FG Looks to Business, China to Bond Buyers

The Federal Government is looking to local businessmen to solve problems in another part of the energy matrix: its chronic power shortage.
Those among the country’s 174 million people with access to electricity suffer from outages 320 days of the year, writes The Wall Street Journal’s Drew Hinshaw. Many don’t have electricity in the first place.
Privatization of the state-owned power stations may be the answer. Last November the government auctioned off six of its 12 dilapidated plants, and Tony Elemelu, a Hilton hotelier, bought one. He plans to get it up and producing 3,000 megawatts of electricity by 2016. At the moment, it creates 160 megawatts.
But the problems to overcome are great. Half of Nigeria’s electricity is stolen or lost from old, inefficient power lines. And gas, needed to drive turbines in the power stations, is often lost due to pipeline sabotage.
The troubles recall those that have dogged the oil industry. Oil theft and corruption have hampered exports and deeply scarred the Niger Delta region. Billions of dollars of revenue aren’t accounted for.
Another businessman, Aliko Dangote, has announced plans to build an oil refinery. He is also Africa’s richest man.
More domestically produced fuel and more reliable power could do much to solve some of Nigeria’s problems. Both may go some way to leveling the difference between the haves and have-nots.
A slower-growing economy in China has been felt throughout global energy markets.
But two recent pieces of news do not suggest scale-back.  China’s state oil company this week offered bonds. The world placed $20 billion in orders.
Among the incentives for buyers was Cnooc’s diversification—last year, it bought Nexen Inc., a Canadian oil-sands operator which also has interests in the U.K.’s North Sea.
That diversity makes it “a little bit different” from other Chinese oil companies, according to one investor, write The Wall Street Journal’s Fiona Law and Mike Cherney.
It also cost $15.1 billion, and saddled the company with debts. The bond issue will help to pay some of them off.
Meanwhile, Chinese demand for crude slowed down with its more modest growth, while another factor capping future demand was the ban on new projects from its main refining companies, in place since 2009.
China’s Ministry of Environmental Protection ministry said the companies had boosted spending to reduce emissions and fixed pollution problems that led to the ban, writes Wayne Ma. The ministry didn’t provide further details.
Crude oil markets remain buoyed by Ukraine tension, while Libyan crude’s slow return does nothing to damp bullish sentiment. 

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