ENERGY
TransCorp has identified four key areas for investment in the energy sector:
Oil, Gas & Petrochemicals:
For more than three decades, the oil sector has accounted for over 90% of Nigeria's foreign exchange earnings. While this sector has grown immensely since oil was first discovered in commercial quantities half a century ago in Oloibiri, Bayelsa, it is still dominated by foreign multinationals. Until recently, local oil companies were mainly confined to the fringe. The decision of the Nigerian government to apply local content rules in the sector has greatly boosted the move up the value chain for these companies.
Since the rise in oil prices in 2003, there has been an increased interest in developing Nigeria’s deep water reserves. For instance, in the fourteen-year period from 1990-2004, the oil industry attracted investments of US$80billion; but in the three-year period from 2005-2008, it is projected that investments will exceed US$67billion, more than two-thirds the previous fourteen- year figure. A large part of this investment will be in offshore oil blocks.
The new local content rules, which require foreign companies to partner with Nigerian companies in the exploration and development of Nigeria’s deep offshore blocks, have created room for the latter to learn valuable skills and earn valuable foreign exchange from the contracts signed for the development of these fields.
The gas sector also continues to receive heavy investment from partners across the world, even as local company participation is still minimal.
In spite of the government's intentions and beckoning opportunities, the lack of access to capital, low investment and low skills have constrained the ability of local firms to take advantage of several opportunities that have been thrown open in the oil & gas sector.
Power:
Recent regulatory innovation and reforms in the until-recently wholly state-controlled power sector have led to increased interest for participation and partnership from the private sector. In addition, the proposed sale of a number of government assets and equity stakes in companies has attracted private business interest in the power sector.
Economic growth and the rapid rise in the urban population have placed huge demands on the capacity of the Power Holding Corporation of Nigeria (PHCN) to ensure stable power supply. Presently, less than 40% of the population is connected to the national grid, and in urban areas, outages are still a regular occurrence. This condition costs local businesses hundreds of millions of dollars each year in burnt equipment and maintenance of off-grid diesel generating sets.
The erratic power supply creates opportunities for companies which have the expertise, experience and access to capital to meet the electicity requirements of the population.
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