Business

Four more UK energy suppliers go bust amid high gas prices

Another four energy suppliers have gone bust in a single day as historic gas market highs continue to rip through the UK’s energy market amid fresh fears that Russia may curb gas supplies to Europe.

The energy regulator, Ofgem, said the collapse of four small energy suppliers on Tuesday would leave about 24,000 households in need of a new supplier, and bring the total number of bust energy companies to 17 since the start of September, affecting more than 2 million households.

The flurry of failures follows rocketing global energy market prices due to a sudden surge in demand for gas as economies began to shrug off restrictions related to the Covid-19 pandemic. Gas markets have reached record highs in recent weeks, leading to one of the sharpest increases in home energy bills and fears of a cost-of-living crisis this winter.

Out of the four UK casualties Zebra Power had the largest customer base, and supplied 14,800 households with energy. Omni Energy supplied about 6,000 domestic pre-payment customers, while AmpowerUK had about 600 UK customers and supplied a further 2,000 overseas households. MA Energy had about 300 overseas customers.

Scores more energy suppliers are expected to collapse in the months ahead as gas markets remain at near-record highs, and suppliers are forced to shoulder the higher costs without raising their tariffs above the regulator’s energy price cap.

Consumer charity Citizens Advice said struggling households would ultimately pay the price “with uncertainty, inconvenience and ultimately higher bills” as suppliers continue “to fall like dominoes”.

Gillian Cooper, the head of energy at Citizens Advice, said: “Last week, Ofgem set out how it intends to ‘raise the bar’ for supplier standards and improve their resilience in the short term. This is a positive step, but it’s clear that existing rules and their enforcement, has not been enough.”

Cooper added: “Longer-term, Ofgem will need to do more to make sure companies are financially sound and provide good customer service. This should include protecting people from the loyalty penalty, which prior to the cap allowed companies to profit from those who didn’t or couldn’t switch.”

The energy regulator set out plans for “bold action” last week to fasttrack changes to its price cap, which protects around 15 million households from unfair energy bills, following growing calls from suppliers to make the cap more flexible so that market increases can be passed on to households sooner.

The price cap overhaul has emerged amid deepening concerns that gas prices, which are more than three times higher than this time last year, may resume their upward climb as temperatures plunge across Europe and Russia squeezes gas exports to Europe.

Gas flows from Russia’s state-owned gas giant Gazprom, which supplies about a third of Europe’s gas, dropped significantly over the weekend and on Tuesday the company declined to offer extra gas supplies to Europe from January, when demand is often at its highest for the winter.

The slowdown in gas exports has reignited fears over the winter’s energy suppliers despite a direct order from the Russian president, Vladimir Putin, for Gazprom to focus on filling its European gas storage facilities from 8 November, when Russian domestic storage should be filled.

Russia’s decision not to open its gas taps to allow extra supplies into Europe from January also defies calls from the global energy watchdog, the International Energy Agency, which said last month that Russia should help to ease market prices by boosting gas exports to Europe this winter.

Moscow has denied it is withholding gas supplies from Europe via its pipelines through Ukraine and Poland to exert pressure on German regulators to approve gas shipments through the new Nord Stream 2 pipeline across the Baltic Sea to Germany.

But its decision to send only contracted volumes despite the strong demand for extra gas supplies is likely to raise gas market prices across Europe, helping Russia to charge more for its hydrocarbon exports.

Business

Nigeria’s total debt hits N87.37trn in Q3 2023 — DMO

Director General of Debt Management Office (DMO), Ms. Patience, on Friday, disclosed that the country’s debt stock stands at N87.37 trillion as at 30th September 2023.

Ms. Oniha who disclosed this during the interactive session held at the instance of House Committee on Appropriations chaired by Hon. Abubakar Bichi, however, noted that while justifying the rationale behind the borrowing spree, she informed the Parliament that projects implemented by Federal Government during the three previous recessions were funded through borrowing.

She said: “Let me speak a bit about public debt as you requested in the letter inviting us

“The first point is that we have run budget deficit for many years for which the DMO has been raising funds locally and internationally to support the budget.

“The point I would like to make is that as the level of borrowings increases you have to service them so debt services increase also.

“Again, we run budget deficits because we have projects and programmes in the budget that the government wants to run. If we go back from 2015 and 2016, we know we have been through about two or three recessions. So, a lot of that bringing the economy out of recession was funded from borrowing.

“The DMO’s role is to manage that debt and make sure it is sustainable and that there is no default because borrowing is not a bad thing but when you borrow you use it well.

“Debt has been growing largely from new borrowings. You see the MTEF for instance that you have approved, it has borrowings in each of the years of 8.7, 10.2 and N11.58 trillion just to buttress the point that as you increase the funds the debt stock grows.

“So, it also also growing because we have issued Promissory Notes and again like I said, Ways and Means advances. We usually like to say that debt stock relative to our GDP is not the issue.

“That has grown from 23 percent in March to about 40 percent in June. The same way the debt stock grew.

“But we need to do, to focus on debt service revenue which is very high. That is why I said the discussions about revenue, we cannot stop talking about them enough.

“So, apart from trying to generate as much revenue as we should, what else should we be doing? We are advocates for a number of initiatives being taken. Should be privatized if those projects can be better managed. You can attract capital. Do the private-public partnership so not everything is on the budget. Because when you put everything on the budget, you cannot get a deficit for which you need to borrow.

“We should strongly support the Fiscal Reform and Tax Policy Committee, we really need to get that working to change the story of us.

“For this year 2023 the DMO was to provide about N8.8 trillion, 7 trillion of that is domestic; meaning we borrow it here on naira. And then there is 1.7 trillion that ordinarily in normal times, we would have issued Euro bonds or from other sources.

“So, out of the domestic of 7 trillion as we speak, we have raised the full amount. So, you can say we have raised a significant amount to fund this budget.

“If the international markets had been covered and we were investing in counties with similar ratings like Nigeria by now we would also have issued a Euro bond.

“We have been extremely supportive of funding the budget and the operations of government,” Ms. Oniha noted.

While speaking on funding of some of the proposed infrastructural projects, she disclosed that the present administration is to ensure direct support with the SUKUK.

According to her, “This year some of that 7 trillion we issued it by way of SUKUK and you will soon begin to see the roads across the FCT.

“Having spoken to what is in the 2023 of which we have raised 7 trillion out of the 8.8 trillion. So we know that in 2024, from the MTEF there is 8.749 trillion.

“So, the levels of borrowing are still high but I think as the MTEF is a rolling document, as the picture looks better on revenues maybe the numbers would be lower.”

Speaking earlier, Chairman, House Committee on Appropriations, Hon. Abubakar Bichi explained that the interactive session with heads of MDAs was aimed at addressing strategies for the rising inflation, reducing the burden of Nigeria’s debt profile, sectoral budgetary allocations, and the dynamics of budget releases.

“Others are economic diversification strategies, revenue generation forecasts, and any useful information that will facilitate the enactment of the bill and effective implementation of the Appropriations Act, 2024.

“Amidst concerns to address the infrastructural gap in the country, eliminate poverty, and generally achieve the 8-Point Renewed Hope Agenda, there is a need to ensure that all loose ends to revenue are tied, as this can have a gross impact on the government’s ability to implement the 2024 Appropriation Bill when passed.

“While the revised MTEF and FSP showed that revenue-generating efforts by the present administration are already yielding fruit, more needs to be done to ensure that government-owned enterprises optimize their revenue-generating potential.

“In light of the above, this interaction is designed to engage relevant stakeholders to provide insight on the perspective of the budget and enable the Committee to play its coordinating role in ensuing allocative efficiency in the 2024 appropriation process,” Hon. Bichi noted.

Business

PenCom Recovers N24.8b UnremittedFunds

The National Pension Commission, PenCom, recovered N24.8 billion of funds unremitted by employers in the third quarter of 2023.

Oguche Agudah, Chief Executive Officer of Pension Funds Operators’ Association of Nigeria made the declaration on Friday in Lagos.

He spoke at a media parley with the theme: “At the dawn of 20 years of pension reform, what are the gains?”

Mr Agudah said PenCom recovered N23.3 billion of such funds in the third quarter of 2022, while it recovered N2.23 billion in the third quarter of 2021.

He said also that the pensions industry recorded an Asset under Management of N17.35 trillion in the second quarter of 2023.

It made investments of N349.97 billion in infrastructure in the second quarter of 2023, up from the N333.02 billion invested in the corresponding quarter of 2022, Agudah added.

Investments in infrastructure, he also said, represented 2.02 per cent of total investments made in the second quarter of 2023.

Mr Agudah said the industry also invested N1.54 trillion in the equities market in the third quarter of 2023.

This, he explained, represented 8.88 per cent of total investments, as against the N964.84 billion invested in the corresponding quarter of 2022.

He said the pension industry would focus more on micro-pensions and revise its investment guidelines in 2024 when it celebrates the 20th year of pension reforms.

Business

Nigeria, China sign pact on $150m battery plant

The Federal Ministry of Power and the China Ministry of Ecology and Environment, on Friday, supervised the signing of an agreement for the construction of a $150m lithium-ion battery manufacturing plant in Nigeria by a Chinese firm.

Parties in the deal signed the agreement in Dubai at the United Nations Climate Conference, also known as COP28, according to a statement issued in Abuja on Friday by the Rural Electrification Agency.

The statement read in part, “The Rural Electrification Agency of Nigeria and the National Agency for Science and Engineering Infrastructure are poised to make a significant stride in climate action by signing a groundbreaking cooperation agreement with the SHENZEN LEMI Technology Development Company.

“The agreement was signed on December 8, 2023, under the leadership of the Nigerian Federal Ministry of Power and the China Ministry of Ecology and Environment.

“The partnership will facilitate the establishment of a lithium-ion battery manufacturing and processing factory in Nigeria. This initiative is backed by a $150m investment from LEMI, with operations scheduled to commence in phases, starting from the second quarter of 2024.”

The REA stated that the Chinese Ministry of Ecology and Environment, in collaboration with the Federal Ministry of Power in Nigeria, expressed enthusiasm for being part of the agreement.

“The signing of the cooperation agreement is anticipated to serve as a pioneer initiative for the Light and Belt Initiative in Africa, aligning with global efforts to drive climate technology development and transfer.

“This collaboration will strengthen NASENI’s mandate under the agency’s new leadership to manage the research and development of capital goods, production and reverse engineering to enhance local mass production of standard parts and services for the nation’s technological advancement with a special focus on the Nigerian electricity sector.

“Furthermore, the collaboration underscores REA’s commitment to bridging the climate technology gap and combating the adverse effects of climate change. It also aligns with Nigeria’s ambitious goals of achieving universal electricity access by 2030 and net-zero emissions by 2060,” the agency stated.

It further explained that the partnership would foster the development and transfer of climate technology, promote indigenous industrialisation, facilitate commercialisation, enhance public-private cooperation, and contribute to job creation, economic growth, and the extractive industry in Nigeria.

“Recognising the crucial role of energy storage in the transition to renewable energy sources, the investment in lithium-ion energy storage manufacturing signifies a significant step towards achieving a low-carbon economy,” the REA stated.