By Emma Amaize

SOME years ago, when the Nigeria National Petroleum Corporation, NNPC, started its gas master plan in 2007, Delta State governor, Dr. Emmanuel Uduaghan, took an interest in it, knowing that the state has a lot of gas. He got in contact with officials of the NNPC and was invited by the corporation to join a team that went round the United Kingdom, Singapore and other parts of the world on a road show for the Nigerian gas master plan.
He was the only governor in the team and had to address the global audience on security issues in the Niger-Delta, which was a major problem then. Uduaghan did this hoping that the Federal Government will use Delta as one of the states for whatever project that will be developed under the Nigeria gas master plan. Fortunately for him, as the master plan was unveiled by President Jonathan later, it became obvious that the state was a major beneficiary with one of the central processing facilities proposed for the state. The other two are in Akwa-Ibom and Rivers States.
Following the gas master plan, some companies outside the country started indicating interest in establishing petrochemical plants in Nigeria and, by the time they came and went round some states in the country, Delta was chosen as the favoured place for petrochemical plant by the Saudis and the Indians preferred it for a fertilizer plant. From the look of things, Uduaghan’s dream of making Delta a preferred investment destination is beginning to materialize and, if properly harnessed, what is happening today might well  be the jump-starting of his ‘Delta without oil’ dream.  The governor spoke with journalists in Warri a day  before a team of investors from the Kingdom of Saudi Arabia (Zenel Oil) and (Nagarjuma Company) India,  along with representatives of the NNPC, Chevron and Sahara Energy , an indigenous firm arrived the state for inspection of the sites of  the  $16 billion petrochemical and fertilizer plants.
Excerpts of interview:

You are expecting some foreign investors in the state.  Can we know their mission?

The Saudis are coming mainly for the petrochemical plant to be located at Koko and the Indians are coming for the fertilizer plant also to be located at Koko. Let me first of all say that these projects are projects initiated by the Federal Government, they were initiated by President Goodluck Jonathan’s administration through the Ministry of Petroleum Resources and then, NNPC, and we are lucky and fortunate that these projects are located in Delta State.

How did Delta grab the two projects?

One of the things that helped us is the location of the chosen site, Koko community in Warri North Local Government Area. We had pursued very vigorously under the administration of the late President Umaru Yar’Adua two export processing free zones, one in Koko, the other in Warri. Yar’Adua graciously approved the Koko Export Free Zone and that helped in locating these plants because you know any investor is very much interested in the tax regime.

So, because it is an export free zone, there are some tax reliefs and Koko was a favourable site for them in Delta, but we are still pursuing the Warri Export Free Zone and I think Mr. President has approved it, we are just waiting for the papers. I want to make something clear, it is the investors really who decided on the best site to locate their plants, but the decision to take Koko was because we have done a lot of work in ensuring that we have an export free zone there in addition to the fact that we have peace and security in the state and, thirdly, we have followed very closely the issue of the gas master plan.

What is FG doing with gas master plan?
Every company in the oil and gas industry is processing for oil, there is no company that is processing for gas and, when you get the oil, what comes out as a byproduct is gas; that is why we call it associated gas.  What has been happening is that most of this gas is flared because it is considered as waste product and it is the dry gas, not the wet gas that can be used to power our machinery, our cooking and all that.

The little gas that is being dried in plants like the Otorogun gas plan here in Delta  is piped to the West Africa gas pipeline, which supplies Lagos and some also supplied by Sapele power plant.  We also have a gas plant in Escravos by Chevron Nigeria Limited, but the bulk of the gas that comes with oil is flared and that is why you have so many flare sites. What the Federal Government is doing with the gas master plan is to ensure that all the gas that is flared is collected to a spot and in that central processing plant, all the gas that is being flared is pulled towards that central processing plant and it dries all the gas, that is take away the wet gas, leave the dry gas for domestic use. And what I mean by domestic use here is people who are interested in petro-chemical plant, fertilizer plant, those who want to put it in cylinders and take to homes and other things.

Benefit to Deltans
The petro-chemical and fertilizer plants are huge projects and they are worth $10 billion and $6 billion respectively and it will be one of the heaviest investments in  this country in recent years and having it in a state is not something that is small. But, beyond that, is the employment opportunities of these plants. Direct construction of the plants alone will employ a lot of our people.

There are indirect benefits; people who sell things to the people that are constructing, the woman who for instance is selling minerals or rice to the construction workers will benefit it, the public transport owners who have to transport workers from Warri and other places to Koko will benefit, so the benefits are quite huge.

And of course, when the plants are finished and they start employing, over 500,000 persons will be employed. Many other service industries are going to spring up with the establishment of these plants; especially industries that will utilize the byproducts of these plants, industries that will even make spare parts for these plants, so the opportunities are better experienced than imagined and we think that, with the cooperation of every Deltan, the future is very bright.

With the completion of Asaba Airport for which you have been so maligned and the coming of these projects, can you tell us what is gradually crystallizing in the state?

What we are beginning to see is a Delta State that is the hub of every investor and any investor coming to Nigeria will prefer the state as a hub. Now the efforts are on infrastructure that will support investment. The gas processing facility is also an infrastructure that will attract investment. Now, what does it mean, in trying to locate their investments?

Every investor looks out for three things- power, it is critical because they spend about 45 per cent of their working capital on power and with adequate power supply, gas can reduce and the profit will be much; transportation and, when you talk about transportation, you are talking about seaport, airport, roads and railway. These are things that will move materials easily for the investor and the other one is gas for many investors, especially for gas-based investments, you have independent power plant.

Now, tying the two together, the transport infrastructure is very critical, this investment requires transportation, sometimes they fly their goods by cargo and the Asaba Airport will be the quickest location to this plant.

So, if they need to bring in some goods fast, they can fly in their goods through  the airport or cargo them. Most of their goods will come ship, but some that they need to use in the next 24 or 48 hours, they have to fly them in and, as soon as the goods land in Asaba Airport, with the dualization we are doing to Koko,  within one and one and a half hours, their things are already in Koko, so it is quite useful to them, not just to transport the human beings that are going to work with them, but also their goods.

Can big ships come to Koko with goods, given the problem of non-dredging of the Escravos bar?
Fortunately for us, there are two entry points to the state and coming to Koko does not require passing through the Esravos bar. We have the Escravos bar and Benin river, now the Benin river also requires dredging, but the dredging there is easier to handle.

The Escravos one is a little bit more complex because there are pipelines crisscrossing, but the one for Benin river, which leads to Koko is about 7 – 8 meters deep and we are liaising with the Nigeria Ports Authority, NPA, on the dredging of the Benin river channel into Koko. The dredging is a Federal Government project really.

Integrated infrastructure
As a state government, what we are doing is to get some infrastructure ready, we are doing the dualization, now, preparing the export free zone site for the companies to put up shops is another big project for which we are hoping that private investors will come and develop. I really did not want to divulge it until we finish all the arrangement. And what developing the site means is building up the place, building houses for the workers, constructing the roads, the water system, sewage system, all these are integrated infrastructure that are required by these companies. What investors do is that if a company for instance constructs the houses for workers, they charge the parent company, so the petrochemical plant will be charged for utilizing those houses. If an investor comes and puts a plant inside that area, it supplies power to every company that is there and they pay. I am explaining this because it might not require the government directly investing in infrastructure in these places and we are already having contacts with people who are interested in doing those investments.

Talking about infrastructure, what is happening to the Warri Industrial Business Park, which was unveiled, last year, but nothing is going on at the site?

We have some challenges in getting anchor tenants because of the tax regime, we have not been able to get the place as an export free zone but, I think we are almost getting there now.  Meanwhile, as we wait for anchor tenants, we are going to start some construction directly. In the next few months, we will start constructing the main office and the main access road, a dual carriage road, the one opposite the Chevron Nigeria Limited clinic down to the river. We have got the design and bill of quantity and we are in the process of awarding the contract. The two projects will start immediately and, once we are able to get our certificate in making the place an export free zone, I am sure we will hit the road with anchor tenants.

Are there more investors on their way?
There are so many people  coming in for investments but, at the same time, there are so many of them that sometimes I think they are insincere. I will tell you in one area I believe that some people are insincere. It is the area of housing. When I started, so many people came, ‘we want to build houses, give us land’.  I approved land for more than 15 investors, but what they used to do is that as soon as they get the Certificate of Occupancy, they used it to raise money and do some other things.

But talking about areas in which we have investors showing interest, we have some Chinese that are interested in putting a fertilizer plant in Kwale area.  We are already discussing with them; in fact , we have signed Memorandum of Understanding with some of them.  We also have Chinese interested in taking over the Bendel Steel structures at Enerhen; we have investors who are interested in agriculture.  Right now, we have the Obasanjo Farms in which we have one of the biggest poultry farms in Nigeria established in Delta.

It is an integrated poultry farms, they are already producing eggs and we also have investors interested in banana, cassava and other agricultural areas. Of course, we have the Orere Tourism Plant, the Delta State Leisure Park is under construction and it is going to be one of the biggest in the world.  We have investors who want to take over some of our industries like the Bendel Glass Factory; we are signing agreement with either Chinese or Indonesia people who have virtually taking over the place. In fact, we have a lot of investors and even our airport; we have people who are interested in the concession of the cargo side and others interested in building warehouses for traders to put their goods.

Equity participation

Our principle is that the state government and the community must have equity participation and it is 15 per cent:10 per cent for the state and five per cent for the community.
Challenges

The biggest challenge we are facing on these capital projects is funding, workers salaries have increased and there are distortions in our funding arrangement.  But, at the same time, this year might be better in terms of returns from federal allocation because the benchmark for allocation this year is slightly up, it is about 25 dollars per barrel.  But beyond that, we have also increased our drive for internally generated revenue. We have increased our drive for taxation; we are trying to be more efficient in collecting our taxes than before. We have employed an audit company that is going round and auditing companies that have hitherto evaded tax.