Nigerian National Petroleum Corporation’s (NNPC) decision to seek alternative financing models for funding its joint venture (JV) obligations has continued to restore confidence among investors, stimulating further Foreign Direct Investments (FDI) in Nigeria’s oil and gas industry
This was disclosed by the group managing director of NNPC, Dr Maikanti Baru, while speaking at the 42nd Society of Petroleum Engineers (SPE) Nigerian Annual International Conference & Exhibition (NAICE) in Lagos.
In a paper entitled “Revamping the Nigeria Oil & Gas Industry through Alternative Funding: Opportunities, Challenges, Innovations & Solutions,” Baru said that alternative financing has deepened local banks’ participation in the upstream sub-sector of the industry.
With sustainable funding, deep-water production sharing has risen over the years, with more than 2000 per cent production growth recorded within the last 10 years.
According to Baru, Nigeria had raised funds traditionally utilising equity or self-funding from cash-flow, commercial debt instrument or partner funding in form of carrying or modified carry arrangement (MCAs).
He identified the non-traditional funding options to include contractor-financing or deferred payment, pension funds, private equity, sovereign wealth funds, export credit agencies (ECAs) and none-less Islamic/Sharia finance.
“There is need to sustain the Industry for it to continue to deliver the much-needed revenue and provide the springboard for economic diversification. We must, therefore, keep the goose which lays the golden egg alive,” Baru noted.
The minister of state for petroleum resources, Dr Ibe Kachikwu, said that the Federal government has demonstrated commitment towards strengthening the industry by giving approval to the relevant oil and gas policies as championed by the Petroleum Industry Bill (PIB).
