Cobwebs hamper Saudi Arabia's $25 billion investment plan in Nigeria

Cobwebs hamper Saudi Arabia’s $25 billion investment plan in Nigeria

• Stakeholders call on FG to address investment challenges
• Request details of the refinery overhaul agreement.
• What Nigeria will gain from this agreement, Fawibe.

Some stakeholders have expressed cautious optimism about Saudi Arabia’s reported plans to invest in the overhaul of Nigeria’s oil and gas industry, particularly its refineries, and have urged the federal government to It calls for the details of the agreement between the two countries regarding the agreement to be made public.

They said the plan may not come to fruition unless the Nigerian government takes immediate steps to address some of the challenges in the local oil and gas sector that scare away investors.

Saudi Arabia reportedly plans to spend around $25 billion in Nigeria and other African countries over the next seven years, in a move that could see the oil-rich Arab nation expand its presence in Africa. . It was found that around $10 billion was voted for in financing and insurance for Saudi exports until 2030, with a further $5 billion set aside for development financing.

Nigerian stakeholders hope that the olive branch from Saudi Arabia will force President Bola Ahmed Tinubu to address the remaining challenges in Nigeria’s oil and gas industry. They argue that while the country is looking for funds around the world, security issues, unfriendly exchange controls, corruption, a poor regulatory environment, fiscal policy, multiple taxes, subsidy payments on gasoline, etc. For this reason, he lamented the fact that companies operating locally are withdrawing overseas. others.

Stakeholders have called on the federal government to clarify the details of the agreement with Saudi Arabia, saying the plan must be transparent and properly communicated to meet the expectations of Nigerians. .

Last week, Nigeria and Saudi Arabia agreed to a number of investment and cooperation agreements. One of the agreements is for the Saudi government to fund the refinery’s renovation, a project estimated to cost $2.2 billion. The agreement was reached during a meeting between President Tinubu and Saudi Crown Prince Mohammed bin Salman while the Saudi-African Summit was being held in Riyadh.

Nigeria’s total debt exceeds N87 trillion, oil production is low, both the federal and state governments are in bankruptcy, and the country’s economy is in a slump, with low oil production and the majority of revenues going to debt servicing.

port harcourt refinery

Nigeria’s Warri, Port Harcourt and Kaduna refineries were shut down about three years ago after years of operating at a loss. The government subsequently awarded a contract to repair the facility for approximately $2.2 billion. Fundraising for the Nigerian National Petroleum Corporation (NNPC), which recently borrowed $3 billion to cope with the free fall of the Naira, faces challenges as the oil company faces investment apathy due to legacy issues forcing it to sell. It has become. .

This is not the first time Nigeria has turned to Saudi Arabia. In 2019, immediate past President Muhammadu Buhari urged the then Minister of State for Petroleum Resources, Dr. Emmanuel Ibeh Kachiku, to leverage the visit of the Saudi Minister of Energy, Industry and Mineral Resources to attract investment from Saudi Arabia to Nigeria. He was giving instructions. In 2018, Saudi Arabia’s Khalid Al Falih visited Abuja, and in early 2015, Saudi Arabia’s King Salman bin Abdulaziz Al Saud and Crown Prince Mohammed bin Salman bin Abdul I had a meeting with Mr. Aziz Al Saud.

Afterwards, around 30 top executives from key sub-national agencies of the Ministry of Petroleum Resources visited Saudi Arabia to explore areas of cooperation in the oil and gas industry between the two countries. Their discussions mainly concerned the downstream sector, refineries and petrochemicals, gas and midstream infrastructure, knowledge sharing, command and control, and stabilization of the global oil market. However, no significant results were obtained from this visit. Earlier this year, total trade between Nigeria and Saudi Arabia was a dismal $600 million.

Segun Ajibola, former chairman of the Chartered Institute of Bankers of Nigeria (CIBN) and professor of economics at Babcock University, said the government needed to make investments.

“Several industry and environmental challenges also need to be urgently addressed to improve the ease of doing business rating. Security concerns, militancy and lack of infrastructure are hindering investment in the oil and gas sector. They are scaring the house,” Ajibola said.

For him, there is also the need to faithfully implement the provisions of the Petroleum Industry Act (PIA) in all their implications. He pointed out that other matters affecting foreign capital imports and foreign exchange remittances have already been addressed.
Ajibola explained that the essence of the Petroleum Industry Act is to attract new investors to the industry by eliminating known bottlenecks. According to him, Nigeria continues to be a beautiful bride for investors across the world, not only in the oil and gas sector, but also in agriculture, manufacturing, hospitality, tourism, education and health sectors.

“Saudi investors, led by Aramco, no doubt believe that the outlook for the oil and gas industry will depend on the provisions of the new PIA. “The influx into these areas is certainly a good sign,” he said.
The professor believes that the experience and expertise of Saudi investors in the oil and gas sector, particularly in the management of refineries, will add value to Nigeria.

He lamented the impact of imports of refined products on the country’s fragile foreign exchange market and urged Saudi investors to join forces with the Nigerian government to revive the currently moribund refineries, along with the efforts of private refineries. He predicted that Nigeria’s economy would recover. You will be healthier.

“It is also hoped that the entry of Saudi investors into Nigeria’s oil and gas business will help develop local capacity in terms of technology and human resources for the industry,” Ajibade said.

Professor Adeola Adenikinju, chairman of the Economic Society of Nigeria (NES) and an energy economist at the University of Ibadan, said Nigeria needs “all the support we can get to get the country’s refineries back up and running”, commenting on the move. said it was reassuring.

According to him, the development will save Nigeria from huge amounts of foreign exchange spent on importing products and will also increase government revenue.

“I also think that if Saudi Arabia invests in Nigeria’s oil sector, it will not only give a big boost to the sector and the economy, but also increase foreign direct investment in the downstream sector, especially refineries. , and serve as an export hub for refined products, providing employment and income-generating opportunities for the economy.

“But there is no free lunch anywhere, so we need to know the conditions attached to the assistance. Are we leaving them in charge of the refinery once the ongoing repairs are completed? Is this close? Is it a loan that has to be repaid in the future? What impact will the support have on subsidy policies etc? So it would be good to know the terms of the agreement,” Adenikinju said.

Joe Nwakwe, a policy analyst and immediate past president of the Society of Petroleum Engineers of Nigeria (SPE), also said the details of the plan were important, otherwise the move would remain on paper.

“The important thing about these promises is that they are promises, nice sweet words from a kind host to a guest in need. “They say the devil is in the details until concrete steps are taken,” he said.

A composite image of President Bola Tinubu (left) and NNPC Chief Mele Kyari.

The development comes at the same time as the Nigerian National Petroleum Company (NNPCL) reportedly plans to import 110,000 barrels of crude oil per day from Venezuela or Saudi Arabia to operate its Kaduna refinery, which is scheduled to come online next year. It is being Lamentation over years of wasting of oil resources in Nigeria.

Dr. Dylan Fawibe, Chairman and CEO of International Energy Services (IES), said: Countries (OPEC).

“Apart from securing funds to expand idle refineries and establish petrochemical plants, Nigeria will eliminate current irregularities in oil fields and maximize oil and gas production efficiency. ” said Fawibe.


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