FG laments loss of $300bn to capital flight

LAGOS — THE Federal Government has expressed concern over the huge capital flight in the oil and gas sector which has been blamed largely on several years of dependency on foreign products and services, costing the nation about $300 billion.


This came on the heels of government’s public disclosure, Thursday, that it had concluded plans to sell the 17 PHCN successor companies for $100 billion.


This was the position of the Minister of Petroleum Resources, Mrs Diezani Alison-Madueke and her counterpart in the Power Ministry, Prof. Barth Nnaji, while delivering their addresses at the 2011 annual conference of the National Association of Energy Correspondents, NAEC, in Lagos.

Madueke said the oil industry currently needed $20 billion annually even as upstream gas production for the domestic gas market alone has been receiving a dedicated spend of between $1.5 billion to $2 billion annually from the Federal Government.

She said major operators had not helped matters by relying on the importation of goods and services from abroad without making the provisions to develop sustainable capabilities within Nigeria that would support life cycle operations in the country, “instead more emphasis have been placed on speedy achievement of first oil, generation of revenue without paying attention to actions that add value to the economy.”

The Minister, who was represented by Executive Secretary of the Nigerian Content Development and Monitoring Board, NCDMB, Dr. Earnest Nwapa, noted that the challenge was for government to create an enabling environment that allows capital to flow inwards and get retained for economic growth and development.
She said: “I want to assure Nigerians and our international partners that the government has taken firm steps to address these concerns in a structured and sustainable manner.”

PHCN bidders

Prof.Barth Nnaji, who was represented by his Special Adviser on Media, Mr. Cydon Adinuba, said the National Council on Privatisation, NCP, had approved and shortlisted potential bidders after receiving the 331 Expression of Interests.

He said 105 bidders had made payments of $20,000 each, adding that 40 firms had been shortlisted to bid for the concessioning of the hydro stations, 87 shortlisted for the thermal stations and 80 for the electricity distribution companies, bringing the total number to 207.

Nnaji said in spite of the global economic crisis and the reported decline in foreign direct investment, there had been a remarkable growth in international investor confidence in Nigeria’s power sector in the last one year.
He said: “A Brazilian company, for instance, has offered to buy the Federal Government’s stake in the 17 PHCN successor companies for $100 billion, and with the inauguration of the Electricity Bulk Trading Company Board last Tuesday, the investor’s confidence has been further bolstered.”

“The Bulk Trader which enjoys the World Bank Partial Risk Guarantee, PRG, exists to give comfort and confidence to generation companies by guaranteeing power generating companies payment for all their products and will cease to exist when the distribution companies mature enough by being creditworthy.”