Stakeholders seek ‘fiscal certainty’ to unlock investment in Nigeria’s oil sector
Stakeholders at the ongoing Nigeria Oil and Gas Exhibition (NOG) have called for fiscal certainty, which they say will serve as incentive to global investors seeking to unlock billions of potential investments in Nigeria’s oil and gas sector.
Apart from concerns of fiscal certainty, the stakeholders also urge the Federal Government to ensure reforms being done through the Petroleum Industry Bill are holistic and attract international investors into the sector.
Nigeria’s deputy minister of petroleum resources, Emmanuel Ibeh Kachikwu, has repeatedly said the Nigerian oil and gas sector requires about $100 billion to open up investment in the sector, and attract more capital inflow into the nation’s economy.
Speaking on Wednesday at Industry leaders’ Panel, with the topic: Unlocking Nigeria’s Investment Potential, Paul McGrath, managing director of Mobil Producing Nigeria Unlimited, said, “To unlock investment potentials in the country, we need fiscal certainty to attract global industry players with huge capital into Nigeria’s oil rich resources.
“You need to have the right framework in place to have global competitive fiscal price policies in place to help lift the opportunities in the sector.”
According to McGrath, “When we talk about investment potential in the country, there is a huge potential in that regard. The second one on investing in the country’s potential is on investing in the people.
“There are works that have been done on the Petroleum Industry Bill, both by the Executive and the Legislature. It needs to have an end result, which is inadvertently to attract international investment.”
He said further, “The Nigerian government must be ready to have reforms that will unlock the potentials in the sector that needs to continue attracting international investments.”
In his submission at the panel, Jeff Ewing, chairman/managing director, Chevron Nigeria Limited, said, “The Federal Government has been making efforts on competitiveness and on the ease of doing business, and that is the discussion we have been having with the government to enable them have a wider understanding of the implication of the competitiveness of their Industry.”
He remarked further, “The government has made some good steps on the Petroleum Industry Bill. We have also look forward to continuous engagement to ensure Nigeria continues to grow investment in the deep water and gas.”
He further pointed out, “The JV in gas and deep water deals should be made to draw more investment into the Nigerian economy.”
On the need for fiscal policy to drive investment in the sector, he said, “We really need fiscal policy terms to drive deep water gas investments, while pushing those gas reserves into marketplace.”
According to him, “We need to have willing buyer – willing seller where the prices are competitive globally. There are also historic issues in addressing gas payments that often occur to boost investor confidence.
“We are working with the NNPC to acquire $3 billion third party funding, and we have $1.2 billion gas project, which included lots of activities for the local economy.”
Osagie Okunbor, country chair, Shell Companies in Nigeria, who was also a panellist, said,”We have been discussing cash calls as a never ending issues. We have been able to sit down in a table to address the cash call issues. It has started two three years ago.
”Nigeria is competing for capital inflows with every other countries of the world. Each of these companies operate in 70-80 countries globally, and each of those countries want those capital into their country too.”
While speaking on Federal Government’s interventions on Joint Venture cash calls, he said, “What is of significance today is that that argument is off the table. We finished a year without the NNPC owing cash calls to International Oil Companies. This kind of gesture by the government naturally opens up the investor confidence in the sector.”
He suggested, “The whole JV process, we have to put our hands on deck, and find a funding structure that works and ensures sustainability. I read in papers that the governors have instructed NNPC to suspend cash calls, and I said that gesture could truncate our progress.”
Suggesting the way forward, he said, “What we need to do is to put the kind of energy that has been put in resolving the cash calls issues around security, sanctity of contracts, and issues around contracting cycles.
“PIB must be passed to remove uncertainty, but not the PIB that does not encourage investment. Sometimes, it is not PIB for the sake of PIB, which has the need to encourage investment. What we are happy about now is that consultation has been very extensive. Both in the Senate and in the House, and they have been supportive.”