• Thursday, March 28, 2024
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Investors in south-south hail FG on end of price capping but call for bandwidth for profit as incentive

Contestants point direction for NIMN ahead of election

Top investors in Port Harcourt who shape the investment climate in the south-south have hailed the end to price capping by the Nigeria National Petroleum Corporation (NNPC) which they hope means complete deregulation of the downstream sector of the oil economy. This began with subsidy removal in May 2020 and removal of capping in prices of premium motor spirit (PMS) or petrol.

The president of the Rivers Entrepreneurs and Investors Forum (REIF), Ibifiri Bobmanuel, told BusinessDay in Port Harcourt that the move would open up the sector for massive investments. Sources said some investors in the region were already putting heads together to take action in area of refinery investment and importation of fuels now that the government would no longer decide prices.

Bobmanuel, owner of a construction firm and now a tractor manufacturing firm, however joined the call for the FG to create incentives that would attract serious investors by putting a cap on what they call range of profit.

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The REIF president said the range would decide whether there would be influx of investors or a lull. He said investors have to call up capital from financiers and banks, saying the language of investors is profit.

REIF has been in the fore front of policy advocacy in the economy and business sector in the past few years of its existence. It also organises the most credible governorship election debates in the country in Rivers State with support with the European Union and other organisations without levying the political parties or their candidates whatsoever.

He said while the call is not for another kind of price regulation to be reintroduced, but said there is the need for the petroleum pricing agency to oversee how profit is made and set a range that would not choke investors. He said that it is important for investors to know the profit range allowable for imported PMS so they can calculate the need to set up jetties, storage facilities, distribution channels, etc, that go with a deregulated sector.

His words: “First incentive has been done; deregulation. Next incentive is how not to gag the investors with very slim range of profit because it requires millions of Dollars to invest. This new opening will account for next phase of investments that will accrue to the Nigerian economy.

“This is bcause it will attract huge interest, let the FG quickly give the latitude to lure them into the space being created now. The investors are going to develop infrastructure such as landing base, waterfronts with lots of facilities there. The vessels are going to be coming there. The truth is that the local players are not big enough. The sector has a lot of space for more players. It will attract foreign direct investors especially in refining and distribution of petroleum products.

“The current investors space is to take crude out of the country and bring back refined products, but with this policy, you see more investors trying to cut that gap between export of crude and import of finished products. That brings to mind why the interest is more in the current bid round in the marginal fields in the oil and gas space. This is because most of the investors interested in the marginal fields would be looking beyond exporting the crude but at refining the product in-country. That would create more headroom for job creation. It’s a gamut of opportunities that is opening up. The FG has taken the first step”.

Bobmanuel noted that the future of oil is in processing, saying it is not true that all aspects of oil is dying.

The investors advised Nigeria to focus on oil products in Africa, saying Africa would be the hub of petroleum products for decades as other continents host diminished interests in the sector.

This, he noted, is because the new oil fields would no longer be for investors eager to drill and export alone but for those willing to process the crude into fuels and sell for better profit. He said there is more activity in the processing than in exporting crude.

REIF president said the petro-chemical plants being established by the Dangote Group alone in Lagos were believed to be worth about $22Bn, an indication of the kind of investments and funds that could accrue to Nigeria in a completely deregulated downstream economy.

Bobmanuel had in a previous interview estimated that at least $100Bn worth of fresh investments would head to Nigeria if the oil sector is completely deregulated. He had earlier also advised the FG to use incentives instead of subsidy to attract distribution of petroleum products to far-flung states and cities in Nigeria especially northern states.