Intermittent Power Supply In Nigeria Has Become An Intractable Problem


Tuesday, September 05, 2017 / 12:35 PM /FDC

Intermittent power supply in Nigeria has become an intractable problem. The award of a $5.8bn contract for the construction of a 3,050MW hydropower station was greeted with scepticism rather than euphoria.

This is because of a history of broken promises by previous administrations in Nigeria. This 6-year project with Chinese funding will increase hydropower contribution to the grid from the current 31% to 50% in 2023. 

Oil price is set for its steepest monthly decline in 12 months after Tropical Storm Harvey shutdown 24% of U.S oil refining capacity. 

Burning Economic Issues   

·        Oil prices down 0.18% to $50.77pb, gasoline prices up in the U.S

·        Naira appreciates 0.54% to N366/$

·        Chinese to build $5.8bn hydropower plant in Nigeria

·        NNPC top management reorganised

·        $2bn subsidy debt cripples oil marketers

·        NNPC boosts gas supply to power plants to 730mmscf/d in June

·        On grid power output up 7.4% to 3,457MWh/hr

Economic News  

The Good  

·        Naira appreciation revenue positive

·        On grid power output up to 3,457MWh/hr

·        NNPC boosts gas supply to power plants to 730mmscf/d in June  

The Bad 

·        Oil prices down to $50.77pb 

Power Generation analysis & Impact  

August 28th: Average power output was 3,457MWh/hour (up 239MWh/h)

·    Gas constraint was 543MW; line constraint was 112.5MW, frequency management constraint due to loss of DisCo feeders was 2099MW

·        Estimated loss: N1.268bn (annualised at N462.82bn /$1.28bn)

·        Increasing high frequency constraints leading to reduced generation

·         Reported gas constraints at Omotosho II, Trans Amadi, Geregu II, Alaoji II

Domestic Commodity Prices Movement   


 Stock Market  

·        NSE ASI 1.48% to 35,629.13pts

·         Consumer goods sub index 0.15% to 956.72pts

Oil prices 

·        Brent crude 0.18% to $50.77pb

·        Tropical storm Harvey leads to shutdown of refineries

·        U.S oil refiners hit hardest compared to crude producers

·        About 2.5 mbpd (16%) of U.S refining capacity is offline

·        Approximately 0.5mbpd of oil production is halted

·        Market also focusing on supply disruptions in Libya and Colombia

Oil markets today 


Outlook – Oil Prices    

·        Refineries in Asia running harder to make up for U.S delivery shortfall

·        Effect of Tropical Storm Harvey in Texas likely to linger

·        Crude market remains in ample supply

Outlook – Agric Prices 


·        Price increase will be short-lived as fundamentals remain bearish


·        Expectations of declining supply expected to support prices in medium term 


·        Prices will be bullish in the long term as global demand is expected to pick up 

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