Nigeria’s Diesel-dependent Economy Braces for Clean-fuel Rules

Nigeria’s frenetic commercial capital, Lagos, is plunged into darkness several times a day.

Then its generators roar, and the lights flood back on.

Nigeria is one of the world’s largest economies where businesses rely so heavily on diesel-powered generators.

More than 70% of its firms own or share the units, while government data shows generators provide at least 14 gigawatts of power annually, dwarfing the 4 gigawatts supplied on average by the country’s electricity grid.

The machines guzzle cash and spew pollution, but they are reliable in a nation where nearly 80 million people – some 40% of the population – have no access to grid power. Now diesel costs could spike globally, and many businesses are not prepared.

Diesel prices are expected to surge as United Nations rules aimed at cleaning up international shipping come into effect on Jan. 1, with many ships expected to burn distillates instead of dirtier fuel oil.

Slowing economic growth and nascent trade wars could blunt a price spike, and as the shipping industry adapts to the rules, vessels will likely consume less diesel. But in the short term their impact could be profound.

Estimates vary widely, but observers warn that prices could surge by nearly 20%.

A diesel-run generator is on display at Mikano head office in Lagos, Nigeria, Sept. 9, 2019.

Higher costs for operating generators that power the machinery, computer servers and mobile phone towers that run Nigeria’s economy could impair growth in gross domestic product, already limping along at 1.92% at a time inflation is at 11%.

With the population growing at 2.6% each year, people are getting poorer.

“In an environment like this, where discretionary spending is very limited, this could have a big impact,” said Temi Popoola, West Africa chief executive for investment bank Renaissance Capital.

A 20% price rise could shave 0.2% off GDP growth, he said.

Generators Everywhere

Nigeria and German engineering group Siemens agreed in July to nearly triple the country’s “reliable” power supply to 11,000 megawatts by 2023. But previous such plans have failed.

While many Nigerian household and small business generators are powered by price-capped gasoline, the big generators for larger firms, apartment complexes and more substantial homes can only run on diesel.

“Businesses may struggle to survive, or in the best case scenario, would at least downsize,” said Tunde Leye, a Lagos-based analyst with SBM Intelligence. Diesel is the second or third biggest cost for many Nigerian firms, he said.

The oil industry, the Nigerian economy’s biggest driver, would not take a big hit as it does not rely on Nigerian consumers being willing to absorb extra costs it has to pass on.

As fuel producers in their own right, its firms can also recoup costs more easily.

But other heavyweight industries would feel pain. Bank branches rely on generators, with diesel often accounting for 20-30% of banks’ operating expenses, according to Popoola.

Telecommunications companies need them to run their mobile phone towers across the country. Telecoms giant MTN told local media in 2015 that it spends 8 billion naira ($26 million) annually on diesel.

Even bakeries need diesel. At Rehoboth Chops & Confectioneries Ltd., a bakery in the Ogba district of Lagos, giant diesel-powered ovens bake hundreds of loaves of bread. The factory runs 24 hours a day, six-and-a-half days a week.

The lights, mixers and fans that clear the heat are powered by two large diesel generators outside. The ovens run directly on diesel, so they never cut out.

Chief operating officer Abayomi Awe said they use cheaper grid power when they can but rely on generators for around 20 hours per day. Grid power can be down for days.

“It becomes difficult for us to expand if the price of diesel goes up,” he said as bakers scrambled to pull finished loaves from steaming ovens. “It might result in some companies, some bakeries like ours, shutting down.”

In Crisis, An Opportunity

Many businesses are already searching for solutions. The Lagos Chamber of Commerce wants electricity prices revised upwards so the grid can attract investment – a politically risky move domestically.

It has also lobbied the government to remove tariffs and taxes on imported solar panels, which stand at 10%.

Unity Bank and the Bank of Agriculture have already signed deals with solar firm Daystar Power, while mobile phone tower firm IHS Towers is trying to power more sites using solar panels.

Solar power provider Starsight Power Utility Ltd said it is working with 70% of Nigerian banks, but that cheap diesel has been one of the biggest hurdles for the development of solar.

“I think an increase in the diesel price would be most welcome for our business,” chief executive Tony Carr said.

“There is no market penetration because diesel is so cheap.”

($1 = 305.9000 naira)

 

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Purdue Pharma to Stay in Business as Bankruptcy Unfolds

A judge cleared the way Tuesday for OxyContin maker Purdue Pharma to stay in business while it pursues bankruptcy protection and settlement of more than 2,600 lawsuits filed against it in a reckoning over the opioid crisis.

At the first court hearing since the Chapter 11 filing late Sunday, Purdue lawyers secured permission for the multibillion-dollar company based in Stamford, Connecticut, to maintain business as usual — paying employees and vendors, supplying pills to distributors, and keeping current on taxes and insurance.

The continued viability of Purdue is a key component of the company’s settlement offer, which could be worth up to $12 billion over time.

Under the proposal, backed by about half the states, the Sackler family, which owns Purdue, would turn the company, its assets and more than $1 billion in cash reserves over to a trust controlled by the very entities suing it.

The Sacklers have also agreed to pay a minimum of $3 billion of their own money to the settlement over seven years, as well as up to $1.5 billion more in proceeds from the planned sale of their non-U.S. pharmaceutical companies.

“This is a highly unusual case in that the debtors have pledged to turn over their business to the claimants,” U.S. Bankruptcy Judge Robert Drain said. “All of the claimants, in essence, have the same interest in maximizing the value of the business and avoiding immediate and irreparable harm.”

Attorney Joe Rice, who represents a group of plaintiffs in the Purdue Pharma bankruptcy, speak to reporters in White Plains, N.Y., Sept. 17, 2019.

Joe Rice, a lawyer for some of the plaintiffs, estimated it could be more than a year before the bankruptcy and settlement are finalized.

“This is not a sprint. We’ve got a little bit of a marathon here,” he said after the three-hour hearing in New York City’s northern suburbs.

Purdue’s bankruptcy filing has effectively frozen all litigation against the company, which its lawyers said has been spending more than $250 million a year on legal and professional fees, but it has not stopped lawsuits against the Sacklers from moving forward.

New York Attorney General Letitia James, who is suing the Sacklers and opposes the proposed settlement, said last week that her office found that members of the family used Swiss and other accounts to transfer $1 billion to themselves.

Purdue lawyer Marshall Huebner said he hoped states that are opposed to the proposed settlement could be persuaded to change their positions.

“In essence, America itself that stands to benefit or lose from the success or failure of these reorganization proceedings,” Huebner said.

None of the Sacklers attended the hearing, but the family name did come up several times as Purdue lawyers declared that they wouldn’t benefit from any steps taken Tuesday to keep the company in business.

As the bankruptcy unfolds, Purdue will continue to pay its approximately 700 employees under preexisting salary structures.

No member of the Sackler family is an employee and none will receive payments, Purdue lawyer Eli Vonnegut said.

Because of commitments Purdue made before the bankruptcy filing, the company will pay sign-on bonuses to five employees and retention bonuses to about 100 employees. The company agreed to hold off on seeking to continue other bonus plans, such as incentive bonuses.

Drain, the judge, also allowed the company to continue covering legal fees for current and former employees, which Vonnegut estimated wouldn’t exceed $1.5 million per month. The company stopped covering legal fees for members of the family on March 1, he said.

“We swear up and down that no payments will go to the Sacklers,” Vonnegut said.

Purdue lawyers argued that the sign-on and retention bonuses were vital to attracting and keeping top talent in a tumultuous time for the company. Covering employee legal fees is important to morale and sends a strong signal that the company backs the people who work for it, the lawyers said.

Bankruptcy trustee Paul Schwartzberg objected, saying the bonuses went “way beyond” normal compensation and were padding the pockets of employees who already make upward of $300,000 a year.

 

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ICC Judges Authorize Appeal Against Afghanistan Rejection

International Criminal Court judges said Tuesday that the court’s prosecutor can appeal against the rejection of her request to open an investigation into crimes linked to the long-running conflict in Afghanistan.

In April, a panel of judges rejected the proposed investigation, saying it would not be in the interests of justice because an investigation and prosecution were unlikely to be successful as those targeted — including the United States, Afghan authorities and the Taliban — are not expected to cooperate.

Seeking leave to appeal, Prosecutor Fatou Bensouda said that reasoning ran contrary to the court’s goal of prosecuting grave crimes when national authorities are unwilling or unable to do so.

Bensouda must now file a detailed appeal that will be considered by judges, a process likely to take months.

FILE – Public Prosecutor Fatou Bensouda attends the trial for Malian Islamist militant Al Hassan Ag Abdoul Aziz Ag Mohamed Ag Mahmoud at the International Criminal Court in the Hague, the Netherlands, July 8, 2019.

Her November 2017 request to open an investigation angered Washington because as well as alleging that crimes were committed by the Taliban and Afghan security forces, Bensouda said she had information that members of the U.S. military and intelligence agencies were involved in crimes.

Her request said they allegedly “committed acts of torture, cruel treatment, outrages upon personal dignity, rape and sexual violence against conflict-related detainees in Afghanistan and other locations, principally in the 2003-2004 period.”

Earlier this year, U.S. Secretary of State Mike Pompeo said Washington would revoke or deny visas to ICC staff seeking to investigate alleged war crimes and other abuses committed by U.S. forces in Afghanistan or elsewhere.

Bensouda said that the Taliban and other insurgents killed more than 17,000 civilians since 2009.

 

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Gates Foundation Says Billions ‘Mired in Inequality’

Living conditions have improved greatly since 2000 even for the world’s poorest people, but billions remain mired in “layers of inequality.”

That is the assessment from the Bill & Melinda Gates Foundation’s third annual report on progress toward U.N. Sustainable Development Goals – 17 measures that most countries have pledged to try to reach by 2030. Those efforts are falling short, says Bill Gates.

“As much progress as we’re making, a child in many countries still over 10% are dying before the age of five. And in richer countries it is less than 1%. So the idea that any place in the world is still 10%, some almost 15%, that’s outrageous, and it should galvanize us to do a better job,” Gates told VOA.

The 63-year-old Microsoft co-founder and philanthropist sat down with VOA at the foundation’s offices in advance of the report, which was released to coincide with the opening of the United Nations General Assembly.

This year’s report uses geography and gender as lenses for examining progress, particularly in terms of health and education.

It finds “an increasing concentration of high mortality and low educational attainment levels” in Africa’s Sahel region as well as in parts of Pakistan, Afghanistan and northern India. People in those regions experience “multiple deprivations, including some of the highest fertility rates in the world, high levels of stunting and low vaccine coverage,” the report says.

Disadvantages fall more heavily on women than on men. Girls generally get less formal education than boys; those in sub-Saharan Africa average two fewer years of education. And even when girls obtain a good education, they’re less likely to parlay it into paid work. 

“Globally, there is a 26 percentage point gap between men’s and women’s labor force participation,” according to the report.

Monitoring progress on these fronts aligns with the Gates Foundation’s commitments, which include improving global health and aiding development in low-income countries. Since its start in 2000, the foundation has spent billions on efforts such as improving vaccines and nutrition, combatting malaria and other diseases, supporting innovative toilet designs to improve sanitation, and ensuring good data collection to identify problems.

As the news site Vox has pointed out, the Gates Foundation each year outspends the World Health Organization and most individual countries on global health. It has built the world’s largest trust — $46.8 billion as of December, according to its website.

That has led some to question philanthropy’s role in development.

“The billions of dollars available to Gates, Rockefeller and Wellcome might be spent with benevolent intent, but they confer extensive power. A power without much accountability,” Wellcome communications director Mark Henderson wrote last week in Inside Philanthropy, announcing that the London-based health charity – second in spending after Gates – would increase its transparency.

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Netanyahu Faces Tough Re-Election Fight Against Rival Gantz

Israelis are voting Tuesday in general elections as Prime Minister Benjamin Netanyahu faces a challenge from former military chief Benny Gantz.

Polls show Tuesday’s contest too close to call, with Netanyahu’s right-wing Likud party tied with Gantz’s centrist Blue and White party, with neither predicted to win a majority of seats in the 120-member Knesset, Israel’s parliament. Ten parties could win seats in the legislature.

That could possibly leave Avigdor Lieberman, a former defense minister and one-time Netanyahu ally but now a rival, as the kingmaker to form a coalition government. Lieberman, the head of the Israel Beitenu party, could double his seats in parliament from five to 10. His campaign slogan is to “make Israel normal again,” a motto aimed at combating what he says is the undue influence of Israel’s ultra-Orthodox parties on political life in the country.

Netanyahu made a last-day nationalist campaign pitch Monday saying if he wins re-election, he would annex all the Jewish settlements in the West Bank over the protests of Palestinian leaders.

He told Israeli Army Radio, “I intend to extend sovereignty on all the settlements and the (settlement) blocs,” including “sites that have security importance or are important to Israel’s heritage.”  

Netanyahu, Israel’s longest-serving leader, is facing his toughest political fight to win a record fifth term to stay in power even as he is confronting possible corruption charges. Israel is staging its second national vote in less than six months, with Netanyahu unable to cobble together a parliamentary majority to form a government after the April vote.

A man hangs up an Israeli flag at a polling station as Israelis begin to vote in a parliamentary election in Rosh Ha’ayin, Israel September 17, 2019.

Gantz has presented himself as an honorable alternative to Netanyahu.

“Blue and White under my leadership will change the direction of the ship of state of Israeli democracy,” he wrote in the Maariv newspaper. “No more instigating rifts in an attempt to divide and conquer, but rather quick action to form a unity government.”

In the run-up to the election, Netanyahu has tried to bolster his nationalist support, along with an assist from his long-time friend, U.S. President Donald Trump, who last weekend floated the possibility of a mutual defense pact between the decades-long allies.

Trump said such a treaty “would further anchor the tremendous alliance between our two countries.”

The U.S. also has another link to the Israeli election, with the Trump administration expected to release its long-delayed Israeli-Palestinian peace plan soon after the vote. The U.S. in June unveiled a $50 billion plan to boost Palestinian economic fortunes, but neither the Palestinians nor Israelis attended the announcement in Bahrain.

Netanyahu has made several campaign pledges in an attempt to win over nationalist voters. He vowed to annex the Jordan Valley, an area Palestinians consider as key farmland in any future Palestinian state. In protest, the Palestinian Authority held a cabinet meeting in the Jordan Valley village of Fasayil on Monday, a day after Israel’s Cabinet met elsewhere in the valley.

“The Jordan Valley is part of Palestinian lands and any settlement or annexation is illegal,” Palestinian Prime Minister Mohammed Shtayyeh said at the start of the meeting. “We will sue Israel in international courts for exploiting our land and we will continue our struggle against the occupation on the ground and in international forums.”

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China and US Clash Over ‘Belt and Road’ in Afghan Resolution

China and Russia clashed with the U.S. and other Security Council members Monday over China’s insistence on including a reference to Beijing’s $1 trillion “belt and road” global infrastructure program in a resolution on the U.N. political mission in Afghanistan.

The mission’s six-month mandate expires Tuesday and council members met behind closed doors for over 2 1/2 hours Monday, unable to agree on a text because of China’s demand.

Russian Ambassador Vassily Nebenzia, the current council president, told reporters afterward that diplomats were working on a new text and “we’re in the process of reaching a compromise.”

He said the council would meet again late Tuesday morning in hopes of reaching unanimous agreement.

This is the second time in six months that the resolution to keep the U.N. political mission in Afghanistan operating has become embroiled in controversy over “belt and road” language.

Resolutions extending the mandate of the Afghan mission for a year in 2016, 2017 and 2018 had language welcoming and urging further efforts to strengthen regional economic cooperation involving Afghanistan, including through the huge “belt and road” initiative to link China to other parts of Asia as well as Europe and Africa.

But in March, when the mandate renewal came up, U.S. Deputy Ambassador Jonathan Cohen objected, saying Beijing was insisting on making the resolution “about Chinese national political priorities rather than the people of Afghanistan.”

He said the Trump administration opposed China’s demand “that the resolution highlight its belt and road initiative, despite its tenuous ties to Afghanistan and known problems with corruption, debt distress, environmental damage, and lack of transparency.”

FILE – China’s Deputy Permanent Representative Wu Haitao addresses the United Nations Security Council, Aug. 29, 2018, at U.N. headquarters.

China’s deputy ambassador, Wu Haitao, countered at the time that one council member — almost certainly referring to the U.S. — “poisoned the atmosphere.” He said the “belt and road” initiative was “conducive to Afghanistan’s reconstruction and economic development,” saying that since it was launched six years ago 123 countries and 29 international organizations had signed agreements with China on joint development programs.

The result of the standoff was that instead of a one-year mandate renewal for the Afghan mission, the mandate was renewed in March for just six months in a simple text, without any substance.

Ahead of this month’s mandate expiration, Germany and Indonesia drafted a substantive resolution that would extend the mandate for a year. It focused on U.N. support for an Afghan-led and Afghan-controlled peace process, U.N. assistance in the Sept. 28 presidential election and strong backing for Afghan security forces “in their fight against terrorism.” It made no reference to China’s “belt and road” initiative.

So China and close ally Russia circulated a rival draft resolution that removes all the substantive language and simply extends the mission for a year.

Council diplomats said after Monday’s meeting that China and Russia would likely veto the German-Indonesian draft resolution, and the China-Russia draft would fail to get the required nine “yes” votes. So diplomats were meeting Monday night to draft a new resolution.

South Africa’s U.N. ambassador, Jerry Matjila, said, “I think there is a chance of a compromise.”

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OxyContin Maker Purdue Pharma Files For Bankruptcy

Purdue Pharma, the maker of prescription painkiller OxyContin, has filed for bankruptcy protection in a U.S. court.

The company is facing numerous lawsuits from local and state governments and other plaintiffs alleging it aggressively marketed dangerous, addictive painkillers that helped fuel the opioid crisis in the United States.

The bankruptcy filing comes days after Purdue Pharma reached a tentative settlement with about 2,000 entities that have filed lawsuits.  The value of the settlement could reach $12 billion.

But some of the states involved in the suits oppose the settlement, saying the company and the Sackler family that controls it are not offering enough and that the current terms would not produce the $12 billion in estimated relief.

Purdue Pharma Chairman Steve Miller rejected criticism of the settlement and said if instead the lawsuits go forward the only result would be to waste money on the legal fight that could otherwise be part of the agreement.

The Sacklers have offered to pay $3 billion under the settlement, and said they want the company to be utilized for public benefit.  That could include providing communities with free doses of drugs the company has created to combat overdoses and addiction to opioids.

The New York Attorney General’s office alleged in a Friday court filing that members of the Sackler family used hidden accounts to transfer $1 billion to themselves.  The family said the transfers were done decades ago and were legal.

U.S. government data shows the number of drug overdose deaths involving opioids rose from 8,000 in 1999 to 47,600 in 2017.

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China’s New Transport Ship Will Help Fortify Islands in Disputed Sea

A new large supply transport ship will help the Beijing government ferry supplies to its holdings in the disputed South China Sea, a resource-rich waterway contested by other countries.

China has alarmed the other countries since 2010 by landfilling small islets for military use. Brunei, Malaysia, Taiwan, Vietnam and the Philippines contest all or parts of the 3.5 million-square-kilometer sea with China. China claims about 90% of it.

The Sansha No. 2 transport ship that passed trial in August can “cover the whole South China Sea,” Chinese state-run Xinhua News Agency reports. The vessel with a displacement of  over 8,000 metric tons will help civilian and military work, Xinhua says.

The ship will help take equipment to the sea’s Paracel Islands – controlled by China but hotly disputed by Vietnam – and possibly further to the more widely contested Spratly Islands, analysts predict.

“They’re expanding their capabilities in all areas,” said Jay Batongbacal, international maritime affairs professor at University of the Philippines. “Deploying in the disputed areas is even more symbolic. It’s also more important for them, because they’re able to keep ahead of the rest of the region.”

Extra-large ship

China’s second transport ship in its class, and one with an especially large displacement, will probably take ammunition, food, water, and power generation gear to the islets it now controls, said Andrew Yang, secretary-general of the Chinese Council of Advanced Policy Studies in Taiwan.

The newest ship will “increase logistics support” for troops stationed on the islets, Yang said. “They have troops and operations stationed there, so they certainly need some kind of more capable logistical support systems,” he said.

The tropical sea stretches from Hong Kong south to Borneo. The six claimants prize it for fisheries, energy reserves and marine shipping lanes.

Sansha No. 2’s late August trial run took it to Woody Island in the Paracel chain. The ship can go 6,000 kilometers without refueling and carry up to 400 people, Xinhua says. 

China operates a military runway on Woody Island and keeps troops there. A transport that went into use on the island 11 years ago could carry just 2,540 metric tons. 

On three major islets in the Spratly chain, China has built runways and military aircraft hangars, according to an initiative under U.S. think tank Center for Strategic & International Studies.

Unique advance for China

Other countries with South China Sea claims lack China’s military power or technology. The People’s Liberation Army, the world’s third largest, flew bombers to the Spratly Islands last year. China plans to deploy floating nuclear power stations to the sea in 2020, according to the U.S. Department of Defense.

The transport ship marks the “latest technology” for China, Batongbacal said. China will probably produce more vessels of the same type to set up a rotation, Yang forecast.

The builder of Sansha No. 2 and its predecessor Sansha No. 1 plans to work on a third transport vessel “to provide better service to personnel stationed on islands”, Xinhua says.

Taiwan sometimes sends a transport to the Spratly chain, Yang said. Taiwan, however, has just one major holding in that archipelago.

Vietnam’s navy operates transport vessels but uses smaller fishing boats for South China Sea transport jobs, said Collin Koh, maritime security research fellow at Nanyang Technological University in Singapore. China could disrupt resupply missions handled by smaller vessels, he said.

“The issue here is more about whether the other claimants can resupply their garrisons uninterrupted the way the Chinese will enjoy in the South China Sea,” Koh said.

The United States, China’s former Cold War foe and a modern-day economic rival, began increasing the number of ship passages through the South China Sea in 2017 under U.S. President Donald Trump. Washington does not claim the waterway but believes it should be open for international use.

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