Connect with us

Economy

Nigeria Lost Out on $10bn Oil Asset Divestment – Operators

Published

on

Nigeria’s Minister of State for Petroleum Emmanuel Kachikwu
  • Nigeria Lost Out on $10bn Oil Asset Divestment

Nigeria failed to benefit from the over $10bn raked in by international oil companies from recent divestment of assets in the country, industry operators said.

The divestment exercise, which started in 2010, saw a number of indigenous oil companies falling over themselves to snap up assets that had been described as over-priced.

In the past few years, mostly before the steep fall in global oil prices, the IOCs such as Shell, Total, Chevron, and Eni successfully disposed of stakes in some onshore and shallow water assets in the country.

But some industry operators said the country did not benefit from the divestment because a proper lease administration and an attractive investment environment were not in place.

The operators stated this while discussing how to grow Nigerian independents to world-class exploration and production companies at the Aspen Energy Roundtable conference held in Lagos on Tuesday.

The Chief Executive Officer, Seplat Petroleum Development Company Plc, Mr. Austin Avuru, said about $10.4bn was spent by indigenous oil firms to acquire divested assets in the last seven years.

He said, “It is not small money; 70 per cent of all of this came out of Nigerian banks. I can tell you that 60 per cent of this money would have gone to the DPR (Department of Petroleum Resources) if the DPR had handled the lease administration properly.

“But this is all the money that we as indigenous companies, using Nigerian banks, paid to the IOCs. I hope that will be a lesson for the next lease administration, bid rounds and renewals.”

Avuru stressed the need for the country to administer its resources in such a way that “maximum value is captured without expropriation.”

“We are the victims knocking our heads together and paying three times more for these leases because we have no option. There are no leases available. So, we knock our heads together and then the IOCs are smiling. We could have paid one third of what we paid to the government and everybody is happy,” he said.

The Managing Director, ND Western, Mr. Layi Fatona, said the divestment had grown a portfolio of new entities in the nation’s oil industry such as Seplat and ND Western.

“But the most important thing is that when you look at the spending, all of the money came mostly from the Nigerian banking system. And I ask a pertinent question: Shall we call this capital flight? All that money that was taken from the Nigerian banking system by essentially indigenous E&P companies paid to the IOCs left the shores of this country.

“How much of this money ended up as a backward reinvestment in the Nigerian petroleum industry?”

Fatona said some of the assets were over-priced but the sellers could not be blamed if the buyer was naive enough or consciously paid what was demanded.

He said if the government had created an environment where the IOCs could put back the money they got from the divestment, the oil majors would have done so.

“So it is not about capital flight; it is about the fact that we have failed holistically to create the environment where the seller of an asset who makes profit believes sufficiently in this society and put all the money back into the system,” he said.

Fatona said the divestment had provided an opportunity for indigenous companies, as assets acquirers, to learn to work with the dominant partner, the Nigerian National Petroleum Corporation.

He described the exercise as a catalyst for the Nigerian petroleum industry to build its own capacity.

The Chairman, Aspen Energy Nigeria Limited, Mr. Bayo Opadere, said the inherent potential of the Nigerian energy sector would not be realised if the players operated in silos and failed to engage in deliberate and structured conversations.

“It is against this background that Aspen Energy has undertaken the task of facilitating the roundtable conference. By this, we hope to create a platform for focused discussion that will articulate strategy and policy proposals on an ongoing basis.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

France, Nigeria to Build New Partnership

Published

on

France is currently aiming at building a new partnership with Nigeria, with the dispatching of its Minister in charge of Foreign Trade and Attractiveness, Franck Riester, to Nigeria.

Riester, who was expected at the time of filing this report on Monday, is scheduled to visit Nigeria from 12-14 April, 2021.

A statement from the French Embassy in Nigeria said: “Franck Riester is visiting Nigeria from 12 to 14 April, a visit that follows up on the priorities set by French President Emmanuel Macron during his official visit to Nigeria in July 2018 and his desire to build a new partnership between Africa and France.

“As the largest economy in Africa and the economic engine of West Africa, Nigeria is indeed a major partner for France, the first in sub-Saharan Africa with bilateral trade amounting to a total of 4.5 billion USD in 2019 (2.3 billion USD in 2020, due to the Covid-19 pandemic).”

It disclosed that the minister will have several official meetings in Abuja and Lagos, in order to underline the importance of the bilateral economic relationship and to prepare the summit on the financing of African economies in Paris on 18 May.

It revealed that the objective of the mission is also to further strengthen the links between the French and Nigerian private sectors, and “in this regard, the minister will have in-depth discussions with the main Nigerian economic actors to strengthen bilateral cooperation and investments, both in Nigeria and in France, particularly in the logistics sector”.

It said while in the country, the minister would meet with young Nigerian entrepreneurs in the cultural and creative industries sector, to discuss the major role of their country in African creativity and the development of the African entrepreneurial ecosystem, with the support of France.

It further said: “The minister will also open the ‘Choose Africa’ conference, a €3.5 billion initiative by President Emmanuel Macron dedicated to supporting the development of start-ups and SMEs in Africa to enable the continent to benefit fully from the opportunities of the digital revolution.”

Continue Reading

Economy

COVID-19: USAID to Provide $3m Grant, Technical Assistance to Combat Food Insecurity in Nigeria

Published

on

The United States Agency for International Development (USAID) is providing financial grant and technical assistance worth $3 million to combat food insecurity in Nigeria compounded by COVID-19 pandemic.

A statement by the agency on Monday said: “On April 12, 2021, the U.S. Agency for International Development (USAID) in Nigeria launched a COVID-19 Food Security Challenge that will provide $3 million in grant funding and technical assistance to youth-led and mid-stage companies working in food value chains in Nigeria.”

The statement lamented that Nigeria is experiencing food insecurity compounded by the COVID-19 global pandemic and its effects on the food value chain in the country.

It stated that the pandemic has disrupted the already fragile agricultural value chains, especially smallholder farmers’ ability to produce, process and distribute food, which has disrupted agricultural productivity and markets, and negatively impacted livelihoods, especially among vulnerable households, women and youth.

The USAID Mission Director, Anne Patterson, said: “We are launching the COVID-19 Food Security Challenge to help innovative Nigerians alleviate food insecurity.

“This assistance encourages private sector-led solutions to boost food production, processing and create market linkage along the agriculture value chain in a sustainable way across Nigeria.”

The statement revealed that in launching the challenge, USAID seeks commercially viable youth-led and mid-stage companies already working in food production, processing, and distribution, noting that successful applicants will present ideas that demonstrably help farmers and other stakeholders in the agricultural value chain increase, agricultural productivity and food security within the next six months.

According to the statement, the challenge will award 15 to 25 youth-led companies up to $75,000 each and award 10 to 15 mid-stage companies up to $150,000 each.

Winners will receive funding and technical assistance to rapidly expand their activities to mitigate the effect of COVID-19 on Nigeria’s food value chain and improve the resilience of vulnerable households to the negative impacts of the pandemic.

Continue Reading

Economy

FG Plans to Deliver Solar Energy to 25M Nigerians

Published

on

The Nigerian federal government has commenced its plan to deliver electricity through solar energy to Nigerians whose communities are off the national power grid.

Vice President Yemi Osinbajo, who spoke during an event to mark the programme in Jangefe, Roni Local Government Area of Jigawa State, restated the determination of the President Muhammadu Buhari administration to give more Nigerians access to cheap and environmentally friendly renewable power.

Osinbajo said the Solar Power Naija programme would continue across the six geopolitical zones in six states, namely, Edo, Lagos, Adamawa, Anambra, Kebbi and Plateau, in the first phase, and then move to the entire 36 states and the nation’s capital, thus, covering 25 million Nigerians at completion.

Jangefe community got 1,000 solar home system connections for its about 5,000 population, as part of a 100,000 scheme, with a local solar power company implementing aspects of the scheme.

According to Osinbajo, the president had emphasised that Nigeria could no longer rely solely on the grid if government is to electrify the whole country, which meant that an effective strategy had to be developed for decentralising power supply.

The Solar Power Naija programme, which is designed by the Rural Electrification Agency (REA), is an ambitious initiative that aims to create five million connections through a N140 billion financing programme that will support private developers to provide power for five million households, which means providing electricity for up to 25 million Nigerians.

The vice president disclosed that the programme was a Public Private Partnership (PPP) arrangement supported by concessionary lending via the Central Bank of Nigeria (CBN) and commercial banks. He emphasised that structures had been put in place to make the cost of the connections affordable for the target communities.

In addition to the concessionary lending rates, Osinbajo explained that the government had provided subsidies and rebates for private developers to the tune of over $200 million under the REA and World Bank Nigeria electrification programme.

Continue Reading

Trending