Access Bank has concluded plans to finance more projects in the nation’s oil and gas, power and other sectors of the economy this year. The resolve is based on the desire of the financial institutions to assist in stimulating the sustainable development of these and other sectors.
A top official of the Bank said, “As a leading financial institution, we are committed to funding feasible and viable projects and programmes in the energy and other sectors of the nation’s economy. We have already funded major projects and would continue to do so in the coming years because of our firm believe in the economy and the nation,” he said.
Specifically, the official maintained that, “Access Bank’s oil and gas group covers corporate customers in the downstream, midstream, and upstream segments of the Oil and Gas industry. The Bank has been very instrumental to the development of the Nigerian content in the oil and gas industry.”
As he puts it, “We offer funding and advisory support to key indigenous and multinational Oil and Gas companies in Nigeria. Access Bank is amongst the pioneer banks in Shell $5billion contract financing scheme and Mobil $1billion contract financing schemes aimed at enhancing Nigerian content.”
The Executive Director (OIL&GAS), Access Bank Plc Mr. Elias Igbinakenzua who provided much insight into the operations of the financial institution said only companies with good corporate governance would attract such funds. “As you know, Oil and Gas is our mainstay in Nigeria. It contributes over 90 per cent foreign exchange to our National revenue annually and it employs the bulk of our people. Any Bank that wants to encourage the industry, and add value to the economy must support Oil and Gas. So, as a bank we have been there for years from inception. We have encouraged players locally as well as the International Oil Companies (IOCs). It cuts across all the chains of Oil and Gas companies in the downstream, midstream and upstream,” he remarked.
Igbinakenzua said Access Bank is one of the well capitalised Nigerian banks that have the wherewithal to support the Nigerian oil and gas industry.
“In terms of governance; we have the right framework to access the risks, dimension them and know the extent to go. We have also been able to help our players to understand the risks and know how to perch against them. So, we are a core player and we think that as a key Nigerian stakeholder, we must play big in the Oil and Gas industry,” he maintained.
He remarked that Access Bank Plc recognises that good corporate governance is fundamental to earning and retaining the confidence and trust of its stakeholders. Igbinakenzua said, “It provides the structure through which the objectives of the Bank are set and the means of attaining those objectives. The Codes of Corporate Governance for Banks in Nigeria Post Consolidation issued by the Central Bank of Nigeria, the Securities and Exchange Commission’s Code of Best Practice and Access Bank’s Principles of Corporate Governance collectively provide the basis for promoting sound corporate governance in the Bank.
“A player cannot attract the bank’s attention if he does not have a structure that is observed and examined as transparent as well as operating in line with global best governance. So, we think that for our local players that want to grow big, they must embrace good governance. We have done that for a number of players. We have actually tried to make them to understand the need for governance. We have also called external parties to assist them to put the right structure in place and have good governance. This form of assistance by Access Bank has encouraged a good number of indigenous players. It is not about coming to borrow, but when they come to us, we help put to their companies to follow good steps as a player for the long run,” he added.
Igbinakenzua who expressed concerns about oil theft and other issues said, “Today, we have inefficiencies in the system and we can’t live and be okay with that. We want to identify what is making our production less efficient and see how we can team up and reduce inefficiencies. When we say oil is costing $15 per barrel to produce, we are talking about removing the associated costs responsible for the inefficiency such as the militancy in the Niger-Delta, the issue of down times and all that.”
He said, “If you look at the cost issue, Saudi Arabia is producing for less than $10 per barrel. Even Ghana here, the cost of production per barrel is not as high as the cost production of oil in Nigeria. So, a lot can be done. I am not blaming the oil company for what we have today but I am saying as a system we are still inefficient and we must work together to minimize inefficiency so that we can have a going concern that is sustainable.”
Recognising that the CBN had during the last quarter of 2014 issued a circular that Banks total loans for the oil and gas sector should not exceed 20per cent of their portfolio, Igbinakenzua said, “Before then, the policy was that a bank could finance 20per cent downstream, 20per cent midstream and 20per cent upstream. And because the circular was issued towards the end of the year, virtually all the banks could not comply with that policy.”
“The CBN had to suspend the policy for now. As a bank, you can lend 20per cent downstream, 20 per cent midstream and 20per cent upstream. The limited factor today is the bank’s single obligor limit. That is to say a bank cannot lend to one obligor, 3 per cent of the shareholder’s fund. And today! We have banks that have up to N500billion insured in the shareholders’ funds. So, they can lend up to a N100 billion if a particular bank so desire to lend to one obligor. That is why I am saying the banks have the capacity. The CBN two weeks ago said, Nigerian banks are well capitalized, that shows that Nigerian banks are actually strong enough to support the sector. We are ready, provided there is good governance,’ he emphasised.