More than $20 billion local investments in the oil and gas sector are under threat as a result of low oil prices.Following the situation, the relevant House of Representatives committee is planning to extend the implementation of the Nigerian content policy to the country’s manufacturing, telecommunication, aviation and construction sectors.
The Guardian gathered that before the fall in price of crude oil (when it was about $110 per barrel), indigenous firms purchased over $10 billion worth of divested assets from International Oil Companies (IOCs), largely financed by bank loans.The financial projections underpinning the loans have long been invalidated, and many indigenous companies struggle to service their debts.
Consequently, oil revenues and profits have contracted sharply and companies, particularly in the upstream sector, battle to stay afloat.
Data from the Nigerian Content Development and Monitory Board (NCDMB) revealed that the average spend in the country’s oil and gas sector after the passage of the local content policy was more than $20 billion.
The Egina Deep Water project is said to have attracted over $1 billion into the country’s industry to create capacity and execute Nigerian content scopes provided on the deep-water project.
It was gathered that business activities of indigenous companies that have invested billions of dollars have been low due to the declining crude oil prices. The Lagos Deep Offshore Logistics (LADOL), for instance, invested over $600 million in transforming the swampland of Apapa port axis in Lagos into a one-stop base for deep offshore logistics. The company even plans to attract another $5 billion investments through the LADOL Industrial Free Zone located in Lagos within the next few years.
Speaking to The Guardian on the impact of crude oil prices on operations, an industry player, Alhaji Ibrahim Sambo, disclosed that some companies had to embark on redundancies.
Sambo specifically said there had been low activities at his boat-building factory in Warri Base which commenced operation in 1986 and had built over 500 boats of various models of personnel carriers Q-860, Q-2700, Q-3300, Q-4000 and landing crafts.
According to him, the IOCs, which patronise the base that operates and maintains the boats with the facility of a maintenance workshop, have been complaining about low prices of oil.
Sambo listed other challenges to include importation of boats by some companies and paucity of funds. “We are praying that the sector will pick up very soon,” he said.
Chairman of the House of Representatives Committee on Local Content, Emmanuel Okon, during a recent visit to Warri, said that the Federal Government would continue to provide condusive environment for indigenous oil companies to succeed in the face of the current low oil prices.
He expressed the House committee’s commitment to prevailing on the IOCs to patronise indigenous oil and gas firms. “We will make sure that there is a legislative policies to encourage local companies. The local content is to help companies like West Africa Ventures”, he added.
Ekon appealed to local investors to invest heavily in the economy of Nigeria, saying the development is the only measure to spur the growth of the country.The House of Representatives member explained that local content in its entirety should be beneficial to all Nigerians if implemented appropriately. “Local content has the capacity to turn around the fortunes of Nigeria for good. It has the capacity of transforming our economy to any level that we want to, but again the implementation lies with us all. We must realise that Nigeria is our country. We do not have any other country to call our own”, he said.
Meanwhile, the Spanish Ambassador to Nigeria, Alfonso Barnuevo Sebastian de Erice, has said that Spain buys €4.6 billion worth of crude oil from Nigeria annually.
The envoy who disclosed this at the official commissioning of the Spanish LaLiga Nigeria office at the weekend in Abuja said Spain was the third best client of Nigeria.
“I am very happy that the already fruition relation between Nigeria and Spain is expanding to other domains. Nigeria is a strategic partner of Spain in energy matters,” he said.
The Spanish envoy noted that as the first economy in Africa in terms of GDP, Nigeria has enormous potentials.He said that the commissioning of the LaLiga office in Nigeria marked the beginning of a solid presence in Nigeria.“As a Spanish ambassador, I have to express my satisfaction that one of the strongest institutions in Spain, and probably one of the best in the world known worldwide, LaLiga has established an office in Nigeria.”
Speaking at the commissioning of the office, LaLiga President, Javier Tebas, said the commissioning was a proof that League was ready to help the country in making Nigerian League one of the best in the world.“The Spanish League is convinced that together with the Nigerian League, we would be very strong.”