Business

No 10 backs Kwasi Kwarteng as split with Treasury emerges in energy row

Splits have emerged at the heart of Downing Street after No 10 lined up behind Kwasi Kwarteng in his extraordinary cabinet row with the chancellor, Rishi Sunak, over whether to bail out firms struggling with energy costs.

Kwarteng, the business secretary, is in favour of more financial support for heavy industry and submitted a formal request to the Treasury for help on Monday, with government sources warning “household names” are at risk of going bust within days because of high gas prices. The steel, chemicals and ceramics sectors are among those struggling.

In contrast, Sunak is sceptical, with Treasury sources saying only one small steel company needed bailing out during the pandemic. A source in the department said the business department naturally wanted to stick up for the interests of industry and stakeholders while the Treasury “has the interests of the taxpayer to look after”.

Amid a growing briefing war between the two departments, No 10 waded in on Monday to say that the government was open to looking at “mitigations” to help industry and stress that it was listening to companies.

Boris Johnson is on holiday in Spain but his official spokesman said he was “closely involved”. A government source suggested No 10 had been irritated by a row making the front pages of several newspapers on Monday, in which a Treasury source accused Kwarteng of “making things up” when he told broadcasters he was in talks with Sunak about a possible bailout for industry struggling with energy costs.

No 10 on Monday backed Kwarteng’s account of events, saying that Treasury and business department officials were looking at ways to help manufacturers hit by the gas crisis. One government source said No 11 would ultimately “have to back down”.

Later on Monday, a cross-government effort got under way to dampen down the row, with aides trying to brief that the government was “united”.

Johnson’s official spokesperson said: “As you would expect, ministers from BEIS are working across government, including with Treasury, on this important issue, the challenges that are currently facing industry in light of global gas prices, and that will continue.”

He said it was “right to continue to listen to industry” and “see if further mitigations are necessary” on top of an existing scheme to help heavy industry with high energy prices.

“We recognise they are facing a particular challenge at this point and we’ll continue to discuss that with them,” he said.

But Treasury sources also pointed out that there had not been any formal proposal submitted on financial support for bailing out industry until about 4pm on Monday, arguing they had been correct to say Sunak’s department was not officially involved until that point.

The department will now examine whether there is a case to address any market failure, what the exit strategy for a bail-out would be, and how to justify taxpayer money being at stake. There is also anxiety within Whitehall about how it would look to financially support energy-intensive industry in the runup to the COP26 climate change summit.

Possible options under consideration include providing short-term loans or guarantees while gas prices are high – with all departments agreed that any support should not be long term– or rewriting the compensation scheme for energy-intensive industry.

Leaders of energy-intensive industries issued a new plea for help on energy costs during a second face-to-face summit with Kwarteng in three days on Monday.

The Energy Intensive Users Group (EIUG), which includes glassmakers as well as major employers in sectors such as steel, fertiliser and paper, said it welcomed the “urgency” shown by Kwarteng but called on the Treasury to follow suit.

“The involvement of other parts of government will also be required,” said EIUG chair Dr Richard Leese. “EIUG is looking for an equally swift response from HMT.”

The EIUG has called for short-term financial support to offset the soaring cost of gas and electricity, as well as more lasting measures to reduce the cost of electricity, which is significantly higher than paid by rivals in other countries such as France and Germany.

Paul Fecher, chairman of hygienic tissue manufacturing company Northwood Paper, Tissue and Hygiene, said the advice from government so far had been to raise the prices that the company charges to its customers, who include suppliers to hospitals, schools, restaurants as well as consumers.

“The government has said to go for price increases and we’re doing that as best as possible but that’s difficult in a marketplace that’s just recovered from Covid,” he said. “The best option would be to go to sleep and wake up when it’s all over but we can’t do that.”

The price of wholesale gas has risen 250% since January, leaving many businesses in crisis because many have not fixed their purchase prices and there is no energy price cap for companies, unlike for consumers.

Business

Nigeria begins sales of Crude Oil in Naira

Nigeria has officially commenced the sale of crude oil and refined petroleum products in Naira.

This milestone, announced by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, marks a new chapter in the nation’s economic strategy.

Effective from October 1, 2024, the Federal Executive Council (FEC) directive to trade crude oil and petroleum products in Naira was implemented following a key meeting of the Implementation Committee.

The meeting included prominent stakeholders, such as the Minister of State for Petroleum (Oil), the Special Advisers to the President on Revenue and Energy, executives from the Nigerian National Petroleum Company (NNPC), and top representatives of the Dangote Group. The Group Chief Executive Officer (GCEO) of NNPC and its Chief Financial Officer (CFO) were also in attendance, underscoring the initiative’s national significance.

The strategic policy, championed by the Bola Ahmed Tinubu-led administration, is expected to reshape Nigeria’s economy.

By denominating oil sales in Naira, the country aims to bolster economic growth, enhance stability, and promote self-sufficiency.

The move is seen as a crucial step toward reducing dependency on foreign currencies, positioning Nigeria for long-term success amidst the ever-changing dynamics of global markets.

Business

Electricity Tariff hike: Nigeria’s discos collect N887bn as revenue

Revenue of electricity distribution companies in Nigeria increased to N887.86 billion in the first seven months of 2024 amid an electricity tariff hike.

This is according to the analysis of Nigerian Electricity Regulatory Commission data on Discos’ commercial performance for the seven months of 2024.

The data showed that out of N1.14 trillion electricity bill issued by Discos to customers, the companies recorded 79.7 percent collection efficiency which stood at N887.86bn in the period under review.

A breakdown of the bill collection by Discos from January to July 2024 includes N95bn, N97bn, N100.44bn, N142.92bn, N191.65bn, N150.86bn and N162.14bn which amounted to N887.86 billion.

Further analysis showed that during the corresponding period in 2023, the companies issued bills totaling N797.18 billion, while they managed to collect N604.15 billion.

This surge in revenue collection is not unconnected to the hike in electricity tariff in April from N66 per kilowatt-hour to N225.

Recall that amid the call for the electricity tariff hike reversal, it was reviewed downward to 206.68 per kilowatt-hour, but was reviewed upward to N209 per kilowatt-hour thereafter.

Though the electricity tariff hike was introduced for customers getting at least 20 hours of power supply, Nigerians have lamented the burden occasioned by the tariff.

The energy cost pain has been exacerbated as Discos migrate more consumers to Band A feeders.

The Minister of Power, Adebayo Adelabu, however, insisted that Nigeria’s electricity tariff is among the cheapest within African countries.

Business

FG unveils seven CNG conversion centres in Ekiti

The Presidential Compressed Natural Gas Initiative (P-CNGi) has unveiled seven centres where commercial transporters can convert their petrol to CNG-powered vehicles in Ekiti.

The Program Director of P-CNGi, Michael Oluwagbemi who spoke during the official unveiling of the centres and handing over of 15 CNG-powered buses to government in Ado-Ekiti, Ekiti State capital at the weekend, urged commercial transporters in the state to visit the centers to convert their vehicle free of charge.

He explained that the CNG initiative is cheaper, more convenient, and safer compared to petrol, noting that the administration of President Bola Tinubu is determined to energize the economy through the initiative which he said would create jobs and enhance sustainable development.

Oluwagbemi disclosed that the administration is targeting one million vehicle conversions to CNG by 2027, saying that no fewer than 125 centres have been opened across the country.

He listed the new centres in Ekiti state to include, Femoyo centres, Beijing Universal Limited, ABJ oil and gas, Bovas Company, and NADDC training center in the state capital.

The program director said that the 15 buses donated would be deployed for inter and intra-state transportation towards achieving about 40 percent reduction in the transportation cost and ultimately reduced hike in food items.

According to him, ” the government of President Bola Tinubu through the presidential CNG initiative is committed to ensuring they(transporters) use this for their vehicles because it is cheaper, cleaner and more importantly it is safer and more reliable.

” This is a compressed natural gas, it is not the same you use in your kitchen to cook. It is lighter and stored in a bulletproof container. It is also the fact it is produced in Nigeria and what the president said is that instead of us to continue to import poverty and export jobs. He said will need to look inward and use what God has given us.

” It is about job creation, it is about reducing the cost of transportation and ensuring economic development by moving away from subsidy payment where we were making the few richer.

” This is a more sensible and reliable path for Nigeria in terms of our energy sector, and that is what the president is doing with this initiative.”

Speaking, the state governor, Biodun Oyebanji commended the federal government for the initiative, adding that the state would support the programme towards ensuring that more vehicle owners embrace the CNG conversion.

The governor who was represented by the commissioner for Infrastructure and Public Utilities, Professor Mobolaji Aluko explained that the CNG conversion initiative would help in generating employment opportunities and economic development in line with his shared prosperity agenda for the state.

The state chairman of National Union of Road Transport Workers(NURTW) Joseph Falope and his counterpart in Road Transport Employers Association of Nigeria(RTEAN) Sunday Adeola, expressed delight over the initiative, assuring the government that members of their respective unions would take their vehicles for conversion to CNG.

On his part, the Chief Executive Officer of the National Automotive Design and Development Council (NADDC), Joseph Osanipin said the council has trained no fewer than 45 technicians across the state on how to convert petrol vehicles to CNG-powered vehicles.