lng_norman_ladyAbout $600million new capital investment is required to grow the Nigerian liquefied natural gas value chain to an enviable height, the Managing Director, Rivers Bank Capital, Mr Akinyemi Osinubi has said.

Speaking to The Nation, Osinubi said the industry’s growth has been hampered by poor funding, occasioned by the refusal of local and international financial institutions to provide enough facility to the gas operators.

He said: ‘’Liquefied Natural Gas value chain needs between $525million and $600million to make the nation’s gas sector compete with its counterparts in the developed economies.

Unfortunately, accessing the required facility for the production, processing and delivery of gas to the consumers has been a task. The banks are not ready to provide credits to gas operators that are not high networth,’’

According to him, banks are not going to provide loans to operators in the gas industry with low credit rating. He said banks would impose 25 per cent interest rate or more on companies that have such problems.

‘’Lack of project financing mechanism, and low credibility ratings of gas’ firms are some of the challenges in the sector. When banks know that a company that is planning to get loans from them have high default rate, they withdraw their services immediately, he said.

The Managing Director, Bgl Securities Limited,Mr Sunday Adebola said though the management of the Nigerian Stock Exchange (NSE) is trying to bring in oil and gas operators to the market to raise capital for growth, there are impediments.

He said equity financing represent a viable option for companies intending to raise capital, advising operators in the gas value chain to do the necessary things before coming to the market.

According to him, foreign companies would like to look at the equity profiles of the local firms before striking a deal with them. He said the market is deep to accommodate as many companies as possible, advising gas operators to come for listing for growth.

He said oil and gas sector will increase market capitalisation by over N1 trillion, once the operators show readiness to tap the opportunities in the market well.


[The Nation]