…Energy is expensive globally, there is no point allocating scarce resources to unprofitable venture
-By Felix Douglas
Signing of the Petroleum Industry Act (PIA) by President Muhammadu Buhari was seen as a respite for the oil industry in Nigeria, stakeholders were of the opinion that the industry has experienced a new dawn after almost two decades of legislative rigmarole.
There has been clamour for energy bank specifically to finance the country’s energy sector.
Stakeholders and speakers at the Energy Finance Forum of the Centre for Petroleum Information (CPI) pointed out that Nigeria has to think out of the box and get best experts to source finance for its huge gas resources.
The PIA has made it easy to bank gas projects with financial institutions embarking on innovative and supportive means of providing finance for gas related projects.
Therefore, the energy industry needs to look inward especially with the provision of energy bank organising portfolio of the companies to ensure balance and evaluation of investments.
The International Energy Agency (IEA) has predicted that by 2030 there will be 155 million electric vehicles in the world. Internal Combustion Vehicle (ICV) will disappear and conventional refineries will suffer. This will make it difficult to finance refinery projects.
However, nobody envisages the present geo-political situation the world is going through. Africa may not sustain itself but it has to make efforts to improve its institutions.
The capacities of the banks in Nigeria to finance oil and gas companies cannot be fathomed, already, countries around the world are sourcing for money to finance energy projects.
These projects are laudable but there may not be commitment to embark on them due to paucity of funds. Balance sheets must be cleared in financial institutions with foreign aids and generation of economic activities in Africa.
Under the energy transition, for finance to make stipulating difference, the way forward is skill and manpower.
This is where the government needs to intervene without paying lip service with convincing efforts to succeed.
On the aspect of power, nothing can be achieved to bridge the gap if mini grids relative to solar solutions are not funded to aid supply across the country.
Another issue bothering the energy industry is subsidy. This has to be clarified because it involves all the value chain. Recently, not just oil, the government announced that it will remove subsidy from the power sector.
It is not only an upstream related issue although it affects the entire chain especially the downstream diverting both government and company’s attention to use scarce fund in the energy space. Energy is expensive globally and there is no point allocating scarce resources to unprofitable venture.
Taking a look at the International Oil Companies (IOCs) selling their onshore and shallow water projects which will not be funded, the independents have the capacity to embark on them.
The government and stakeholders should seek the attention of independents especially the Nigerian National Petroleum Company Limited (NNPC) which play a major role in the energy space.
Comment here