Oxford Business Group Forecast on Nigeria’s Economy

The Oxford Business Group has published a report stating that the non-passage of Petroleum Industry Bill will have adverse effect on the sector while the privatisation of the power sector will boost electricity supply in the country

|  By Anayo Ezugwu  |  Feb. 3, 2014 @ 01:00 GMT

A RECENT report by the Oxford Business Group, OBG, a global publishing research and consultancy firm, has taken a look at the prospects of Nigeria economy in 2014, stating that the power sector privatisation will boost the economy while the non-passage of the Petroleum Industry Bill, PIB, will stall investment into the oil and gas sector. The report examined the country’s power sector, banking industry, ICT industry and the oil and gas sector. The OBG report identified the Nigeria power sector as an investment hub in the economy in 2014. As a result of the latest development in the sector, the report stated that the sector is set to play a major role in addressing the country’s long-standing electricity shortage.

Stephanie Parker, director, circulation and communications, OBG, said the power sector is compared to oil and gas, banking and manufacturing. Parker said the report analysed the country’s bid to overhaul its oil production infrastructure, which is key to sustaining output and boosting downstream processing. She also pointed out that the report reflects the challenges facing the country as an oil producer, while documenting new initiatives, such as plans to channel funds into deep water reserves exploration.

The OBG’s report identifies the spotlight on Nigeria’s banking industry, providing wide-ranging coverage of the central bank’s efforts to improve the sector’s operating environment. It also reflects on the efforts of key industry players in the banking sector on topical issues, including the national drive to recover past losses through restructuring and the important role earmarked for consumer credit in boosting economic growth.

She added that the report covers the nation’s evolving ICT industry, which it described as one of the most dynamic on the continent. “With growth in the mobile segment accelerating and internet penetration on the rise, the report considers the potential for expansion in segments such as online shopping. It also provides extensive coverage of the development taking place in Oyo, where efforts to streamline procedures and improve infrastructure are garnering investor interest, particularly across the state’s agricultural sector,” Parker said.

Robert Tashima, regional editor, OBG, acknowledged that the non passage of the Petroleum Industry Bill, PIB, and heightened security risks in some areas are some of thorny issues hanging over Nigeria.

Supporting Tashima, the Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, on Thursday, January 16, said that non-passage of the PIB posed serious challenges to investments in the oil and gas sector. Also Sheiyi Gambo, national public relations officer, PENGASSAN, said that the bill was yet to be passed 12 years after stakeholders’ arguments and counter-arguments over its importance. Gambo expressed regret that this was in spite of promises by some members of the National Assembly that the Bill would be passed before the end of 2013. According to him, non-passage of the Bill is responsible for investors’ apathy in the oil and gas sector. He said that the delay in passage of the Bill was among several other uncertainties holding back most International Oil Companies, IOCs, planned investment of about 100 billion dollars in offshore deepwater projects. He said that some oil companies, which planned to invest in the oil and gas sector, would rather wait for stable and right conditions before they could commit their finances to any project.

He lamented the continued loss of revenues and investments due to the delay in the passage of the PIB, crude oil theft, bunkering and insecurity, among others. He likened what is happening in the oil and gas industry to what happened to Mexico. “I recall the Mexican story, it took the country 50 years to recover from that loss in oil production and my worry is that we are slipping into that. Even today, if we produce a modest of three million barrels per day and just assume a modest decline rate of 10 percent that leaves us with 2.7 million barrels per day. What this means is that for us to maintain that level of three million barrels per day, we must produce additional 300,000 barrels per day.” He added that non-passage of the Bill was hurting indigenous oil servicing companies as this had led to few jobs for them, while many of them are contemplating sacking some of their staff.