Petroleum Products Scarcity

Petroleum Products Scarcity

Since the downturn of oil price in the middle of 2014, petroleum products have drop in price worldwide except in Nigeria. The official pump price is ₦87 per litre for PMS; however, today it goes for a minimum of ₦150.

People queuing for petroleum products.

There has been accusations and counter-accusation between the FG and Petroleum Product Marketers. The minister of Finance Ngozi Okonjo-Iweala has accused the Petroleum product marketers is blackmailing the FG, and ganging to stop the selling of petroleum products to consumers within the federation. She claimed barely a week after reaching an agreement to pay marketers over ₦200billion of claims, that the marketers are yet to be selling petroleum products to consumers; furthermore, that the marketers are demanding that she sign to pay another ₦159billion which is meant to be payment for differential due to the changes in exchange rate.[1]

Nigerians need petrol, diesel, etc to run their vehicles, to power their homes and to run their businesses. It is really biting hard on all Nigerian citizens and residents alike, individuals and companies. Some foreigners have joined to hustle for the search and purchase of the scarce commodity.[2] Furthermore, this petroleum product scarcity has forced aviation companies like Arik Air to suspend operation, Virgin Atlantic to divert to Ghana for purchase of aviation fuels. Not left out are telecommunication companies Airtel, MTN, etc; they are finding it difficult to power their equipments in order to provide efficient services due to this scarcity of petroleum products.

Petrol scarcity forces a foreigner to join the hustle - courtesy of Symphony007 of Nairaland.com

Why are we at the mercy of petroleum products marketers? Nigeria ranks the sixth largest exporter of oil, yet we import refined petroleum products for our consumption. We have four refineries in Nigeria, yet we are not feeling the impact of refineries in our economy; instead, we are being dependent on a group of petroleum marketers.

Back in 2012, most International Oil Companies IOC claimed that building refineries in Nigeria and the world at large was not profitable. This statement can be attributed to Mr Malcolm Brinded, the outgoing Executive Director of Shell Petroleum Development Company (SPDC). He based his claims on the information that there are surplus of refineries in the world; consequently, additional refineries in Nigeria will be at a loss to any entity venturing into the business. Furthermore, he claimed that it will be better to import refined products and pay the differentials in transport and exchange rates than to refine oil here in Nigeria.[3]

A petroleum refinery

Now we see the results of not developing our refineries. If the FG made plans to build new refineries or at least maintain the old ones so that they run at optimum capacity, we would not be in this problem we have found ourselves. Let us look at the advantages and disadvantages of refining our crude oil in Nigeria.

Advantages

• Capacity building and development of locality.
• Job creation for citizens and residents.
• Savings on logistics of importing refined petroleum products.
• Potential export of excess refined petroleum products.
• More business opportunities for entrepreneurs.
• Elimination of petroleum subsidy.
• Elimination of round-tripping (making claims on locally refined product with the assumption that they are imported).

Disadvantages

• Long-term business plan.
• Huge investment.
• Lack of quick returns.

Merely looking at advantages and disadvantages, we will realise that if we really want this country to move forward, then we need to stop looking at only short-term solutions, stop patronising conmen pretending to be businessmen.

On another note, Nigeria needs alternatives to these petroleum products. The demand for petroleum products in Nigeria is mostly for electricity generation. Our refineries are not working; we are not generating enough electricity to power the nation. Solar power is a very viable solution if we must develop and grow.

References

[1]          Fuel Crisis: ​​Okonjo-Iweala Accuses Oil Marketers Of Blackmail

[2]          White Man Looking For Fuel With Jerry Can In Nigeria

[3]          Why We Can’t Build Refinery In Nigeria -              Shell

http://dreamingnigeria.blogspot.com/2015/05/petroleum-products-scarcity.html

Electricity Business Challenges in Nigeria 3

What do you know about the current transmission and distribution system?

Which is more preferable in power systems, underground cable or overhead line?

The distribution and transmission network in Nigeria is mostly (90%) based on over head lines. The 330kV, 132kV, 33kV, 11kV, 415V lines are mostly based on overhead lines. In the distribution network, these conductors are usually placed at least 7 metres above the ground, suspended using concrete or wooden posts, far from human reach. Furthermore, these conductors are usually not insulated; however, they are isolated from the poles using porcelain insulators. In the transmission network, these conductors are placed at a higher height than that of distribution network due to the higher voltage in the network, and they are suspended using metallic structure which is composed of steel trusses. In addition, the conductors are suspended using glass insulators.

Advantages of Overhead Line

·         Lower capital costs.

·         Easy accessibility to the operators.

·         Quick time for repairs.

·         Easy upgrade.

Disadvantages

      ·         Easy accessibility to illegal connection touts and consumers.

       ·         Easy accessibility to vandals.

       ·         Highly susceptible to bad weather conditions such as wind, rain, snow, etc.

Given the current distribution system in Nigeria, where consumers engage in illegal connections, it can be said that overhead distribution lines can never work in Nigeria. The peoples’ orientation on energy theft needs to be dealt with appropriately. There is always a sudden trip-off of power supply whenever there is thunderstorm, rain or wind in Nigeria. Rain decreases the insulation provided by the surrounding and calculated separation of the conductors, this causes leakage currents which instantly triggers the safety measures and the control point. Thunderstorms, the electric discharge from a lightning bolt can trigger safety control systems as well. High wind speeds can wreck havoc on building, and overhead line structure. Furthermore, due to the problem of incessant vandalism on, it will be better to look into better way of securing the system as well.

Underground cables, most developed nations have phased out overhead lines; New York has no overhead line since 1890’s, Singapore has 100% underground network, The Netherlands has 100% distribution network, etc. So why can Nigeria embark upon underground cables distribution and transmission network. There are only few places with underground cables; example, parts of Sokoto State Polytechnic, Sokoto.

Advantages of Underground Cable

       ·         Not susceptible to bad weather conditions.

       ·         Unexposed to vandals.

        ·         Unexposed to illegal connection touts.

        ·         Low maintenance costs – if well panned and managed.

Disadvantages

                ·         High lifetime costs – needs to be replaced at expiry date to guarantee safety.

       ·         Upgrade needs an overhaul the installation.

       ·         Fault location is instantaneous but repair can take some while to be completed.

The beauty of underground cable network is that it prevents illegal connection, energy companies will definitely benefit from this because it will bring energy theft to a halt; however, this will involve a lot planning, dedication and investment. Once an underground cable has been buried and commissioned, it can last for up to 40 years and if its capacity is not exceeded, then it serve the community throughout its lifetime. No individual or group can successfully vandalise an underground cable, and bad weather conditions have no effect on it.

More coming soon....

Electricity Business Challenges in Nigeria 2

Do you need constant electricity?

Are you willing to bear the cost of constant electricity?

Prior to the advent of GSM in Nigeria, these same questions were on the minds of investor and every concerned individual in Nigeria. SIM cards sold for nothing less than NGN50, 000, how about handsets; they sold for nothing less than NGN30,000. The handsets in question are Nokia 3310, Siemens A50, Motorola; devices that hard less quality than your everyday scientific calculator. However, despite the cost, most Nigerians saw the value of GSM communication, they embraced it and our glorified dinosaur NITEL went caput because it refused to evolve.

With the success in the Telecoms industry in Nigeria, then an innovative solution for the Power industry should work as well. You must have read about the analysis of solar power that I posted on this blog. It is a viable solution if people can key into it.

Another phase of this solution is the total overhaul of the distribution network in Nigeria. The distribution network level has been bastardised, a lot illegal connections, inefficient wiring and wrong terminations plague the distribution network; there several losses incurred on the line. A new system that will be based on underground distribution network with zero accessibility to non-certified staff of the Operator distribution company should be installed. Furthermore, two-way electric meters should be installed as well.

Next, I will explain more on the advantages of underground distribution network.

Au revoir!

Electricity Business Challenges in Nigeria

How can we make this Solar Power solution possible in Nigeria?

Where can the everyday Nigerian get the money for Solar Power generation?

The first thing about a solution is accepting it as a solution. I have gone thru a quiz from friends on how I can recoup my money if I install it for consumer. However, my goal is not to install for a consumer but to install for very Nigerian and African at large.

There is one thing every Nigerian should know, any service rendered or commodity consumed must be paid for, else that service of commodity will cease to exist. Let us take an example, why has NEPA/ PHCN/DISCOs failed to provide power to Nigerians adequately? The answer is simple; most Nigerians prefer to consume electricity from the grid without making any payment.

Initially, it was a problem of lack of electric meters; this made NEPA/PHCN to send out estimated bills to customers. Note the phrase ‘estimated bill’, which customer in his/her right frame of mind will pay for an estimated bill; a customer has to the right to reject any estimated bill as far as he/she does not see the actual bill. Another problem with estimated billing is that the managers at the various distribution centres eagerly manufacture estimated bills for customers without any reference to energy that was supplied to the region they managed.  This coupled with electricity touting led to consumers making  illegal connections, it became a norm to the society, then the DISCO debt recovery agents failed in their duties by taking bribes from consumers and allowing them to use electricity without making any form of payment or having a concrete agreement to make payment.

Furthermore, with illegal connection now the norm, consumers of business categories hardly pay bills. Most welder shops, mechanic shops, barbing saloons, woodwork specialists shops, metalwork specialists shops, ladies’ hair dressing saloons, bukas(mini restaurants), beer pubs, mini guesthouses,  etc, do not have any electric meter installed at their places of businesses. These businesses run mostly of private generators which are fuel expensively, with the illegal connections, they utilise a few hours electricity from the grid; and at the end of the month, the DISCO agents will deliver an enormous energy bill to them - these bills are estimated bills. These businesses already pay a lot by running private generators, these enormous estimated bills without any evidence gets ignored; consequently, ignoring energy bills are now normal in the society.

In addition, even customers that are genuinely billed now ignore energy bills because, there is inadequate supply of electricity and why should one consumer pay when another is enjoying electricity illegally. As a result, when energy is utilised and no payment is made, the utility company NEPA/PHCN/DISCOs will definitely go into extinction like dinosaurs.

Coincidentally, other utility companies that were operated by the government has suffered the same fate – extinction, namely NITEL, NIPOST (operates below it capacity), State Water Corporations, etc. Other potential utility companies such Cooking gas companies, Internet companies are not developing as a result of this problem as well. NITEL was the sole operator of telecommunications in Nigeria prior to the year 2000. Having a telephone at home or in the offices was considered a luxury, less than 20% of the population had telephone at their homes. However, with the advent of GSM which was pioneered by ECONET, the spread of communication gadgets in Nigeria increased. Initially, to obtain a SIM card was expensive, and then came the competition MTN, Mtel, Globacom, Etisalat, and other CDMA networks. This competition eventually lowered the cost of the acquiring mobile phone subscription in Nigeria; now we have nearly 100% mobile subscription for every adult in Nigeria.

Now if there is a solution to telephone subscription in Nigeria, then we can as well develop the solution to the electric energy sector.

What are my ideas.......?