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Economy

Nigeria’s Economic Growth, Competitiveness Depend on Infrastructure—SEC DG

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SEC Nigeria infrastructure deficit

**Gives FG Alternative Funding Tools for Projects

By Dipo Olowookere

For the umpteenth time, the Securities and Exchange Commission (SEC) has listed different ways federal government can reduce the huge infrastructure deficit in Nigeria through the capital market.

Acting Director-General of SEC, Ms Mary Uduk, while speaking at the annual conference of Capital Market Correspondents Association of Nigeria (CAMCAN) last Saturday, said government can narrow this gap by creating an enabling environment for private investors to assist in solving the problem.

Ms Uduk, who was represented at the event by the Head of Department, External Relations at SEC, Mr Sufian Abdulkarim, noted that private sector must be brought into the picture to achieve meaningful results.

“Government cannot be the sole provider/promoter of infrastructure projects, private sector investment in infrastructure sector is also required.

“Given the need to bridge the infrastructure deficit and the challenges of financing it, the county needs to leverage on alternative sources of infrastructure financing, such as the capital market.

“In view of the government’s bid to reverse the current growth trend, diversify the economy and develop infrastructure, there is no better time than now to leverage the capital market for sourcing of infrastructure development financing,” the SEC boss said at the forum themed Bridging Nigeria’s Infrastructure gap: The Capital Market Option.

Ms Uduk described infrastructure development as very important for a country’s sustained economic growth and competitiveness, noting that a well-developed infrastructure has the potential to increase productivity which leads to poverty and unemployment reduction, facilitate trade and promote innovation in an economy.

According to her, the capital market provides an enabling environment for private investments in infrastructure projects and the SEC was doing its part to foster this through the implementation of the Capital Market Master Plan (2015-2025).

She said the plan’s major objective is to transform the Nigerian capital market, making it competitive, while contributing towards the nation’s development through funds mobilization.

“The Nigerian capital market has been used as a source of raising funds as early as 1946, when the colonial government floated the first loan stock worth £300,000 to fund its local administration.

“Today, the Nigeria capital market has broadened and become more sophisticated as a result of various development initiatives advocated by the SEC,” she stated.

The SEC acting DG said, “There are various sources of funds available in the capital market which can be harnessed for infrastructure development, some of which are Pension Funds, Real Estate Investment Trusts (REITs), Collective Investment Schemes (CIS) amongst others.

“In addition, there are various capital market instruments that can be used for infrastructures financing, amongst which are the infrastructure project bonds, sukuk, infrastructure debt bonds, green bonds and revenue bonds.”

She expressed confidence that the establishment of an active infrastructure funds via the capital market as being pursued by capital market stakeholders would be immensely beneficial in closing the infrastructure gaps in the country.

Ms Uduk said Nigeria, and many other Sub-Saharan African countries have huge infrastructure deficits with the attendant low economic development.

According to her, the traditional source of infrastructure funding through public expenditure and development finance aids have been found to be inadequate as evidenced by the country’s infrastructure gap.

Quoting a report by the African Development Bank (AfDB) on Nigeria’s Infrastructure Plan in 2013, she said it was estimated that Nigeria would need to invest about $350 billion in its infrastructure sector in 10 years to be at par with its peers.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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Economy

Absa Lauds Regulatory Framework for Trading Digital Assets in Nigeria

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trading digital assets

By Modupe Gbadeyanka

The decision of the Securities and Exchange Commission (SEC) to provide a regulatory framework for investing and trading digital assets, including cryptocurrencies, in Nigeria has been applauded by Absa Nigeria.

The chief executive of the leading pan-African bank, Mr Sadiq Abu, while appearing on CNBC Africa’s Power Lunch Show recently, expressed optimism that this development will boost the confidence of investors in the digital assets landscape.

He particularly commended the apex regulatory agency in the country’s capital market for recognising digital assets as securities and making efforts to regulate investments in the sector.

He said, “SEC decided to be proactive around cryptocurrency and digital assets. The SEC has realised that these are rightly called securities and further created a framework to bring them within the broader securities regulatory framework in Nigeria.

According to him, the SEC has also created a framework for protecting investors by requiring investments to be held by digital assets custodians and acknowledged that exchanges or platforms for trading digital assets needed to be regulated.

“There is also an overarching framework for regulating all participants that play in the digital assets space through a specialised license called Virtual Assets Services provider,” Mr Abu stated.

He pointed out that a new rule stipulating tenure and other qualifications of the Chief Executive Officer and Principal Officers of Digital Assets Offering Platforms was similar to the regulations of the Central Bank of Nigeria (CBN).

According to him, this is a clear indication that the SEC and CBN worked together to develop the new framework for the operation of digital assets.

He stated, “There is clear evidence that the SEC is working hands in glove with the CBN to create a regulatory framework for the operation of digital assets and the regulation of CEOs and Principal Officers fall under the broader approved person regime of the SEC.”

SEC had recently published a new guideline on Issuance, Offering Platforms and Custody of Digital Assets, fulfilling the promise it made last year to examine the digital currency to gain a better understanding and develop regulations to protect investors.

Absa, which has a strong footprint across the African continent, offers investment banking and market products through its various Nigerian registered subsidiaries, namely Absa Representative Office Nigeria Limited, Absa Capital Markets Nigeria Limited, and Absa Securities Nigeria Limited.

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Economy

FG Moves to Improve Midstream, Downstream Operations

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downstream operations

By Adedapo Adesanya

The federal government, through the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), has disclosed plans to unveil six regulations on midstream and downstream operations.

The regulations are being put in place to bring clarity to the sector as well as improve business processes and ease of doing business in the sector.

According to the Authority Chief Executive (ACE) of NMDPRA, Mr Farouk Ahmed, in a statement after a meeting with the Independent Petroleum Producers Group (IPPG), said the regulations are gas pricing, environmental management plan, environmental remediation fund, decommissioning and abandonment, gas infrastructure fund, and natural gas pipeline tariff.

The ACE also informed that a Working Team chaired by Mr Ogbugo K. Ukoha, Executive Director, Distribution Systems, Storage & Retailing Infrastructure (DSSRI) was set up to review the draft regulations, engage and consult stakeholders for smooth implementation when released.

Mr Ahmed further stated that the Authority was working hard on reducing the sector’s import dependency with more active efforts placed on local options.

“One of our key concerns is boosting local refining. Dangote and BUA refineries are coming on board; however, we want to see more companies investing in refineries so we can stop the importation of refined petroleum products, save our foreign earnings, create jobs and add value to the economy,” he explained.

The NMDPRA boss noted and commended the gradual growth of indigenous players in local exploration and production of petroleum products. He assured of the organisation’s commitment to making the business climate in the midstream and downstream conducive for local and foreign investment to thrive.

On his part, the IPPG Chairman, Mr Abdulrazaq Isa had said that the IPPG was an association of 25 indigenous Exploration and Production (E&P) companies with the vision to promote the continued development of the Nigerian Petroleum Industry for the benefit of industry stakeholders and the nation.

Mr Isa noted that timely communication with industry players was important at this time when the agency was going through a transition period, calling on NMDPRA to, as a matter of urgency, enact regulations on tariffs, domestic gas and clear license issuance modalities amongst others.

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Economy

NNPC, Sahara Group Invest $300m to ‘Circulate’ Clean Energy in Africa

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NNPC profit 44 years

By Adedapo Adesanya

The Nigerian National Petroleum Company Limited (NNPC) and leading energy and infrastructure conglomerate, Sahara Group, have taken delivery of two 23,000 CBM Liquefied Petroleum Gas (LPG) vessels.

The delivery happened on Monday at the Hyundai MIPO Shipyard in Ulsan, South Korea, with plans to add 10 vessels in 10 years to enhance Africa’s transition to cleaner fuels.

The new vessels, MT BARUMK and MT SAPET have increased NNPC and Sahara Group’s joint venture investment to over $300 million, approaching the JV’s $1 billion gas infrastructure commitment by 2026.

The fleet previously comprised MT Sahara Gas and MT Africa Gas. All four vessels were built by Hyundai MIPO Dockyard, a foremost global manufacturer of mid-sized carriers.

WAGL Energy Limited, the JV company between NNPC and Oceanbed (a Sahara Group Company) is driving NNPC’s five-year $1 billion investment plan announced in 2021 to accelerate the decade of Gas and Energy transition agenda over the period.

Speaking on this, NNPC’s GMD, Mr Mele Kyari disclosed that the order of three additional new vessels was being finalised, adding that “we have a target of delivering 10 vessels over the next 10 years. The NNPC and our partners stand out with integrity in our energy transition quest and our commitment to environmental sustainability is unwavering.”

MT BARUMK and MT SAPET are WAGL and Sahara Group’s injections into the JV. WAGL is shoring up its gas fleet and terminal infrastructure, while Sahara Group continues to make remarkable progress in the construction of over 120,000 metric tonnes of storage facilities in 11 African countries, including Nigeria, Senegal, Ghana, Cote d’Ivoire, Tanzania, and Zambia, among others.

Mr Kyari also said the vessels were critical to driving the Federal Government’s commitment to the domestication of gas in Nigeria through several initiatives and increasing seamless supply in compliance with the mandate of President Muhammad Buhari.

The initiatives –  the LPG Penetration Framework and LPG Expansion Plan are geared towards encouraging the use of gas in households, power Generation, auto-gas and industrial applications in order to attain 5 Million Metric tonnes of LPG consumption by 2025.

“This is another epoch-making achievement for the NNPC and Sahara Group, and we remain firmly committed to delivering more formidable gas projects for the benefit of Nigeria and the entire sub-region,” Mr Kyari said.

On his part, Mr Temitope Shonubi, Executive Director, Sahara Group, said: “WAGL has successfully operated two mid-sized LPG Carriers MT Africa Gas and MT Sahara Gas in the region in keeping with global standards, delivering over 6 million CBM of LPG across West Africa. With the new vessels, we are set to promote and lead Africa’s march towards energy transition.”

Mr Ali Magashi, Nigeria’s Ambassador to South Korea who represented the Federal Government, noted that President Muhammad Buhari deserved commendation for the Petroleum Industry Act (PIA) which he said would reposition the NNPC to explore more projects with partners like Sahara Group.

BARUMK was derived from the combination of the name and initials of the late NNPC GMD, Dr Maikanti K. Baru, in fond memory of his immense support for the Gas development in Nigeria. “SAPET” is named after the Sahara – Petroci (the Ivorian National Oil Company) JV LPG Company (SAPET Energy SA.), currently constructing phase one of a 12,000MT LPG storage facility in Abidjan, with expansion plans to achieve 30,000MT in phase two. The JV emerged from WAGL’s trading relationship with PETROCI, dating back to 2014.

LPG is the fastest-growing petroleum product in sub-Sahara Africa over the last decade, with forecasts indicating that LPG will grow at a 7 per cent Compound Annual Growth Rate (CAGR) over the next 15 years.

Increased uptake of LPG will reduce net Green House Gas (GHG) emissions and pressure on forest reserves, thereby increasing environmental sustainability.

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