Business

Steel industry calls for state support to avoid ‘full blown crisis’

The steel industry has called for urgent state support to avoid a “full blown steel crisis”, warning that plans to issue loans to soften the impact of soaring gas prices “won’t address the problem”.

As industry leaders voiced dismay at the perceived lack of support from government, trade unions wrote to the prime minister warning he was at risk of making a “historic mistake with devastating consequences” for an industry employing 32,000 people.

Uncertainty about how to support power-hungry industries such as steel has already sparked a political row between the Treasury and the business secretary, Kwasi Kwarteng, over whether to offer financial support.

While the Treasury is understood to be reluctant to fund a bailout, ministers are weighing up proposals from Kwarteng to provide short-term loans or guarantees while gas prices are high, to help sectors such as steel, glass, chemicals and paper.

Representatives from the industry met officials from BEIS on Tuesday but left disappointed at a lack of detail on the proposals and concerned that the loan plan won’t help.

“If it is only these loans that are on the table, then for the steel industry that won’t address the problem,” UK Steel’s director, Gareth Stace, told the Guardian.

“We need to get back round that table to discuss and agree better solutions.”

Three steelworkers’ unions – Community, the GMB and Unite wrote to the prime minister on Tuesday, urging action to protect thousands of jobs.

“The seriousness of the situation requires swift and decisive action from government. But it seems government ministers have been too busy squabbling, and that’s why we wrote to the prime minister urging him to get a grip and act to resolve this crisis before it is too late.”

In their letter to the prime minister, the steelworkers’ unions said other European countries had provided assistance to their own steelmakers.

“Brexit was supposed to make it easier for the government to back British industry and British jobs, but all we are seeing is the same old procrastination and excuses for doing nothing,” they wrote.

UK Steel had earlier backed Kwarteng in calling for assistance from the chancellor, Rishi Sunak. The Treasury initially appeared to reject, issuing an unusual reprimand to the business secretary for suggesting help might be available.

Since the split, officials from the departments are understood to have thrashed out the short-term lending plan.

But UK Steel said this would leave the industry still battling against a “hostile environment” and at risk of shutdowns.

In an earlier statement, Stace said: “Our message directly to the prime minister is please don’t just apply a sticking plaster to what is a significant long-term problem. Action can and must be taken now to secure the foundations of British industry.”

Kwarteng met representatives from industries including steel, paper, glass and chemicals on Friday and again on Monday, to hear their arguments for longer-term help, such as measures to ease electricity costs, which are high relative to European peers.

Stace said any measures to help steel had to put UK producers on a “level playing field” with overseas rivals.

“If any package delivers less than this and we still continue to pay more for energy than French and German steel producers and we remain at a competitive disadvantage,” he said.

“Steel producers here in the UK will continue to have to pause steel production, will be less efficient and will lose margins and market share.

“This is a hostile environment for industrial investment in the UK and for the government’s levelling-up agenda.”

The business department said the steel industry’s international competitors were often benefiting from pricing regimes that transferred the cost of industrial energy usage onto households.

“Ministers and officials continue to engage constructively with industry to further understand and to help mitigate the impacts of high global gas prices,” said a spokesperson.

“Our priority is to ensure costs are managed and supplies of energy are maintained.

“Some countries on the continent have lower industrial electricity prices in part because some costs are recovered from consumer bills.”

Business

NERC unbundles TCN, establishes Nigerian Independent System Operator

The Nigerian Electricity Regulatory Commission (NERC) has announced the unbundling of the Transmission Company of Nigeria (TCN) with the establishment of the Nigerian Independent System Operator of Nigeria Limited (NISO

In an order dated April 30, 2023, jointly signed by NERC chairman, Sanusi Garba, and vice chairman, Musiliu Oseni, TCN is directed to transfer all market and system operation functions to the newly established company.

This decision follows the enactment of the Electricity Act 2023, which provided more precise guidelines for the incorporation and licensing of the Independent System Operator (ISO) and the transfer of assets and liabilities of TCN’s portion of the ISO.

NERC also instructed the Bureau of Public Enterprises (BPE) to incorporate a private company limited by shares under the Companies and Allied Matters Act (CAMA), 2020, by May 31.

The newly formed company, to be named the Nigerian Independent System Operator of Nigeria Limited (NISO), will assume the market and system operation functions outlined in the Electricity Act and TCN’s system operation licence.

“The name of the company shall, subject to availability at Corporate Affairs Commission, be the Nigerian Independent System Operator of Nigeria Limited (“NISO”),” NERC said.

According to NERC, NISO will manage all assets and liabilities related to market and system operation on behalf of market participants, consumer groups, or other stakeholders specified by the Commission.

It will also negotiate contracts for ancillary services with independent power producers and successor generation licensees and fulfil other market and system operation-related obligations previously held by TCN.

Business

Federal Govt raises Maximum Deposit Insurance Coverage for banks

The Nigerian Government has reviewed upward the Maximum Deposit Insurance Coverage for banks operating within the country.

In a recent briefing with journalists, Nigeria Deposit Insurance Corporation Managing Director, Bello Hassan disclosed the new coverage benchmarks.

The NDIC for Deposit Money Banks has been raised from N500,000 to N5 million, for Microfinance Banks from N200,000 to N2 million, for Primary Mortgage Banks from N500,000 to N2 million, and for Mobile Money Operators subscribers’ from N500,000 to N5 million per subscriber.

Hassan emphasised that the update aims to bolster depositor safety, public trust, the inclusivity of financial services, and the overall stability of the financial sector.

He stated, “The increase in the maximum deposit insurance coverage levels for all licenced deposit-taking financial institutions with immediate effect.”

The coverage benchmark had been raised from N50,000 to N200,000 in 2006; the coverage limit of N100,000 was also set, for the first time, for MFB and PMB depositors in the same year.

In 2011, the coverage limits for DMBs increased from N200,000 to N500,000 and from N100,000 to N200,000 for depositors of MFBs and PMBs.

Additionally, the coverage level was further adjusted to N500,000 in 2016 for PMB depositors and subscribers of licensed Mobile Money Operators.

Coverage of N500,000 was equally extended to depositors of PSBs in 2020.

Meanwhile, the coverage for DMBs remained at N500,000.

Business

NERC Deregulates Prepaid Meter Prices

Govt directs electricity companies to charge Nigerians per hour

The Nigerian Electricity Regulatory Commission (NERC), in a move to deregulate the metre supply and pricing market, released an order on Monday on the deregulation prices for metres deployed under the Meter Asset Provider (MAP) Scheme.

According to the order, the commission said the move was necessitated after MAPs and other operators requested a further review of metre prices in consideration of the significant changes in foreign exchange and inflation rates since NERC’s last price review in September 2023.

It said the significant changes in these macroeconomic variables had constrained the abilities of metre providers to supply metres at the approved regulated price.

“The commission has noted the need for the efficient pricing of meters to respond more quickly to changes in macroeconomic parameters, particularly exchange rates.

“The commission has further taken cognisance of the constraints/challenges faced by MAPs and LMMAs and therefore approved the deregulation of prices of meters deployed under the MAP scheme with effect from May 1, 2024,” NERC stated.

It added, “With effect from May 1, 2024, all prices of meters under the MAP scheme shall be determined through a competitive bidding process with customers provided with a choice of authorised vendors.”

As a result, NERC said it has henceforth deregulated the pricing of meters deployed under the MAP scheme.

“The cost of prices of meters deployed under the MAP scheme is hereby deregulated to enable end-use customers acquire meters from MAPs of their choice based on competitive open market prices determined from transparent bidding frameworks,” the commission stated.

It said, “All MAP permit holders are henceforth eligible to provide services and transact for the provision of meters and metering services with any Disco in the Federal Republic of Nigeria with their existing permit.

“The lifting of the restriction on permitting to operate in all Discos is subject to the mandatory requirement for MAPs to comply with the associated Disco specific requirements/specifications.

“All Discos shall ensure the effective and seamless integration of smart meters deployed by MAPs with the Disco’s head-end systems and meter data management systems.”