Nigeria Govt: Time Is Ripe For Investment, China Leads Way

LONDON, April 16, 2008 (Dow Jones Newswires)

The U.S. and other western countries risk being left behind in Africa by a nimble and committed China, Nigerian Finance Minister Shamsudeen Usman said Tuesday, and they must wake up to the continent's investment opportunities.

"The Chinese have been very clear and aggressive in terms of their commitment to Nigeria," Usman said in an interview with Dow Jones Newswires during a visit to London.

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 a visit to Beijing by Nigerian President Umaru Yar'Adua and a delegation of oil industry and business leaders in February.

In the past, western nations offered millions of dollars in direct loans to the Nigerian government, though much of that didn't translate into meaningful development.

Sinosure will instead 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-governmental groups and some western governments have criticized China for its lack of transparency, alongside its human rights record, as it increasingly strengthens its position across the African continent.

'Huge Potential' For Gas Infrastructure Development

During the interview, Usman also said there's "huge potential" for developing Nigeria's poor gas pipeline infrastructure or in joint venture partnerships.

Nigeria has gas reserves estimated at 184 trillion cubic feet, and the government recently passed a series of new policies aimed at regulating the burgeoning market as it seeks to develop both its domestic and export markets.

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 in an interview with Dow Jones Newswires published Sunday. 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 state-run Nigerian National Petroleum Corp., Royal Dutch Shell PLC, 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.

Development of the country's shaky power sector is crucial as it currently crimps industrial development.

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.

LONDON, April 16, 2008 (Dow Jones Newswires)