Energy
Nigeria receives only 4% of investment flows into Africa’s oil, gas before PIA — Sylva
…Lost $50bn worth of investment
By Uthman Salami
The Minister of state for Petroleum Resources, Chief Timipre Sylva has said that Nigeria received only 4 per cent of investment inflow into Africa oil and gas before the Petroleum Industry Act ( PIA) was signed and lost over $50 billion worth of investment over delay.
Sylva stated this in a keynote address during the 5th edition of the Nigerian International Energy Summit (NIES) holding in Abuja.
According to him, “A new dawn was ushered into Nigeria’s oil and gas industry the day President Muhammadu Buhari, GCFR, signed the Petroleum Industry Bill (PIB) into law making it the historic Petroleum Industry Act (PIA).
“It was a landmark achievement and victory for all Nigerians. Before this landmark Act, Nigeria’s petroleum industry was governed by the Petroleum Act of 1969 and other obsolete legislations.”
Commending Muhammadu Buhari over the assent to the bill, he said “Mr. President never concealed his desire towards creating a more conducive environment for growth of the sector and addressing legitimate grievances of communities most impacted by extractive industries.
“Let us not forget that the PIB was introduced over two decades ago.
“Despite the controversies and the difficulties, the Buhari Administration believed that the concept, objectives and long-term goals of the bill remained impeccable as to warrant its efforts to rally the legislature from different political and ethnic divide for its passage.”
He bemoaned that, “While the country was waiting for the PIA, Nigeria’s oil and gas industry lost about $50 billion worth of investments.
“In fact, between 2015 and 2019, KPMG states that, “Only 4 per cent of the $70 billion investment inflows into Africa’s oil and gas industry came to Nigeria even though the country is the continent’s biggest producer and the largest reserves.”
“It is no brainer, therefore, to see that the absence of the legal, governance, regulatory and fiscal framework for the industry contributed to the huge loss Nigeria has witnessed.
“However, with the assent of the PIA, President Buhari has assured multinational oil companies and global oil industry investment community of adequate protection for their business interest in Nigeria.
“The nation’s energy industry is no longer rudderless. The PIA makes Nigeria competitive relative to other oil and gas producing countries, especially among its African peers.
“While the role of the two new dual regulators will come under scrutiny, the issue of the host communities will continue to elicit frayed nerves and emotions.
“It is commendable that the PIA addressed the relationship with host communities by creating the Host Community Development Trust Fund (HCDTF) to foster sustainable prosperity, provide direct social and economic benefits from petroleum to host communities, and enhance peaceful and harmonious coexistence between licensees or lessees and host communities. It may not be perfect yet, but it is much better than where we are coming from.
Nigeria’s debt to petrol traders has surpassed $6 billion, doubling since early April, as the state oil firm, Nigerian National Petroleum Corporation (NNPC), struggles to cover the gap between fixed pump prices and international fuel costs, according to six industry sources.
This is according to a report by Reuters on Thursday, which tracks data on international petrol prices.
Sources confirmed to the American media outlet that NNPC has capped the pump prices of petrol shortly after the removal of subsidy in May 29, 2023.
The cap on fuel prices has resulted in stability at the pump despite increases in international crude oil prices and the devaluation of the naira against the dollar.
This situation has led many to speculate that the government might have reinstated some form of petrol subsidy, given the discrepancy between market prices and the steady price of the commodity.
According to data from Reuters, NNPC began facing difficulties early this year when late gasoline payments exceeded $3 billion.
The company has yet to pay for some January imports, with traders stating that the late payments now amount to between $4 billion and $5 billion.
Under the terms of their contracts, NNPC is required to pay within 90 days of delivery.
“The only reason traders are putting up with it is the $250,000 a month (per cargo) for late payment compensation,” one industry source said.
At least two suppliers have already stopped participating in recent tenders after reaching their self-imposed debt exposure limits to Nigeria, the sources said.
This means they will not send more gasoline until they receive payments.
The tension to reconcile the international landing cost of petrol and the fixed price of N617 has deepened the debt of NNPC to the traders, the sources confirmed.
Chevron Nigeria Limited (CNL), operator of the joint venture between the Nigerian National Petroleum Company Limited (NNPCL) and CNL – NNPCL/CNL JV – was recognized with the Best Exhibitor award at the 2024 edition of the Nigerian Oil and Gas (NOG) Energy Week conferences and exhibition in Abuja.
The award presented by the Minister for Petroleum Resources (Oil), Senator Dr. Heineken Lokpobiri was received by Chevron Nigeria’s Chairman and Managing Director, Jim Swartz during the NOG closing gala dinner hosted by NNPCL at Transcorp Hilton Hotel, and attended by dignitaries including government officials, regulators and captains of industry.
Jim Swartz appreciated the organisers of the event for the award and noted that Chevron remains committed to its partnership with Nigeria in ensuring safe, reliable, and efficient operations in and delivering affordable, reliable and ever cleaner energy supply that is critical to the development of the Nigerian economy.
He assured that the company remains committed to supporting the social and economic development of Nigeria and desires to grow its business in the country.
…Urges Govt to support local manufacturers
Mrs Nkechi Obi, Group Managing Director (GMD), Techno Oil Limited has discredited the Federal Government for its policies on Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG) cylinders.
Obi made her displeasure known during a panel session at the 2024 Nigeria Oil and Gas (NOG) conference in Abuja.
Speaking, Obi urged the government to reverse the zero import duties placed on the importation of LPG cylinders and restore the initial 40 per cent import duties, to discourage importation.
“We need policy reversal on that to encourage local producers. The unofficial explanation we are getting from some customs officers is that the Compressed Natural Gas (CNG) which the government wants to encourage its usage in Nigeria, has the same Harmonised System (HS) code with LPG.
“So, the import benefits placed on CNG equipment eventually affected LPG equipment; that is why they were tied together on the zero import duties.
“Harmonised System codes are commonly used throughout the import and export process for the classification of goods.
“For me, we don’t produce CNG cylinders in Nigeria because it involves advanced technology but we produce LPG cylinders here.”
“For us to produce CNG cylinders, we have to change one or two machines, and we expect the government to encourage us to upscale our technology to 32, which we are planning to do,” she lamented.
Obi also called on the Federal Government to separate LPG HS code from that of CNG, to ensure that importers of LPG pay higher import duties, and to also enable the government to continue with its efforts to make CNG affordable in the country with zero import duties.
“The previous government protected those producing cylinders, so that import will not overshadow local production; they did that to encourage local manufacturing but when this government came into existence, policy changed.
“We only enjoyed that policy for six months before it was scrapped and replaced with the new ‘zero import duties’ policy.”
“Definitely, we have to produce CNG cylinders and the government needs to consider those that will go into that production. But if government policy is killing LPG cylinder production that we are doing, it will be very difficult to enter into CNG cylinder production.
“So, if there is anybody who can venture into CNG cylinder production, we the producers of LPG cylinders are here to do that and it is in our plan.
“But we are not encouraged to do it because of what happened to us in the LPG cylinder production because of the frustrating policy that is encouraging its importation,” Obi added.
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