 Welcome back, set for a first major conversation I guess is already on standby, but let's quickly inform you that there are indications that the banking sector is shunning fresh investments in fossil fuel development, forcing all majors to seek funding from alternative markets. According to reports, more banks pledged in 2022 to stop funding some or all types of new fossil fuel development as lenders are under increasing pressure from shareholders and society to cut back on emissions profiles of their client portfolios. According to the leadership a Nigerian newspaper, the oil and gas industry was flush with cash last year as prices soared, but the sector stuck to capital discipline and especially in the United States of America, focused on remunerating shareholders and paying down debts instead of taking on more loans. Now information from Data Compound by Bloomberg indicates that clean energy projects and ventures saw around $518 billion in money raised on the debt markets last year. Now it's a situation one that will have immediate play out in Nigeria's all-important oil and gas sector. Don't forget Nigeria acquires over 90% of export earnings and roughly about 70% of government earnings from oil sales. Now what sources of alternative funding are we talking about? What sources of alternative funding are available to the oil and gas industry? We have joining us to discuss this. Bolaon Olojeri here is an oil and gas analyst. Good morning to you Bolaon Olojeri. Thank you very much for your time. Good morning. Nice to be on the program. Now when we see reports like this, they usually have a global outlook. Can we juxtapose this and also can we place this in a Nigerian context? Is this a reality as far as oil and gas industry in Nigeria is concerned? Certainly. There has been a very strong movement. For some decades now actually to migrate away from possible. I was this money I was just thinking about my project in business school and that was 20 years ago and it was still around possible. So it's been on the table for a while but it is gathering more momentum and as of today there are various sort of deadlines across several countries in the world that we went to migrate away or how to migrate away from for safe work. So when you create this kind of uncertainty in the market number one, providers of fund in the financial system are going to be worried about the fact that or if the future of oil and gas is so uncertain should like stable investing there. The second point is the fact that the people that are behind this movement, this is a very huge, huge movement with powerful people and organizations behind them. They are also capable of mounting pressure on the financial system. You said look I don't want you lending to this segment and that is part of what is playing out. So we see banks that are saying no I'm going to cut down on how much I give to that. So some are not even willing to finance fresh investment in that space at all. For us in Nigeria that has huge implications just like that's a cost point. Let me say however that it is possible if you can show a proof that you have the cash flow. If the financial system will not offer you financing you can always go to the alternative market. That one will always be there. For as long as rather is your cash flow or you can show that in the future you'll be able to produce cash flow. Then you can go to the alternative market. Money will be there. However for us as Nigerians we have to be concerned. A lot of major projects involve funding from this huge bank and the capacity of the Nigerian banks to be able to fund significant investment in this space may be a little limited especially with the fact that the uncertainties in that market also affects Nigeria. So as a country as a lender in Nigeria you're worried about investing in this space thinking oh what if I invest in this Ugoela. We're not in the company so we can sell this Ugoela because of the fossil fuel rejection that is being proposed across the world. However alternative funding should also be available to the Nigerian market as well. Beyond that Nigeria must be asking that critical question what is life after fossil fuel going to be and how do we begin to prepare for that life after fossil fuel. So when you speak of the alternative market what sources are you referring to? Okay apart from bank flow alternative market has to do with things like peer-to-peer funding. So there's somebody who has access money it's not it's not user it or it's looking for where to plug it. Here is another person who needs money without going through the banking system that these two people can be connected these two categories of people. Investors directly with the people that need the fund that is an alternative fund without involved in the bank. You can also have things like vendor financing factor in which a vendor financing is looked. If I borrow money from the bank what I'm going to use the money for is probably maybe to buy equipment. So why not talk to the equipment provider directly instead of going through a bank. So the equipment provider looks at your cash flow he sees that you are able to generate cash flow and repaying for the equipment that you can do a deal directly with that vendor without going through the financial system. So that is that is vendor finance. You can also structure all form of a step back as equalization. The bottom line is that you are able to show that what you are what you are putting this money to it's capable of generating cash flow. Once the investor is convinced of your cash flow generating capacity a funding structure can always be put together. That is essentially what the alternative finance is all about. And we can we can also do that in Nigeria. Even if in Nigeria no company is importing equipment from outside the country you can have a direct relationship with that vendor and have the financing arranged. That's what we're saying. However let me say that the fact that we are cutting the bank the bank have been the biggest financier of this industry and it will not be the same if those if that segment is not provided for the industry. An analysis of results of Nigeria's you know publicly leading all engasse companies revealed the end of hoping some of 1.031 trillion naira 1.031 trillion naira so revenue in the nine months that ended September 2022. And this this you know basically just outstripped outpaced the corresponding earnings for the same period in 2021. I mean we look at 776.9 billion naira for a corresponding period in 2021. That's that's that's a huge a huge jump to 1.031 trillion. And this seems attractive especially with the climate economic political climate in the world today. The Russian war in on Ukraine which has driven up oil and gas prices. Isn't the industry so attractive such that it is so juicy that the lenders will not be able to stay back? Is it not is the the clamor in the the drive for a cleaner energy stronger than the financial attractiveness of oil and gas industry? Let's look at Nigeria and then the global context. That is the reality. The the pressure on those huge banks is is is such that they might not have an option on that all down. If the owners of the bank if the shareholders are saying don't put my money in that industry you don't have an option on a guy highly than you could be asked to go if you would not obey the rules laid down by the shareholders. So and the pressure the people the movement is is extremely strong. If you take America for example America now is under the democratic party and democratic party are strongly pro uh this particular movement that we're talking about. So you're not only facing pressure from your shareholders you're going to be facing some subtle pressure from the government as well. So if things change a little bit maybe if you have a republican government in power in America the pressure point might be might be lower than what we currently have but as it is today look at banks if you put the banks like Welfare, Gold City Bank and Bank of America you put them together and you see how much they put in this industry it is huge it is in trillions of dollars that's what this dice combined together put in the industry. So if they are pulling back it's a huge impact on that industry however it's also an opportunity for the alternative market. Let's see what investment bankers and the rest of them can put together to ensure that financing will continue to this particular industry. So you're looking at investment bankers you're looking at venture capitalists maybe I don't know if hedge funds are part of that but but let's look at Nigeria what does I'm sorry to use this example but what's the what's the Nigerian bank care you know in the real sense of the word about fossil fuel emissions you know greenhouse gases. I would have said what I still don't really care about it but I think it cares because it tries to do a lot of good PR so I'll leave him out but what what do the banks care about in Nigeria care about this when you see an industry which whose revenue rose by 32.7% in 2022 the nine months leading to September compared to the corresponding period in the preceding year all right and it's it's growing it's making a lot of money and we're not even hitting the potentials in terms of the quota for Nigeria all right even to supply gas to parts of Europe we can't even meet it up so do the Nigerian banks okay let's leave out the the global institutions Nigerian banks really care that much right now at this point are they really that involved in this this shift towards let's call it ethical funding. I think as a country I mean the Nigerian banks are a subset of the country as a whole the real question as a country is that are we particularly conscious or do we have a strong movement towards anti-fossil work and should we my answer would be no I don't think we have a strong a movement against fossil fuel and the reason is simple we are strongly fossil fuel dependent as a country 30 years ago Nigeria's foreign exchange earnings is over 90% from Kudor today 30 years after 90 percent over 90 percent is still from Kudor so should we be getting excited about going out of fossil fuel I don't think we should be getting excited about rather one Nigeria and Nigerians should be looking at is how to be able to negotiate its way um against a force that we impoverish us as a country what is the what is the global world putting on the table for a country like Nigeria if you see the source of a 19 of over 90 percent of effects should go away what is in it for us you know so for me Nigerian banks are doing their best as far as financing industry for example they will probably do continue to do that but let's realize that there are limits to those funding especially when uncertainty starts to to uh uh uh get in the space people will pull back on how how bullish they tend to get about funding that participates Nigeria should be exactly the same all right you're saying basically that right now uh where we are we're not ready in terms of uh the corporate sector especially banking majors to to jump on this global train in the way that the other companies are doing everything they can I mean I see adverts from Total and Shell you know talking about the environment it's it's a departure from what we used to see before um on on CNN you see them talking about clean you know you see some windmills and you wondering is this this or you're saying that the Nigerian banks are not ready yet because of where we are to developing country it kind of reminds me of um uh the example that uh one of the presidential candidates gave when he said that uh he was asked about you know you know uh the environment and um uh carbon issues you know carbon neutrality and all that and he said well the west should be able to fund it if they want Africans and Nigerians to be involved that you can see a church who are staring at uh uh poison communions he used that example which I'm sorry he's right now and you can't tell it's not to eat that that poison communion it'll go and eat it because it's hungry you know so yeah I don't know if you agree with that I want to talk about the light of the fact that the vice president of Nigeria went globetrotting some time ago I particularly went to United States of America to see Kamala Harris and to talk about uh how to you know develop and you know build on Nigeria's energy transition plan I mean it's a big deal they have a website for it trust them you know they will have everything in place they have a big a website for it it's uh Nigeria trying to achieve uh they say carbon neutrality by 2060 they you know it's you and we really do we have the will to to do this or is this just something we're doing just to make sure that we are going along with the world with cop uh but who would cop and all that we don't even have an option that is the reality if we don't begin to take steps and make those transition plans and negotiate our transition plans with the international partner with the global community then we're going to be caught so we're going to be knocked out of the system we will be caught in the large so we must continue along the line of that energy transition that the vice president has been pursuing in fact after this government is gone even if it's possible to to to have him continue the campaign it will be a nice idea you can get some other people with the same level of passion who can be who can continue that phase we must negotiate our way through the transition otherwise the global world has used the same possible to develop their economy and they are now trying to pull it down all of a sudden remove it totally and leave leave a country like Nigeria in in object poverty what will happen to us if the source of over 90 percent of our efforts disappears overnight the other part however it's also that Nigeria as a country must begin to work on the line after fossil fuel so there must be clear transition the clear steps we're going to take and now we will manage our way out of dependence on fossil fuel as the source of over 19 percent of our foreign energy we must begin that work and the time to begin our work is actually now so while we are negotiating with the global community on one side we are also preparing for life after fossil fuel on the other side issues of renewable energy they must be able to see our coming back to renewable energy as well so building a portfolio of renewable energy must be in that beach it's part of all we go to the table table screen and say you this is the effort we are making in the renewable energy space but however allow us to transit according to this particular plan that we have for moving away from fossil fuel so we can not be on the same page not that we will uh just concede and and leave over 90 percent of our foreign energy it will be absolute impoverishment for us as a country it will be madness someone will say to do that but what you're saying is that there is no shaking for Nigeria's oil and gas industry they are always going to be alternative sources of funds because there's money to be made I guess that's the thesis of what you're saying and it's a lot of work though it's a lot of work because we're talking about the alternative funding are not regularly here as we speak so we have to develop we have to now grow to be able to meet that need we're talking about saying that this is a lot of work will this slow down the development in the oil and gas industry uh in Nigeria looking at the huge profits made this year or last year sorry 2022 will this slow down um if this this becomes a reality in 2023 I think some of that finance in the future are stepping into into that space um african afdb and there are there are major discussions at those levels to even ask african what are we doing putting all our sovereign wealth african sovereign wealth that's sitting in europe and america and these same europe and american banks are the ones who are saying they will stop financing your institutions here in africa so we must begin to also ask ourselves some of those questions do why can africa do much more in terms of providing funding for its own need within africa rather than having all this sovereign wealth sitting in europe and america all right so it is progressive okay we're just a final one um the federal government is saying field importation will end by 2024 I guess a lot of people forgot about the uh renovation of the refineries especially that of potakat and we are hearing that it will start producing 60 000 barrels per day in the first quarter of this year according to timmy presilva do you foresee that happening I think it will happen um we contract our awarded for three refineries one of them should be about completed as let's speak I'm sorry a couple of other ones to be completed later in the in the first of the year they will produce and then the primary refinery is also one thing that I look forward to at those levels we now begin to be exporters of fuel even if it is just within africa that would be an additional source of foreign exchange earning for Nigeria to begin to be a producer of valuable product and not just an exporter of commodities all right bono all right all in gas analysts thank you very much for your time look forward to having you again on the program my pleasure is mine thanks for having me all right still ahead we look at the uh see I want to look at more on the cbn withdrawal limits which uh began yesterday implementation began yesterday uh I made concerns about the new naranotum and scarcity for the new naranotum for now I'll just to try and fill this one properly into my pocket and I'll be right back please stay with us