Investment in the oil and gas sector is fraught with multiple operational and financial risks.
These risks when combined with the capital-intensive nature of oil and gas operations, makes an investor extra cautious when deciding whether or not to invest in a country’s oil and gas sector.
Dayo Okusami, Partner, Templars has restated the need for regulatory certainty in the sector to attract needed investments.
Speaking with Petrolgas Report on the sidelines of the Energy Sustainability Conference hosted by the Energy Institute, he said this will serve as incentive to global investors seeking to unlock billions of potential investments in Nigeria’s oil and gas sector.
In his words,
“The regulatory environment needs certainty for investment.
“What clients want from the Regulatory body is clarity and certainty.
“Sadly, we don’t have such here.
“We need to get things done fast so we can get to do the business at hand.
“Specifically, when we go back to gas generation, you have a situation where a large number of gas generating plants could have taken off but after the Partial Risk Guarantee that was given on the Azura Plant that Templars worked on, you find a situation where there are no more Partial Risk Guarantee.
“Without that, companies can not develop the Power plant because they do not have the financial security and that in turn slows down investments in the sector.”
According to him, business owners need to “have a realiealistic expectation of what investment means from a promoter point of view.
“They say they want to do ReFinancing. They don’t want to give equity or not enough.
“Meanwhile, the Company itself cannot carry the debt.
“A lot of time, I think there’s a lack of realistic expectations of what you need to provide as support to your financing objective.
“It’s a situation of getting your business plan and objective correctly defined,” he added.
Speaking further, he said there needs to be Fiscal incentive for the Alternative Energy industry “where a lot of renewable energy companies will qualify for Pioneer Tax status which means you have tax free regime for the first 5 years of commercial operation.
“I think that’s the biggest incentive. If there’s any support from government like guarantee for payments or uptake, that would certainly help.
“But there are some incentives such as giving support either by guarantee that will definitely push the Renewable energy industry to run faster.
“Nigeria’s Renewable energy sector is just starting out. It is in its infancy and in my opinion will take about 10 years to get to mature.
“I think there’s an appetite from banks, Private Equity and other investors in seeking ways to find investment.
“But the important thing is that we have started and we are seeing a lot of activities in the industry.
“You will see Arnergy just closed a $9 million funding.
“We have seen a lot of interest from finance and development from that side”, he added.