For 10 years the energy multinational company Asea Brown Boveri (ABB) hasn’t shown any interest in Nigeria’s power sector. The Swedish-Swiss company is no longer focused on oil and natural gas in the West African country. However, Nigeria wants to turn its electricity sector upside down and ABB wants to be a key player in that transformation process. According to Adedayo Olowoniyi, General Manager of ABB Nigeria, the company has identified Nigeria as a “key country for growth.”
An important reason for this optimism is the government’s intention to create a legal framework. The oil sector, which makes up around 90 per cent of Nigeria’s exports, will be reorganised under the Petroleum Industry Bill (PIB). There has been a lot of controversy over the last eight years about the legal framework for the oil sector. “People have had enough time to make any necessary adjustments,” says Mr Olowoniyi.
The most important aspects are more efficient promotion through liberalisation and access for new investors, better access for the population and better environmental protection.
If the international players found a more solid legal framework, they would have no problems adapting to more demanding environmental rules, explains the Mr Olowoniyi. For example flaring off gas is prohibited in many technologically-advanced countries. “Oil and gas is the most significant sector in Nigeria,” Mr Olowoniyi points out. “If you have not developed the value chain, you will not get the benefit.” That means the raw materials should be processed in Nigeria and not abroad. Although the country has been experiencing an oil boom for almost 50 years, about half of the Nigerian population lives below the poverty line.
“We export crude oil, and import back the finished product. At the end of the day, the finished product is where you find the main value added,” states the ABB Nigeria General Manager. The new legal framework will give Nigeria the chance to slowly work its way up in order to develop its value chain. That is what he expects from the new rules. The first steps towards the privatisation of the energy sector are important as this is going to enable direct investment from abroad in order to overcome the current bottlenecks.
ABB is preparing itself for the moment when it can increase its capacities. At present, a few dozen newly-hired employees are being trained in competence centres in Egypt, Italy, Germany and Sweden. There is also a lot of work to do with its less-qualified workers. “We have equipment that should last 25 years, but after two years it looks as if it had been used for decades,” says Mr Olowoniyi, who assures that with the private sector’s entry, “the training will be there, the operators will be knowledgeable, they will understand their products and equipment.”