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Home > Manufacturing > Fabrication > Building/Construction
Nigeria Infrastructure Report Q3 2009
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We have revised our forecasts slightly this quarter on the back of a recent bounce in the price of oil andbetter than expected gross fixed capital formation and real investment growth figures. Nigeria’sgovernment revenues - and the economy as a whole - remain highly dependent on the price of oil(Nigeria’s key export). Brent Crude was trading at US$58/b at one stage in May 2009, considerablyhigher than the level of US$37/b witnessed in December 2008, at the bottom of the commoditycorrection. In this context, we now envisage real growth in Nigeria’s construction industry registering acontraction of -10.8% in 2009, compared with our earlier forecast of -14.5%. We envisage largely flatsector growth in 2010.
An indication of the dire state of the power sector came in May 2009, as the state-run Nigerian NationalPetroleum Corporation (NNPC) was reported to be in talks with an ex-subsidiary in order to secure areliable power supply for its Port Harcourt Refinery. The refinery has been closed since 2008 due topower shortages. A newspaper report quoted an unnamed source saying that gas-powered electricitycould be sold to the NNPC by Eleme Petrochemical Company, in exchange for natural gas liquids. Thisnews came in a context where Power Holding Company of Nigeria (PHCN) was reportedly generating acountrywide electricity supply of less than 2,200MW - barely enough to supply Lagos State. Also in May2009, two lawmakers who had been investigating corruption in the power sector were detained. Thecountry’s Economic and Financial Crimes Commission said that the two were being investigated for theiralleged role in an NGN6bn corruption scandal relating to contracts for rural electrification.
Nigeria sits in mid-table in our Project Finance Ratings, with a placing of fifth out of nine Africancountries. Nigeria scores reasonably solidly in the Commissioning and Operating phase relative to otherAfrican countries, in large part owing to strong inputs for the Energy and Utilities variable. However, thecountry is let down by its performance in Design and Construction phase, due to a poor regulatoryenvironment and a poor score for inputs.
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