A Review of the Nigerian Energy Industry

NNPC admits scarcity of funds for oil and gas projects

*NNPC-Towers, Central Business District, Garki, Abuja.

Ike Amos

19 September 2018, Sweetcrude, Abuja — The Nigerian National Petroleum Corporation, NNPC, Tuesday, admitted that securing funds to finance major projects in the oil and gas industry is becoming challenging, hence its decision to resort to contractor-financing option.

In a statement in Abuja, Group Managing Director of the NNPC, Mr. Maikanti Baru, stated that it resorted to contractor-financing of its pipeline and other facilities development in recent times in the Industry to get around the prevalent funding challenge in the country.

Baru, who was represented at the Nigerian International Pipeline Technology and Security Conference (NIPITECS 2018) in Abuja, by the Chief Operating Officer, NNPC Ventures, Mr. Babatunde Adeniran, said this had enabled the corporation to aggressively build the pipeline infrastructure within the Gas Master Plan as exemplified in the recent award of the Ajaokuta-Abuja-Kaduna-Kano (AKK) gas pipeline and all ongoing downstream pipeline infrastructure rehabilitation effort.

Baru wondered if Nigeria had a financially capable environment that could provide funds at rates that would be competitive and low enough to produce adequate returns.

He averred that the answer to these posers would enable NNPC to restructure and develop policies that would encourage infrastructure development in the country.

He further stated that pipeline remained the cheapest way of moving products across any distance, noting however that pipeline operation and construction in Nigeria had been an expensive undertaking.

He challenged members of the Pipeline Professionals Association of Nigeria, PLAN, and other stakeholders to proffer solutions that could lead to a dramatic change and expansion of pipeline business in Nigeria.

Baru said such solution must be able to resolve the challenge which had hindered the growth and viability of pipeline venture in the country.

He explained that emphasis should not be on what has been done in the past but to seek quicker, better, cheaper and more effective ways of how things should be done to achieve the feat.

‘’The poser I will like the conference to address is: Is cost really an inhibitor or is it the security challenges or financial models that are not properly structured and above all how do we make the pipeline business a financially viable investment?’’ he said.

Continuing, he noted, “How do we build a partnership with the required technical expertise to assemble new technology based-industries that are cheap to operate and can deliver products that are both locally and internationally marketable?”

Earlier in his welcome address, Mr. Geoff Onuoha, Chairman of PLAN, assured that the pipeline professionals would not only pick up the gauntlet and tackle the challenge posed to the group by the NNPC but would continue to work with other stakeholders to ensure the in-country viability of pipeline business.

Mr. Chidi Izuwah, the Acting Director General/Chief Executive Officer, Infrastructure Concession Regulatory Commission, commended the NNPC for embracing the contractor-financing model in the AKK project, noting that such an option should be replicated wholesomely in respect of other mega industry projects.

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