Mrs Audrey Joe-Ezigbo, the president of the Nigerian Gas Association (NGA) and the co-founder/Executive Director of Falcon Corporation, an indigenous oil and gas firm, in a recent interview with the Nation highlighted some key issues in Nigeria’s gas sector which need to be addressed by the federal government.
She said; “Unfortunately, there are too many challenges and uncertainties facing existing and would be investors in the gas industry. There are issues surrounding pricing and appropriate tariff structures to incentivise investments along the value chain; regulatory inconsistencies relating to foreign exchange (forex) in terms of the investment/income currency mismatch; there are constraints around the timing and quantum of payments of invoices; issues of sanctity of contracts which has been a long-standing challenge, among others. It has been over 14 years and we have still not been able to pass any part of the Petroleum Industry Bill. There are uncertainties around the proposed fiscal policy which impinge on the potential for aggressive development of gas infrastructure.”
“Financing is a key challenge investors face because of the structure of funding available within our domestic financial markets, and the fact that global investors are looking at more investor-friendly and less risky climes to channel their funds. Bankability of projects is a concern and admittedly the quality of guarantees available in the export markets is much stronger than for the domestic market. There are issues of securitisation and payment assurance, security of assets and so many other factors impact on ability to raise funds.”
She also added; “There are challenges with bureaucratic delays and extended procurement processes, corruption and rent-seeking, multiplicity of agencies and attendant costs and approval overlaps. There are also very significant security budgets that have to be attached to projects in the industry. These and many more serve to increase the cost profiles of projects. Time is lost trying to get projects past the approval stage, off the ground during the construction phase, as well as once operationalised. All these add up to significant time lost and value erosion.”
She however said; “It is difficult terrain indeed, so the operating philosophy of the investor is centred around strategies for hedging, de-risking, efficiencies, optimisation, and the like. We are very pleased that a lot of the industry restructuring is looking at the reduction of contracting cycles, removing bureaucratic bottlenecks, streamlining agencies and driving efficiencies within the public sector.”
Source: The Nation