 |
Chairman, Oil Producers
Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry (LCCI), Clay
Neff
|
Power sector gas invoice
arrears have grown from a reconciled ₦40 billion of undisputed arrears in
December 2014, to about ₦100 billion according to Nigerian National Petroleum
Corporation (NNPC)’s estimate of May 2016.
The
Guardian Nigeria report continues:
Chairman,
Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and
Industry (LCCI), Clay Neff, who made this disclosure at the 2016 Business Forum
organized by the Nigerian Gas Association (NGA) in Lagos, said that repaying
outstanding gas invoice arrears has become a serious challenge in the gas
sector.
According
to him, it is important to settle the outstanding debts and establish bankable
credit support facilities for future gas sales.
Without
these assurances, he noted, it will be unreasonable to expect investors to
commit additional investments to grow domestic gas supply.
Neff
stated that Nigeria’s inadequate gas infrastructure, has contributed to the
inability to meet domestic gas demand. “Although some progress has been made
recently, the growing demand of domestic gas calls for major investments in
infrastructure”, he added.
He
said that Nigeria’s huge untapped gas resources could underpin government’s
vision to grow gas production for power generation and to support industrial
uses.
To
attract investment into the gas sector, Neff emphasized the need for a
conducive business environment.
He
listed the components of a conducive business environment include: having
efficient and effective regulatory bodies, maintaining stable laws and
policies, honoring contracts, eliminating structural factors that increase
costs, and ensuring security of life and property.
He
said that it is essential to have efficient and effective regulatory bodies to
ensure transparent and timely approval of activities such as permits, license
renewals, projects, and contracts.
“The
Government agencies that regulate the petroleum industry often have duplicative
and overlapping functions leading to unnecessary bureaucracy. For example, procurement,
contracting approvals take up to thirty-six months, while in many countries
similar processes take an average six months. This slows project development
and increases costs.
“There
must be a solid tax and legal framework that leads to stable laws and policies
in order to attract the required massive investments”, he said.
He
emphasized the need for Nigeria to maintain its reputation for honoring
contracts. “Businesses need to know with reasonable degree of certainty that
contracts and agreements entered into in good faith will be honored, and where
disputes arise, that there will be access to an independent and fair mechanism
for a timely resolution.
“There
is an opportunity for industry and Government to collaborate on opportunities
to eliminate structural factors that increase operating and capital costs in
the petroleum industry. Industry has made great strides to reduce costs where
the opportunities are within their control. However, there is an untapped pool
of cost reduction opportunities, which have the potential to position Nigeria
as a more competitive basin in the global industry – as it should be given the
quality of resources,
He
stated: “To fast-track the development of these resources, Nigeria needs to
focus on the five key areas highlighted today.
“Government
policy should be directed at striking the right balance between seeing gas as a
catalyst to drive economic development and as a commodity for revenue
generation. This balance is necessary to encourage the required investments for
gas development.
“When unlocked, these abundant resources can boost Nigeria’s economy by improving electricity generation, and creating jobs and new industries such as fertilizers, methanol and plastics.
No comments:
Post a Comment