- Investments in Nigeria’s Oil Sector Decline to N78b
Capital importation into Nigeria’s oil and gas sector has declined from the $200 million (N90 billion) from the second quarter of 2016 to $172 million (N78 billion) in 3rd quarter, according to the National Bureau of Statistics (NBS).
But this decline has been attributed to uncertainty in the country’s oil and gas sector occasioned by insecurity, delay in the passage of the Petroleum Industry Bill (PIB) and delay in meeting contractual obligations in the services industry.
NBS stated in the report that the oil and gas sector maintained a high level of capital importation; although it decreased by 14.4 per cent relative to the previous quarter; but still elevated relative to previous periods at $171.63 million.
It noted that the sector is characterised by isolated periods of high capital importation, adding that it is therefore unusual that the level has remained high for two consecutive quarters.
This sector, it said, accounted for the third highest amount in the third quarter of 2016.The oil and gas sector, had for the first time, during the second quarter of the year, recorded the largest amount of capital, which accounted for $200.39 million, or 19.23 per cent of the total.
NBS explained that in all previous quarters, the sector that imported the most capital had been banking, financing, production or telecommunications.
It noted that oil and gas is characterised by occasional high levels of capital importation, interspersed with periods in which very little capital is imported. “This sector imported $20.83 million in first quarter and only $4.86 million a year previous,” it added.
Giving reasons for the decline in capital importation to the country’s oil and gas sector, former President, Nigeria Society of Petroleum Engineer, Dr. Emeka Ene, said it was due to increase of uncertainty, which he said repels investors’ interest in the sector.
Ene, also a former Chairman, Petroleum Technology Association of Nigeria (PETAN), and Managing Director of Oil Data Nigeria Limited, noted that some major projects in the oil and gas sector have suffered delays.
He said that there is gap in policy alignment on gas, PIB versus Ministry of Environment and security situation in the country.“Until we have an alignment, there may not be substantial investment in the sector. Majority of the investment end up with the service industry, which executes most of the jobs. Right now, the service industry is in a very comatose state because the contractor’s obligations are not being met. A lot of money is being owed to Nigerian service companies over a very long period of time, which creates uncertainty,” he said.
Ene warned that the effects of the present lack of substantial investments are going to impact negatively on the Nigeria’s oil sector in the future.“We are going to be feeling the effects when the oil industry turns around. It is going to be worse. Some service companies are being owed for over two years. Bear in mind that the companies borrowed from the banks to execute the contracts and they’re not being paid for two years, how will the companies be able to take another loan to service any other business? This is exactly the uncertainty we are talking about.”
Speaking on the possibility of low oil prices having effects on investment inflow into the oil and gas sector, Ene citing Kuwait as an example, said: “Between 2015 and 2020, it planned to spend $50 billion in the oil industry. This is because it recognised that this is the best time to drill and produce and that the pricing issues will definitely be tackled in the future and that prices will rise in the future.
“Nigeria service industry should be encouraged, because they can do the work cheaper, and get people employed for longer, so that when the industry turns around, these people will still be alive to do the work.
“The oil industry is strategic and will continue to be strategic in Nigeria for long time for economic security. We have seen Nigerian government not having the dollars to pay for goods imported and its impact on the wider economy.
“Although the oil industry does not contribute so much to the country’s Gross Domestic Product (GDP) like agriculture, but the impact of the oil industry is definitely much more because we are still part of the global economy. Most of the infrastructural projects being undertaken by government need dollars for execution.
“The service industry is facing severe challenges. We were asked to reduce service charges; we are being owed for two or three years and at the same time, and the government refused to reduce systemic costs. For example, we have some agencies, which have not reduced their fees and licenses running to billions of naira.”
Ene therefore called on the Federal Government to tackle the local challenges confronting on oil sector is make it attractive to more investment.
On his part, PETAN Chairman, Mazi Bank-Anthony Okoroafor, emphasised the need for the Federal Government to reduce contracting cycle from three to four years to six months.
Okoroafor said that there also need to create good image for Nigeria through institutional transparency, well-articulated policy consistency and building of enabling infrastructure.
He said there is need to restructure the country’s oil and gas industry operations by simplifying access to assets, maintaining sanctity of contracts, instilling corporate governance in all our dealings and reducing overall project costs for cost effectiveness.
Gov Emmanuel Attracts $1.4b Fertilizer Plant to Akwa Ibom
The Governor of Akwa Ibom State, Mr. Udom Emmanuel has signed an agreement for the citing of a multi billion fertilizer plant in his State.
Governor Emmanuel was part of a Nigerian delegation led by the Minister of State for Petroleum Resources, Chief Timipre Sylva, that visited Morocco to set out the next steps of the $1.4 Bln fertilizer production plant project launched in June 2018.
The agreement between the OCP Africa, the Nigerian Sovereign Investment Authority and the Akwa Ibom State Government will birth one of the biggest investments in the fertilizer production industry worldwide.
The signing ceremony took place at the Mohammed VI Polytechnic University (UMP6).
Mr. Emmanuel signed one of the agreements of the partnership, which covers a memorandum of understanding between OCP Africa, the Akwa Ibom State in Nigeria and the NSIA on land acquisition, administrative facilitation, and common agricultural development projects in the Akwa Ibom State.
Speaking while signing the agreement, Governor Emmanuel said, “Our state is receptive to investments and we are prepared to offer the necessary support to make the project a reality.
“With a site that is suitably located to enable operational logistics and an abundance of gas resources, all that is left is for the parties to accelerate the project development process”, Mr. Udom said.
The agreement reached between the Nigerian Government and the OCP further links OCP, Mobil Producing Nigeria (MPN), the NNPC, the Gas Aggregation Company Nigeria (GACN), and the NSIA.
The two partners agreed to strengthen further their solid partnership leveraging Nigerian gas and the Moroccan phosphate.
This project will lead to a multipurpose industrial platform in Nigeria, which will use Nigerian gas and Moroccan phosphate to produce 750,000 tons of ammonia and 1 million tons of phosphate fertilizers annually by 2025.
The visit of the Nigerian delegation to Morocco takes place within the frame of the partnership sealed between OCP Group and the Nigerian Government to support and develop Nigeria’s agriculture industry.
Following the success of the first phase of Nigeria‘s Presidential Fertilizer Initiative (PFI) and the progress of the fertilizer production plant project launched in 2018 by OCP and NSIA, the Moroccan phosphates group and the Nigerian government delegation have agreed on the next steps of their joint project which is rapidly taking shape.
Several cooperation agreements were inked on Tuesday at the Mohammed VI Polytechnic University (UM6P) by OCP Africa and the Nigerian delegation. Through these deals, OCP reaffirms its unwavering support of agricultural development initiatives in Nigeria including PFI.
OCP Africa and the NSIA have agreed, inter alia, to set up a joint venture which will oversee the development of the industrial platform that will produce ammonia and fertilizers in Nigeria.
The OCP has also pledged to supply Nigerian famers with quality fertilizers adapted to the needs of their soil at competitive prices and produced locally.
ICPC Says Nigeria Loses $10bn to Illicit Financial Flows
The Independent Corrupt Practices and Other Related Offences Commission (ICPC) says Nigeria accounts for 20 per cent or 10 billion dollars (N3.8 trillion) of the estimated 50 billion dollars that Africa loses to Illicit Financial Flows (IFFs).
Chairman of ICPC, Prof. Bolaji Owasanoye, said this during a virtual meeting to review a report on IFFs in relation to tax, Mrs Azuka Ogugua, spokesperson for ICPC, said in a statement released in Abuja on Friday.
The ICPC Chairman said, “the African Union Illicit Financial Flow Report estimated that Africa is losing nearly 50 billion dollars through profit shifting by multinational corporations and about 20 per cent of this figure is from Nigeria alone.”
The ICPC boss explained that taxes played “very strategic role in the nation’s political economy.”
He said the objective of the meeting was to improve on the awareness on IFFs, especially in the areas of taxation.
The ICPC boss added that the meeting would give participants the opportunity to openly discuss how to effectively use the instrumentality of taxation to curb IFFs through risk-based approach.
“Risk-based approach, that is: monitoring and audit; due process in tax collection; structured tax amnesty framework skewed in public interest; data privacy; timely resolution of audits and payment of tax refunds and intelligence sharing among revenue generating, regulatory and law enforcement agencies,” he said.
Owasanoye also stated that for the contemporary tax man to remain relevant, he must build his capacity in areas of technology management, solution architects and an astute relationship manager.
The Executive Chairman of Federal Inland Revenue Service (FIRS) Mr Muhammad Nani, expressed concerns that IFFs posed a serious threat to the Nigerian economy as the act robbed the nation of resources that were needed for development.
Nani declared that tackling IFFs would expand the country’s tax base and improve revenue generation, which was required for development.
He consequently pushed for policy reforms that would make it difficult for “capital flights” from occurring so that the country would be placed on the path of growth.
Other discussants at the event identified weak regulatory framework, opacity of financial system and lack of capacity amongst others as some of the factors that fuelled IFFs.
The discussants emphasised the need for capacity building of relevant stakeholders as one of the ways to stamp out illicit financial flows.
They commended ICPC for leveraging its corruption prevention mandate to open a new vista in IFFs discourse in Nigeria. (NAN)
African Development Bank, Egypt Signs Agreements Worth €109 Million to Transform Sewage Coverage in Rural Areas
The African Development Bank Group has signed financing agreements of €109 million with the Government of Egypt to improve sanitation infrastructure and services for rural communities in Luxor Governorate in Egypt’s Upper Nile region.
The financing consists of a €108 million loan from the Bank, and a grant of €1 million from the Rural Water Supply and Sanitation Initiative (RWSSI) – an Africa-wide initiative hosted by the African Development Bank.
The funding, provided in a challenging global context, will help meet the Egyptian government’s financing requirements in the light of the COVID-19 pandemic, and support a sound water and sanitation infrastructure base, a key enabler for the country’s inclusive development.
The Integrated Rural Sanitation in Upper Egypt-Luxor (IRSUE-Luxor) project is set to boost sewage coverage in the region from 6% to 55%, improving the quality of life of citizens, including women and children, who are most affected by poor sanitation.
“Promoting efficient, equitable and sustainable economic development through integrated water resources management is a priority for the Government of Egypt. The IRSUE-Luxor initiative unlocks the socio-economic development potential for inclusive and green growth,” said Rania Al-Mashat, Minister of International Cooperation, who signed the agreements on behalf of the Egyptian government.
About 22,000 households (240,000 inhabitants) will benefit from on-site and off-site facilities, through an integrated system of sewerage networks, sludge treatment and wastewater treatment plants.
IRSUE-Luxor contributes to the National Rural Sanitation Program established by the Ministry of Housing, Utilities and Urban Communities, which aims to expand nationwide access to sanitation services from 34% currently to 60% in 2030.
The project also complements the national Haya Karima (Decent Life) initiative that aims to help rural communities across Egypt access essential infrastructure services to improve their living conditions and livelihoods.
Furthermore, the project includes a staff training component to strengthen performance within the Luxor Water and Wastewater Company.
“This intervention is not just about infrastructure development. An essential part of the project is supporting ongoing sector reforms,” said Malinne Blomberg, the Bank’s Deputy Director General for North Africa.
One of several initiatives supported by the African Development Bank in Egypt to optimize the use of the country’s water resources, IRSUE-Luxor will enable about 30,000 cubic meters of treated wastewater per day to be discharged into drainage and irrigation canals and re-used to enhance agricultural output.
The initiative is in line with the Bank’s water sector policy, which promotes efficient, equitable and sustainable development through integrated water resources management. In addition, the operation supports tariff regulation to achieve full cost recovery, which is one of the basic principles of the Bank’s water sector policy.
The partnership between Egypt and the African Development Bank Group dates back more than half a century. More than 100 operations have been deployed, mobilizing more than $6 billion across multiple strategic sectors.
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