Yemisi Izuora/Ijeoma Agudosi
Absence of clear policy framework, notwithstanding, the Nigeria’s oil sector has continued to attract investment mostly from outside the country.
Available record has put foreign investment in the country’s oil and gas sector to about $14.34 million or N2.87 billion in the first half, (HY1), of 2015.
The National Bureau of Statistics, (NBS) revealed in its Nigerian Capital Importation report for Second Quarter, Q2, 2015, said the figure showed appreciation of 347.36 per cent or $11.133 million or N2.23 billion increase from the $3.205 million (N641 million) recorded in the sector in the second half, HY2, of 2014.
The amount is however 93 per cent lower than the $204.97 million (N40.99 billion) year on year in 2014, just as there was a sharp decline in Q2 2015.
According to the report, capital importation into the sector in Q2 2015 stood at $4.86 million, down 48.65 per cent or $4.609 million (N921.8 million) from the $9.473 million (N1.89 billion) realised in Q1 2015.
Analysts at Cardinal Stone Partners, had in their economic outlook for 2015, predicted that the Nigerian oil and gas sector will be constrained by under-investment and capital flight as a result of the declining oil prices.
The analysts noted that the low oil price brought about a number of negative consequences, putting the naira under pressure due to rapid capital flight, which triggered scepticism among foreign investors due to concerns about the implications of declining oil prices for Nigeria, an oil-dependent country.
Similarly, PriceWaterHouseCoopers in its economic analysis for Nigeria and Africa, declared that areas where limited infrastructure is currently in place are also likely to suffer due to the paucity of investment inflow into the sector.
It said: “This is because external investment is needed to develop the requisite infrastructure – investment that will be difficult to procure to produce a commodity that is currently losing in value. In these areas, development of existing discoveries may end up on ice unless there is a domestic need for the resource.”
The NBS further noted that at $2.666 billion, the value of capital imported into Nigeria in Q2 2015 is a marginal drop of $5.24 million or just 0.20 per cent quarter on quarter.
“Capital importation thus remained relatively unchanged from the $2.67 billion recorded in the opening quarter of 2015, suggesting that this new lower level will be maintained as long as an uncertain economic environment remains.
“Year on year, second quarter capital imported was $3.137 billion or 54.06 per cent lower than the $5.803 billion imported in quarter two of 2014,” the report said.
Giving further analysis, the NBS said portfolio investment remained the largest of all investment types, totaling $2.183 billion in Q2 2015 or 81.88 per cent of all capital imported.
This is $322.50 million or 17.33 per cent higher than the $1.861 billion recorded in Q1 2015, which was 69.65 per cent of the total.
However, the report said year on year the decline remained large at $2.734 billion or 55.60 per cent.
“Within portfolio investment, the key driver of the quarterly growth observed was Equity, which at 84.56 per cent of portfolio investment, increased by $706.70 million or 62.02 per cent from the preceding quarter,” the report said