China has unfolded plans to commit between $40billion and $50billion in investment in the nation’;'[s oil and gas sector, Finance Minister, Shamsudeen Usman, has said.
“The Chinese have been very clear and aggressive in terms of their commitment to Nigeria,” Usman told Dow Jones Newswires at the weekend
The implications for Western nations is “that they need to wake up and really determine what their strategy is for Nigeria and for Africa as a whole,” Usman said, adding that the current pace of development in Africa is comparable with that of India or China 15 years ago, when only “those who moved in quickly and took advantage are today reaping the benefits.”
China’s export credit guarantee agency, Sinosure, has offered $40 billion-$50 billion to help fund infrastructure projects in Nigeria over the next three years, after President Umaru Yar’Adua visited Beijing with a delegation of oil industry and business leaders last February.
Sinosure will provide capital backing to Chinese or Nigerian companies investing in critical infrastructure in the oil-rich country, with Nigeria expected to repay the bulk of the loans with crude oil.
Non-government groups and some Western governments have criticised China for its lack of transparency, alongside its human rights record, as it increasingly strengthens its position across the African continent.
Usman said there is a “huge potential” for developing Nigeria’s poor gas pipeline infrastructure or in joint venture partnerships, adding that Nigeria has gas reserves estimated at 184 trillion cubic feet, and government recently passing a series of new policies aimed at regulating the burgeoning market as it seeks to develop both its domestic and export markets.
Meanwhile, Algeria and Nigeria will sign a preliminary agreement formalizing their intention to build an ambitious natural gas pipeline that would link some of Africa’s largest gas reserves to Europe, Algeria’s energy minister said.
This ambitious and long-stalled project would ship up to 30 billion cubic meters of natural gas annually to Europe.
Nigeria has also agreed to expand its liquefied natural gas project in Bonny Island, southeast Nigeria, in a joint venture between the Nigerian National Petroleum Corporation (NNPC), Shell, Eni SpA and Total SA. The venture is expected to generate $1 billion in revenue annually.
The country’s new gas policy will open up “tremendous investment opportunities, both for foreigners and for Nigeria, since that gas is needed for power plants, for further processing domestically into industrial products,” though that involves the creation of infrastructure to distribute gas domestically, Usman added.
Usman also said some discussion is underway on the possibility of establishing a sovereign wealth fund drawing on some of the country’s $60 billion in foreign exchange reserves, a quarter of which comes from the excess crude oil revenues.
“We clearly hope to have something along those lines,” he said, without giving further details.
Sovereign wealth funds are government-owned investment vehicles, funded by foreign currency reserves but managed separately, that are invested in capital markets for profit.