Fast-tracking access to funds for oil, gas firms in capital market

The capital market is meant to provide long term funding for investors. While the Nigerian capital market has been a source of funding for corporates and government, the oil and gas sector have shied away from the capital market despite its huge financing challenges.  The banks as constituted today cannot fund oil and gas exploration and production due to enormous resources and the long term nature of funding such projects.

Haruna Jalo Waziri, executive director, Business Development, Nigerian Stock Exchange(NSE)  restated NSE’s commitment to providing the  enabling environment for the development of virtually all the major sectors of the economy which the Oil and Gas sector happens to be one of the most effective.

Mismatch

Oscar Onyema, the chief executive of NSE said the exchange moved to the oil and gas sector as a recognition of how pivotal the sector is to the Nigerian economy.  

“The oil and gas sector is estimated to contribute about 14.4 per cent of nominal GDP and accounts for about 87 per cent of total export reserve and the government’s revenue is about 76 per cent,” Onyema said. There are about 87 exploration and production companies, 65 indigenous players, 42 indigenous producing, six listed on foreign Stock Exchange and over 15 are listed on the Nigerian Stock Exchange. 

Huge gap

There is a huge gap for oil and gas in the capital market. Andrew Yakubu, Group Managing Director (GMD) of NNPC, noted that Nigeria still remains Africa’s largest producer of oil and gas. He said that Nigeria’s GDP has to hit $1 trillion by 2020 for the country to be among the top 20 economy in the world adding that unbundling the NNPC will increase market capitalization. The passage of the PIB  which is expected to establish the legal and regulatory framework for the regulation of the industry remains critical to these aspirations.

Frank Uzuegbunam