The Managing Director of Nigeria LNG Limited (NLNG), Mr. Babs Omotowa, has said that over 50 per cent of the populations of Africa did not have access to electricity and have correspondingly low per capita Gross Domestic Product (GDP) of below $3,000.
Omotowa, who delivered a keynote address at the recent sixth African Petroleum Producers Association Conference and Exhibition (CAPE IV) in Abuja, said despite the global apprehension generated by the rapid oil price decline, there could be no better time to embark on the strategic multi-billion dollar investments required for oil and gas development projects in Nigeria and Africa.
According to him, it is on record that final investment decision for the Nigeria LNG was taken on an oil price level of $20, stressing that the cost of steel is now at the same level it was 13 years ago when Train 3 FID was taken.
Drawing a parallel between energy intensity and pattern of global gross domestic product (GDP), Omotowa referred the audience to the unfortunate statistic that a vast majority of African countries still have more than 50 per cent of their populations left without access to electricity and have correspondingly low per capita GDP of below $3,000.
“It is on record for my company NLNG, that final investment decision was taken on an oil price level of $20 and the cost of steel is now at the same level it was 13 years ago when Train 3 FID was taken. The same applies to the cost of iron. Indeed with the cyclic movement of oil prices, there is no better time to invest in oil and gas projects as construction periods takes the best part of 4-5 years and it is the forecast oil price during production phase that goes into the economics, but the lower prices for input materials and lower construction costs now means that now is the better time to attract needed foreign and local investments and build the oil and gas projects that will enable us solve Africa’s energy crisis and bring Africa from darkness to light,” Omotowa explained.
Omotowa acknowledged that Africa has huge human and natural resources which sadly remain unutilised, 50 years after independence.
He noted that Africa today is significant as a primary source of the energy which powers other continents from its huge reserve base, despite the reality that there is a gaping energy gap right here on the same continent.
With energy demand in Africa poised to rise significantly with population growth over the coming 20 years, he fingers gas as a unique area of opportunity and an avenue to sustainable revenues, economic growth and manageable levels of poverty.
He forecast was based on the global energy demand pattern, where gas is seen growing at 2.7 per cent per year, three times faster than oil, and LNG demand which is growing even quicker, at 7.6 per cent – nearly three times faster than gas.
According to Omotowa, the African Development Bank estimates that Africa requires annual investments in energy infrastructure of some $42 billion over the next decade to catch up with the developed world.
Omotowa also reflected on some bright spots in Africa’s development, mostly initiated by governments over the last 40 years or so.
These include action to end armed conflict, improvement of democracies, security, macro-economic reform and a comparatively better business climate which together have seen foreign direct investment on the continent grow from $1.26bn to $54 bn in 2015.
He fronted NLNG, whose plant at Bonny Island Rivers State is the fourth largest such facility in the world, as an inspirational Nigerian business success story. He lined up political risk stability, corporate structure, technical depth, governance and financial capacity among factors critical to the company’s continuing success while referencing plans to build additional trains and add 40% to current production capacity as part of a corporate growth programme.
He said: “NLNG is a great example of how to build a successful model to overcome the unique challenges associated with doing business in Africa. We need similar type of intervention for our gas projects and power generation; so we can light up the continent, improve our GDP per capita and take Africa’s teeming population out of extreme poverty”.