Kachikwu Advocates for Fiscal Reforms to Harmonize Investment in Africa’s Upstream Sector
By Ndubuisi Micheal Obineme
Afric Energy Chairman, and Nigeria’s former Minister of State for Petroleum Resources, Dr Emmanuel Ibe Kachikwu, has advocated for new fiscal policies to harmonize the investment climate in Africa’s upstream sector.
Kachikwu, made the disclosure during his keynote address at the Angola Oil & Gas Technology Virtual Conference 2020, noting that the COVID-19 pandemic has impacted the oil and gas industry as the oil prices, investment portfolio, and employment are impacted.
He stressed that the COVID-19 has taught the industry a lesson in such a way that the fiscal that is taken for granted in the oil sector has deep. And most oil-producing countries are beginning to reduce production to stabilise the market and this is good for the short-term. But in the long-term, there should be an alternative option whenever the oil prices are down.
In his words, “We need to begin to diversify away from the immediate fiscal regime of the upstream. We need to begin to look at other investment in quartile related energy sector just like what Saudi Arabia is doing.
“I would like to see a fiscal conference soon that brings the biggest players in the sector hopefully led by groups such as Afreximbank to look at what are the fastest potentials sources of funding major projects within the African continent in the energy sector. I hope this conference achieves a whole lot. I would like to see a solution conference.
“We need to look at regulations. Most of our regulations in Africa are based on protectionism and expansion. That was good when the demand for oil was basically limitless. But the reality is that in the next 25 years the demand for oil will deep and clean energy will take over and unless there is an alternative to this oil through investment and extraction, we will continue to sit with our oil in our hands.
“We need to create regulations to boost local content. Nigeria and Angola have done well on that aspect, but we need to see other African countries do a whole lot more by sharing ideas.
“We need to move regulations from protectionism to the new vista which is liberal incentives. We need to create a liberal incentive for investment. Africa needs to be a prime market.
“The Arab world and the Asian market have moved very fast and professional to set up regulatory frameworks that will position its oil industry for sustainable development in the next 20 years.
“We need to create a value chain in the African market so that the future will be bright for all of us.”