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N93bn debt: power crisis looms, as big debtors default



  • As Airlines cancel flights over aviation fuel scarcity

Electricity distribution companies, DISCOs, at the lead weekend made good their threat by embarking on mass disconnection of historic debtors, barely a week after warning them to offset their debts, put at N93bn.

The DISCOs alleged that while electricity consumers expect the provision of modern facilities electricsuch as transformers, pre-paid meters and world class services, their ability to deliver on these expectations had been constrained by fund shortages, occasioned by huge indebtedness and government’s inability to implement the power tariff structure.

Confirming the mass disconnection yesterday, Executive Director, Association of Nigeria Electricity Distributors, ANED, Sunday Oduntan, said for now, all historic debtors, including residential, commercial, industrial and government establishments across the defaultthree tiers of government would have to find alternative means of electricity supply until the debt issue is resolved.

A breakdown of the debt profile as at last calculation indicated that government establishments, including the military and security agencies alone owed the DISCOs some N93bn. The figure comprises N39.1bn pre-privatisation of electricity assets and N39.5bn post privatisation. Also computed is the outstanding interest of N15bn, which the Bulk Trader charges DISCOs for late payment of their electricity bills, a situation that occurred as a result of non-settlement of electricity bills as at when due.

A further analysis of the indebtedness showed that government establishments, comprising ministries, departments, military formations, security agencies owe each distribution company as follows; Abuja DISCO N18.6bn, Eko DISCO, N8.6bn, Kaduna, N8.2bn, Enugu, N7.2bn, Ibadan DISCO, N6.8bn, Ikeja DISCO, N5.9bn, Port Harcourt DISCO, N6.8bn, Benin DISCO, N5.8bn, Jos DISCO, N6.5bn, Yola DISCO, N2.4bn and Kano DISCO, N1.2bn.

To demonstrate the seriousness of the debt issue and its implications for their operations, the DISCOs had two weeks ago, placed advertorials in national newspapers where all historic debtors were given deadlines within which to pay their debts or have their supply disconnected. Oduntan said his member-companies had to carry out their threat when it became obvious that there was no sign from the affected debtors that they were ready to offset the debt.

He said: “Although we appreciate the efforts of the Vice President, Prof. Yemi Osinbajo and the Minister of Power, Works and Housing, Babatunde Fashola, but the stark reality is that there is nothing concrete to hold on to.

“No allowance for MDAs debt to DISCOs in the budget, even though we started discussion before the budget was passed. “The indebtedness has become so huge that we are truly troubled about how the government would resolve this without a budgetary allocation. “Our position is that this indebtedness is killing us; it is seriously impacting negatively on the entire value chain in the power sector equation.

“Don’t forget that only 25 per cent of this debt actually belongs to DISCOs, the rest are for other companies in the value chain – generating companies, the bulk trader, gas suppliers etc. “So, if you don’t pay and you accumulate debt, what you are looking at is a possible total collapse of the entire power sector. “That is what we seek to avert by this action. We need this fund to energise the power sector; to ensure electricity supply and to grow the sector.”

The ANED boss, however, made it clear that the current mass disconnection was not an exercise targeted at MDAs but all historic debtors. He lamented that the operations of all distribution companies were hampered by the huge indebtedness of the historic debtors.

Energy analysts noted that unless this funding crisis is resolved through prompt payment of the huge indebtedness and the implementation of the new power sector tariff structure, the nation’s hope of improving power supply may remain a mirage. Realising the enormity of the financial challenges the DISCOs are facing, Fashola, had few weeks ago urged them to divest 60 per cent shares in the utilities in order to access more liquidity.

The suggestion has, however, been roundly rejected by energy experts most of who contended that the privatisation agreement the discos entered into with the Bureau of Public Enterprises, BPE, was emphatic that no investor will be allowed to sell beyond 5 per cent of their shares in the first five years. According to industry analysts, what government should do is to promptly pay the huge indebtedness of the MDAs so that the DISCOs could access fund for their operations.

The experts also urged the Federal Government to pursue its plan to secure N309bn Bond to finance the shortfall in the Nigerian electricity market. Oduntan, who agreed with the experts, harped on the need for adequate funding of the sector. He explained that in addition to immediately ensuring that the MDA’s indebtedness to the sector are settled forthwith, the Federal Government should also pursue the bond.

In the meantime, the scarcity of aviation fuel, which has affected the industry over the past few days, became worse on Sunday as a number of domestic airlines cancelled their evening flights out of Lagos, while others simply rescheduled them.

Among the airlines that cancelled their flights were Aero Contractors, Medview and First Nation, while Dana Air rescheduled it flights out of Lagos.

As a result, many passengers, who were due to travel from the Murtala Muhammed Airport Terminal 2, had their plans disrupted.

Stakeholders in the industry had recently estimated that the scarcity of aviation fuel had led to 50 per cent reduction of the carrying capacities of the local airlines.

An intending passenger, who was scheduled to fly into Abuja, explained that while some passengers made frantic efforts to make alternative flight arrangements, several others whose flights were cancelled left the airport in disappointment.

According to the passenger who was due to fly Dana Air’s flight 9J 359 from Lagos to Abuja, the 5.10pm flight was cancelled with the passengers dispersing in disappointment.

However, he later received a message from the airline’s customer service team at about 5.50pm, informing him that the flight had been rescheduled for 18.30 hours.

“It is scandalous and disheartening. A lot of passengers were left confused as to what to do because most of them seemed to have one engagement or the other to honour at their destinations. Even the message notifying me of the rescheduling came in after I had returned home,” the passenger said.

When contacted, the spokesperson for Dana Air, Kinsley Ezenwa, said none of the airline’s flights was cancelled, adding that they were instead rescheduled.

“The scarcity of aviation fuel has no doubt been affecting flight operations generally. But we have been trying to give the best of services notwithstanding the challenges posed by the scarcity,” Ezenwa explained.

On its part, the management of Aero Contractors apologised to its customers over the delay and cancellation of some of its flights.

According to a statement by SY&T Communications Limited, consultants to the airline, Aero explained that it was experiencing fuel scarcity because its contract suppliers were unable to supply Jet-A1.

Meanwhile, the Nigerian Civil Aviation Authority has said that the new Civil Aviation Regulations, promulgated in December last year, will take effect on July 1, 2016.

This was contained in a circular, with reference number NCAA/DG/AOL/21/16/01, sent to all airline operators by the agency.

According to the NCAA, the review of the old regulations, incorporated in 2009, became necessary in order to standardise operational, implementation and enforcement procedures in the industry.

National Mirror with additional report from Punch


WAIVER CESSATION: Igbokwe urges NIMASA to evolve stronger collaboration with Ships owners



…Stresses the need for timely disbursement of N44.6billion CVFF***

Highly revered Nigerian Maritime Lawyer, and Senior Advocate of Nigeria (SAN), Mike Igbokwe has urged the Nigeria Maritime Administration and safety Agency (NIMASA) to partner with ship owners and relevant association in the industry to evolving a more vibrant merchant shipping and cabotage trade regime.

Igbokwe gave the counsel during his paper presentation at the just concluded two-day stakeholders’ meeting on Cabotage waiver restrictions, organized by NIMASA.

“NIMASA and shipowners should develop merchant shipping including cabotage trade. A good start is to partner with the relevant associations in this field, such as the Nigeria Indigenous Shipowners Association (NISA), Shipowners Association of Nigeria (SOAN), Oil Trade Group & Maritime Trade Group of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA).

“A cursory look at their vision, mission and objectives, show that they are willing to improve the maritime sector, not just for their members but for stakeholders in the maritime economy and the country”.

Adding that it is of utmost importance for NIMASA to have a through briefing and regular consultation with ships owners, in other to have insight on the challenges facing the ship owners.

“It is of utmost importance for NIMASA to have a thorough briefing and regular consultations with shipowners, to receive insight on the challenges they face, and how the Agency can assist in solving them and encouraging them to invest and participate in the maritime sector, for its development. 

“NIMASA should see them as partners in progress because, if they do not invest in buying ships and registering them in Nigeria, there would be no Nigerian-owned ships in its Register and NIMASA would be unable to discharge its main objective.

The Maritime lawyer also urged NIMASA  to disburse the Cabotage Vessel Financing Fund (CVFF)that currently stands at about N44.6 billion.

“Lest it be forgotten, what is on the lips of almost every shipowner, is the need to disburse the Cabotage Vessel Financing Fund (the CVFF’), which was established by the Coastal and Inland Shipping Act, 2003. It was established to promote the development of indigenous ship acquisition capacity, by providing financial assistance to Nigerian citizens and shipping companies wholly owned by Nigerian operating in the domestic coastal shipping, to purchase and maintain vessels and build shipping capacity. 

“Research shows that this fund has grown to about N44.6billion; and that due to its non-disbursement, financial institutions have repossessed some vessels, resulting in a 43% reduction of the number of operational indigenous shipping companies in Nigeria, in the past few years. 

“Without beating around the bush, to promote indigenous maritime development, prompt action must be taken by NIMASA to commence the disbursement of this Fund to qualified shipowners pursuant to the extant Cabotage Vessel Financing Fund (“CVFF”) Regulations.

Mike Igbokwe (SAN)

“Indeed, as part of its statutory functions, NIMASA is to enforce and administer the provisions of the Cabotage Act 2003 and develop and implement policies and programmes which will facilitate the growth of local capacity in ownership, manning and construction of ships and other maritime infrastructure. Disbursing the CVFF is one of the ways NIMASA can fulfill this mandate.

“To assist in this task, there must be collaboration between NIMASA, financial institutions, the Minister of Transportation, as contained in the CVFF Regulations that are yet to be implemented”, the legal guru highlighted further. 

He urged the agency to create the right environment for its stakeholders to build on and engender the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders.

“Lastly, which is the main reason why we are all here, cessation of ministerial waivers on some cabotage requirements, which I believe is worth applause in favour of NIMASA. 

“This is because it appears that the readiness to obtain/grant waivers had made some of the vessels and their owners engaged in cabotage trade, to become complacent and indifferent in quickly ensuring that they updated their capacities, so as not to require the waivers. 

“The cessation of waivers is a way of forcing the relevant stakeholders of the maritime sector, to find workable solutions within, for maritime development and fill the gaps in the local capacities in 100% Nigerian crewing, ship ownership, and ship building, that had necessitated the existence of the waivers since about 15 years ago, when the Cabotage Act came into being. 

“However, NIMASA must ensure that the right environment is provided for its stakeholders to build and possess the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders. Or better still, that they are solved within the next 5 years of its intention to stop granting waivers”, he further explained. 

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Breaking News: The Funeral Rites of Matriarch C. Ogbeifun is Live



The Burial Ceremony of Engr. Greg Ogbeifun’s mother is live. Watch on the website: and on Youtube: Maritimefirst Newspaper.

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Wind Farm Vessel Collision Leaves 15 Injured



…As Valles Steamship Orders 112,000 dwt Tanker from South Korea***

A wind farm supply vessel and a cargo ship collided in the Baltic Sea on Tuesday leaving 15 injured.

The Cyprus-flagged 80-meter general cargo ship Raba collided with Denmark-flagged 31-meter wind farm supply vessel World Bora near Rügen Island, about three nautical miles off the coast of Hamburg. 

Many of those injured were service engineers on the wind farm vessel, and 10 were seriously hurt. 

They were headed to Iberdrola’s 350MW Wikinger wind farm. Nine of the people on board the World Bora were employees of Siemens Gamesa, two were employees of Iberdrola and four were crew.

The cause of the incident is not yet known, and no pollution has been reported.

After the collision, the two ships were able to proceed to Rügen under their own power, and the injured were then taken to hospital. 

Lifeboat crews from the German Maritime Search and Rescue Service tended to them prior to their transport to hospital via ambulance and helicopter.

“Iberdrola wishes to thank the rescue services for their diligence and professionalism,” the company said in a statement.

In the meantime, the Hong Kong-based shipowner Valles Steamship has ordered a new 112,000 dwt crude oil tanker from South Korea’s Sumitomo Heavy Industries Marine & Engineering.

Sumitomo is to deliver the Aframax to Valles Steamship by the end of 2020, according to data provided by Asiasis.

The newbuild Aframax will join seven other Aframaxes in Valles Steamship’s fleet. Other ships operated by the company include Panamax bulkers and medium and long range product tankers.

The company’s most-recently delivered unit is the 114,426 dwt Aframax tanker Seagalaxy. The naming and delivery of the tanker took place in February 2019, at Namura Shipbuilding’s yard in Japan.

Maritime Executive with additional report from World Maritime News

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