Page 5 - AfrOil Week 47 2019

AfrOil COMMENTARY AfrOil
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Rather than addressing these concerns, officials in Abuja have often taken action that has made the investment climate even worse, he charged. Unless the government changes its approach, more companies may quit the country, he argued.
Loss of confidence
Fawibe did not make any policy recommenda- tions or describe specific problems encountered by individual companies. But Sunny Eromo- sele, the CEO of another local service company, Mudiame International, pointed to the govern- ment’s failure to garner support for a long list of large-scale upstream, midstream and LNG projects worth more than $160bn.
“Most of the investment package that this administration met has not taken off for the past five years,” he was quoted as saying by the Guardian. “The attitude of government is irre- sponsible, especially [with respect to] push- ing companies away in the name of revenue generation.”
Eromosele accused the government of undermining current investors’ confidence in Nigeria, saying that officials in Abuja were con- tributing to a climate of uncertainty and inse- curity. If these conditions persist, he said, the country may also fail to attract new partners.
For his part, Adeoye Adefulu, a partner in Odujinrin & Adefulu who also heads the law firm’s energy practice, real estate and mining teams, described the government as lacking the political will needed to take the necessary steps to attract and keep investors. This shortfall has prevented a number of IOCs from moving quickly to the final investment decision (FID) stage, thereby hindering oil and gas develop- ment, he said.
Habeeb Jaiyeola, the associate director of
PricewaterhouseCoopers’ Nigerian branch, also urged the Nigerian government to work more quickly when confronting issues related to oil and gas development.
“It is very important that government’s deci- sions are executed in a timeframe that can bring needed economic value, because when they are not done, the changes to the global economy, prices and capital expenditure and other things required on each project will affect the com- missioning of the projects,” Jaiyeola told the Guardian.
Creating the “right investment climate”
These Nigerian business leaders were speaking several days before ExxonMobil announced plans to sell off some of its stakes in African pro- jects. The US giant did not identify any specific divestment targets, but banking sources told Reuters earlier this week that several Nigerian assets were on the chopping block.
Meanwhile, another international super-ma- jor – namely, Royal Dutch Shell (UK/Nether- lands) – has urged Nigeria’s government to do more to support oil and gas projects. Osagie Okunbor, the chairman of Shell’s Nigerian operations and the managing director of Shell Production Development Co. (SPDC), said at an industry conference in Lagos last week that Abuja played a crucial role in creating a support- ive environment.
“The right investment climate would also include strengthening our regulatory bodies, giving priorities to research and further ena- bling the industry’s financials. I believe that where the investment climate is right, digitalisa- tion and deployment of emerging technologies will enable incremental value creation over the coming years,” he was quoted as saying by the Independent, another Nigerian newspaper. ™
Private equity investor Actis buys into Senegal’s Tobene IPP
“ ExxonMobil’s
Nigeria assets are reportedly on the chopping block
Several of
INVESTMENT
SENEGAL
PRIVATE equity investor Actis has bought Sen- egal’s 115-MW Tobene gas-fired power project from local IPP Melec Power Gen (MPG) for an undisclosed sum. Actis’ Africa-focused power investment vehicle Azura Power will now take over the heavy fuel oil (HFO)-powered project with assistance from Africa50, part of US devel- opment finance institution (DFI) Power Africa.
Actis and Africa50 now aim to complete the conversion of the power plant to natural gas and eventually invest in MPG’s other power assets. Actis did not reveal the size of the deal.
MPG holds a 20-year build-own-operate (BOO) contract with local utility Senelec. The Tobene project opened in 2016 and was set up
with the backing of the IFC. MPG also runs the 67.5-MW Kounoune HFO-fired power plant, which was opened in 2008 and was Senegal’s first IPP. It was also backed by the IFC and the African Development Bank (AfDB).
“We are delighted to be making this invest- ment in the Tobene Power Plant to help drive our growth in thermal power plants [TPPs] in Africa. A key part of the investment strategy for Azura is to convert the Tobene plant from HFO to gas, as part of Senegal’s Emerging Sen- egal Plan (PSE), in order to drive down the cost of power as well as improve the environmental impact of the plant,” said Azura Power CEO Alan Muir.
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