Monday, August 25, 2008

Nigeria - spending on diesel for telecoms

GSM operators spend over N2 trillion on diesel annually

Judging from claims made recently by Zain Nigeria’s chief executive officer, Bayo Ligali, the GSM industry spends trillions of naira on the purchase of diesel annually.

Ligali claimed in a press briefing recently that Zain Nigeria consumes about 450 litres of diesel every second to power its 3600 base stations across the nation. Considering the northward movement of the price of diesel, which has doubled to N150 over the last 12 months, it can be inferred that the company will be spending more than N2 trillion before the end of this year.

Buttressing this point early this year while speaking at the launch of the then Celtel’s Rural Acquisition Initiative in Abuja, Gamaliel Onosode, the company’s chairman, had noted that the company spent an average of N36,000 on diesel at each base station per second to total more than a trillion naira. The continued increase in the price of diesel to more than 100 percent over the past few months may have increased the company’s expenditure to more than two trillion naira.

Last year, Ahmad Farroukh, chief executive of MTN, had claimed that his company was spending about N700 million per month on diesel. The more than double price increase over the last year to N150 must have increased that cost by now, to at least N1.4 billion per month, to equal about N15 billion per annum.

Although the diesel cost implication of Globacom is not clear, its operating base stations are however a little more than the number operated by Zain. A manager at its head office simply said that he does not know company’s total expenses on diesel.

Meanwhile, the Federal Government is considering the contribution of $5 billion (N585 billion) to alleviate the problem of power outage in the country.

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