Capital importation into Nigeria’s oil and gas sector declined from the over $300 million (N91 billion) recorded during the fourth quarter (Q4) of 2016 to $101.08 million (N31 billion) in the first quarter of 2017, according to the National Bureau of Statistics (NBS).
The NBS report, which was released on Wednesday, stated that compared to the previous quarter, the oil and gas sector recorded a decrease of 69.12 per cent in the country.
The agency noted that despite the decreases, the banking, and oil and gas sectors were the third and fourth largest capital importing sectors, accounting for $126 million and $101.08 million respectively.
Less investment in the oil and gas sector would result to low production and job losses. Indeed, hundreds of direct and indirect jobs have been lost to the sector on account of recession
The Minister of State for Petroleum Resources, Dr Ibe Kachikwu, recently said about $13 billion to $17 billion investment would be needed in the country’s upstream sector for the development of gas fields with total reserves 37.4 trillion cubic feet.
He added that $14 billion to $17 billion will be needed for the Trans-Nigeria gas pipeline project, gas revolution industrial park at Ogidigben, and three power plants for additional 3.2 GW capacity in the gas-to-power sector.
A sectoral breakdown of the NBS report showed the banking sector has been a consistently important sector for imported capital, while the oil and gas sector has increased in importance in recent periods.
NBS put the total value of capital imported into Nigeria in Q1 2017 at $908.27 million. Although this was an increase of 27.75 per cent relative to the same quarter of 2016, it was nevertheless 41.36 per cent smaller than the value of capital imported in the previous quarter, and was the second lowest value recorded since 2007.
According to the agency, there is a high-profile sale of (bonds denoted in a non-local currency) during the quarter, “but this has not yet appeared in the data; there is a lag between subscription and actual payment, and therefore it is possible that this will show up next quarter.
“Capital importation was particularly low in January, at $187.90 million; this was only the fourth month since 2007 in which capital importation was less than $200 million.
“The main driver of the quarterly decline was a fall in Other Investment, although Foreign Direct Investment (FDI) also contributed. Portfolio investment was the only category to record an increase relative to the previous quarter,” it added.
Lagos, as in all previous quarters, attracted the most capital into Nigeria in Q12017, being the commercial and financial capital of Nigeria, and home to the Nigerian Stock Exchange where shares are traded.
“As such, it accounts for most of the capital imported into the country. In the first quarter of 2017, Lagos accounted for 95.32 per cent of capital importation, which represents a slight decrease in its share relative to the previous quarter, when it was 96.38 per cent, but an increase relative to the share in the same quarter of 2016, of 92.53 per cent. Akwa Ibom and Abuja were the states to record the second and third largest amounts of imported capital, recording values of $18.36 million and $14.87 million respectively,” it explained.
It identified the United Kingdom (U.K.), as country from which Nigeria imported the most capital, which accounted for $302.47 million, or 33.30 per cent of the total.
It, however, noted that the value was 37.36 per cent lower relative to the previous quarter. The existence of an historical relationship between the U.K. and Nigeria, London (the capital of the U.K.) is also a key financial centre, which could help to explain the high value of capital importation accounted for by the U.K. Since 2010, the U.K. has accounted for the highest value of capital importation in all but two quarters.
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