Nigeria's sovereign fund seeks co-investors for gas industrialisation projects

Exclusive: A basic chemicals facility is estimated to cost $1bn, while flare gas to LPG project is more than $100m

executive Uche Orji, chief executive, Nigeria Sovereign Investment Authority. Reuters

Nigeria Sovereign Investment Authority (NSIA), the sovereign wealth fund of Africa's largest economy, is looking for co-investors to develop two gas industrialisation projects worth more than $1 billion (Dh3.67bn), as it continues to broaden its portfolio of investments.

NSIA plans to develop a basic chemicals platform with a project value in excess of $1bn that will produce ammonia and fertilisers in Nigeria. The second one, a project to convert flare gas into LPG, could cost more than $100 million, Uche Orji, the chief executive of NSIA, who is in Abu Dhabi attending a two-day Africa Investment Summit hosted by the Abu Dhabi Investment Authority, told The National.

"We will be looking hopefully to develop [the projects] with sovereign wealth funds and other co-investors," he said. The talks are at early stages, he said and did not name any potential partners.

Nigeria, Opec's biggest crude producer in Africa, relies heavily on the oil and gas sector, which accounts for about 20 per cent of its gross domestic product, and 85 per cent of total exports, according to Opec data. The country expects investments worth $48bn between 2018 and 2025 in the sector, Maikanti Baru, former managing director of Nigerian National Petroleum Corporation (NNPC) said in July.

Mele Kyari, who has replaced Mr Baru as the head of NNPC, said that state-owned energy companies Saudi Aramco and Abu Dhabi National Oil Company are also considering investing in Nigeria's energy sector.

“We are open to all partners, all like-minded partners. We have no restrictions, we have ongoing discussions with so many people,” Mr Orji said of the potential deals with long-term investors across sectors of Nigerian economy. “We have health care, we have infrastructure [projects], it really depends on what the interest of our partners is.”

Additional equity from the government, Mr Orji said, will help NSIA to broaden its investment base. The fund's current focus remains on achieving growth through joint investments.

"I'm expecting more from the government but a lot of it would depend on the oil price movement," he said. "We are very hopeful that we will get some funds," he said. The current price level of $62 per barrel for Brent crude is still above "our benchmark rate", which is $57 per barrel, he saoi.

NSIA invests through its three main funds: the Stabilisation Fund, Future Generations Fund and Nigeria Infrastructure Fund, which account for 20, 30 and 50 per cent of its investments, respectively.

NSIA not only manages its own funds, but it also those on behalf of the Nigerian government and its total assets under management are between $2.5bn to $3bn.

Over the years, NSIA has increased its focus on domestic infrastructure projects and it is investing in three major transport infrastructure schemes – the Abuja-Kano highway, Second Niger bridge and the Lagos-Ibadan road projects.

“These projects are quite significant altogether. When they are done, they would be around roughly $2bn [in value]”, he said.

The projects are being financed through the funds provided by the government and NSIA's own equity and it will look to raise $500m in external funding from the market next year, Mr Orji said.

“We are appointing advisers next year to commence the capital raising process,” he said without specifying the timing of the deal.

Development of power, agriculture and the healthcare sectors is among the top priorities for NSIA, and the authority is looking to join hands with sovereign wealth funds from the Middle East and beyond for co-investments in these sectors.

“Less than 20 per cent of the Nigeria’s arable land is cultivated for agriculture so that’s an opportunity right there. We are talking about a large quantum of land here,” he said.

Within the healthcare sector, it has already finished two projects this year and is on track to finish another in the first quarter of 2020. The country is looking to launch another two next year out of the active pipeline of 12 projects, he said.