NIGERIA Invest in 2012-13 - Newsdesk Media

Oil and the Niger Delta
Nigeria’s oil sector endured an exigent start to
2012 with rows over fuel subsidies and
protracted regulations. But the controversial
reforms are central to the government’s goal of
securing the long-term economic future of the
country, says Antony Collins
When you have a situation where
85 per cent of a country’s export revenues
come from oil, it is fair to say that the
sector is an essential aspect of the
economy. This statistic relates to Nigeria,
one of the world’s largest oil export markets shifting over two
million gallons of oil per day.
Such a high percentage also denotes an over-reliance on
oil. This was made starkly obvious to Nigerian citizens on
OIL, GAS AND MINERALS 105
Government reforms are a vital step
in ensuring Nigeria’s oil sector
remains internationally competitive
1 January 2012, when the government made the tough
decision to remove its generous oil subsidy, which had kept
petroleum prices artificially low for years.
This move divided opinion. Supporters claimed the
savings would provide billions of dollars of investment for
ailing infrastructure, while opponents were angered at
being unable to afford to buy petrol after prices more than
doubled overnight. The nature of the removal – a sudden,
single slash rather than a phased reduction – has been
hard for many to accept and absorb, but experts such as
Patrick Mgbenwelu, director and head of project and
structured finance at FBN Capital, the asset management
business of the First Bank Group, believe that the benefits
will become apparent in the long term.
“The eventual removal of fuel subsidies will
open up major investments in the Nigerian oil and gas
sector – in particular the refineries and petrochemical sectors
INvESt IN NIGERIA 2012-13