Nigeria requires $30bn annual investment to bridge infrastructure deficit —Experts

Some oil and gas experts have posited that Nigeria would require a minimum of $30billion annual investment to bridge the infrastructural gap that exists in the economy.

Speaking at a Retreat/Workshop by National Association of Energy Correspondents (NAEC) in Lagos at the weekend, Head of Research, Ecobank Plc, Dolapo Oni, argued that in order for the global energy needs to be met, a whopping $300 billion would be needed and for Nigeria to meet its infrastructural deficit, it requires $30 billion annual investment.

According to him, “if Nigeria needs to bring its infrastructural development to date, it requires $30 billion annual investment. Past governments have placed emphasis on building reserves which stands at about 36 billion barrels, but emphasis should be placed on monetization of reserves rather than building the reserves. This is because no one knows how soon the world will stop relying of crude oil as main sources of energy.

“Nigeria’s reserves can last for the next 55 years, but in next 55 years, would the world still in need of our oil?”

He said Nigeria’s output has been stagnated since 1980s and he harped on the need to expand production beyond 2.2 million barrels per day which he considered to be too small when compared with Nigeria’s population.

Being the seventh country with the largest gas reserves in the world, Oni urged the government to develop policies that would encourage investment in gas development. “No incentives for gas development. Nigeria has not been producing non-associated gas but associated gas. It means gas discovered during crude oil exploration. Although, Nigeria’s gas output has grown faster than crude oil output, but it is not being monetized very well,” he stated.

Oni also lamented under-utilization of the refineries which have been operating below 50 per cent capacity for years. “Refineries have been so badly managed and it may be difficult to bring it to optimal capacity. The main challenge the refineries had was inadequate supply of crude oil. Refineries must be adequately supplied with crude oil. This is another challenge I think Dangote Refineries would face except it sources its own crude from abroad with reliance on Nigerian crude,” he said.

While urging the Nigerian government to make sure the Petroleum Industry Governance Bill (PIGB), he reminded the regulators and stakeholders in Nigerian oil and gas sector that west African region now has more crude oil producers unlike what we had in the past when only Nigeria and Angola dominate African region.

“In the past, Nigeria is a major player in global oil market. In those times, when a force majeure is declared due to perhaps an attack on Forcadoes pipeline or Bonny terminal, crude oil price will react in the global market. That’s there will be an increase in crude oil price following such declaration, but nowadays, nothing happened.

“This is because most refiners have found refuge in other crude oil producing nation with much stable environment. Ghana is expected to add additional 100,000 barrels per day production because Jubilee Field is coming up soon. Niger is producing oil, Angola is increasing production and every time Nigerians blowup their pipelines, new markets are created for these competitors.

“Asian refiners that love sweet crude grade from Nigeria are now upgrading their refineries to accommodate heavy crude,” he said.

On the way forward, Oni stressed that Nigeria should get its fiscal framework right and pass the PIGB in other for investors to bring the much needed fund to explore new frontiers. He said what Nigeria needs to attract investors is regulation.

On her part, the Outcome a lead, Revenue Management, Facility for Oil Sector Transparency and Reform (FOSTER), Oyinda Adedokun, blamed lack of transparency and poor management in the accounts of government for the lull in investment in oil sector.

She stated that most state governors in Nigeria do not publish what they received from Federation Accounts. She said it was established that some state governments in Nigeria earns more than some countries in West Africa, yet there was nothing to show for their share from FAAC.

According to her, “there is need for constitutional stabilisation mechanism that will compel the states to save for the future. Currently, the constitution states that all monies must be shared and the Federation Account must have zero balance.

“Nigeria established its Sovereign Wealth Fund (SWF) in 2011 and it has $1.4billion as its balance as at present. Iran has $62billion in its SWF, Angola has $4.6 billion balance while Ghana has $0.45 billion. All these nations created the SWF in 2011.

“The government must ensure it promotes transparency and accountability, State Revenues and expenditure must be accounted for and the government at all levels must adhere strictly to the Fiscal Responsibility Act,” she said.