fundamental shift.”

The FIRS chairman also added that the agency is deploying new technologies to monitor production volumes.

“We are going to be able to monitor everything, particularly in terms of actually finding the allowable deductions so that going forward, even the Nigerian companies are able to pay taxes expected from them,” he added.

“If by the end of nine months, we have generated N3.3 trillion for non-oil taxes alone, the oil sector used to account for over 55 to 60 per cent of the total taxes we collected in the past.

“So, if everything were to be okay, by today, we should be talking about N7 trillion already because if the non-oil sector were to be operating at a level that you want it to operate, Nigeria would have been better for it.”

TheCable

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NNPC Accepts NUPENG’s Demand, Offers To Rebuild Roads

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The Nigerian National Petroleum Corporation (NNPC) says it will rebuild damaged roads under the road infrastructure tax credit (RITC) scheme.

Mele Kyari, group managing director of NNPC, made this known during an engagement with stakeholders in Abuja on Tuesday.

This is coming two days after the National Union of Petroleum and Natural Gas Workers (NUPENG) called off its planned strike action over the “shameful state of roads in the country”.

NUPENG had decried the loss of its members and properties to dilapidated roads — but NNPC appealed to the union to shelve the planned strike so as not to affect energy security.

During the meeting, the corporation said the engagement is part of efforts to provide lasting solutions to dilapidated roads across Nigeria and sustain the current smooth supply and distribution of petroleum products nationwide.

Kyari said stakeholders agreed on a framework for NNPC’s intervention in critical road rehabilitation through the RITC scheme.

“We are committed to utilising the federal government’s tax credit scheme to rebuild some of the affected roads in line with Mr. President’s executive order 7,” Kyari said.

“Upon our fruitful deliberations today, the NNPC has pledged to support the PTD and NARTO in carrying out quick intervention fixes on some strategic bad spots identified to enable unhindered movement of trucks for transportation of petroleum products nationwide.”

The meeting, according to a statement signed by Garba Deen Muhammad, NNPC spokesperson, was attended by the Petroleum Tanker Drivers (PTD), the National Association of Road Transport Owners (NARTO), Department of Petroleum Resources (DPR), federal ministry of works, Federal Inland Revenue Service (FIRS), Department of State Services (DSS), Federal Road Safety Corps (FRSC) and NUPENG.

The NNPC said stakeholders also agreed to enforce mandatory installation of safety valves in all petroleum product trucks in the country effective February 1, 2022, with the full commitment given by NARTO.

The meeting also frowned at the abuse of axle load or tonnage limits, with the NNPC agreeing to engage the Nigerian Customs Service (NCS) for enforcement of preventing the importation of tanks that exceed 45,000 litres capacity.

The road infrastructure tax credit (RITC) scheme enables companies with high tax profiles to construct roads in a negotiated agreement with the federal government to provide the infrastructure instead of taxes.

It is a public-private partnership (PPP) intervention that enables the Nigerian government to leverage private sector capital and efficiency for the construction, repair, and maintenance of critical road infrastructure in key economic areas in Nigeria.

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