In a significant boost to Nigeria’s oil and gas industry, First Bank Plc has pledged to fund a $1.3 billion fabrication contract awarded by Addax Petroleum to Kaztec Engineering, a subsidiary of the Chrome Group. This contract is tied to Addax’s Ofrima/Udele development project and is scheduled to commence next month, marking another milestone in local capacity development within Nigeria’s energy sector.
First Bank’s Support for Local Content
The decision to fund the project follows a visit by Mr. Olabisi Onasanya, Managing Director of First Bank, to Kaztec’s Fabrication Yard at Snake Island, Lagos, to inspect the progress of ongoing projects. Onasanya expressed satisfaction with the work completed for Addax’s Antan Development Project, a $136 million undertaking also partially funded by First Bank.
Speaking on the bank’s commitment, Mrs. Bashirat Odunewu, Group Executive Director of Institutional Banking at First Bank, highlighted the impressive technical capacity of Kaztec Engineering, a wholly Nigerian company.
“Our visit was impressive because Kaztec is a 100 percent Nigerian company. They showed us their current and completed projects, which are typically outsourced to foreign companies. Their client, Addax Petroleum, is also satisfied with their performance,” Odunewu stated.
She affirmed the bank’s interest in continuing to support Kaztec, emphasizing the importance of investing in phases to ensure proper funding and execution of the multi-billion-dollar project.
“This is a piecemeal project executed in phases. It’s a multi-billion-dollar initiative, and we work with a ratio where they provide part of the funding, and we support the rest. Sometimes, we involve other banks for syndication when necessary, as regulators set limits on how much a bank can fund for any particular customer,” Odunewu added.
The Challenge of Bankable Projects in Nigeria
Odunewu also pointed out the challenges many Nigerian companies face in accessing bank facilities, citing lack of commitment as a primary issue.
“Nigerian companies need to show competence and prove they have invested equity into their projects. A bankable project requires commitment and accountability. Some companies want banks to finance everything, but without demonstrating their ability to manage funds, banks are hesitant to assist,” she explained.
First Bank’s decision to back Kaztec Engineering is based on the company’s proven track record and competence.
“Kaztec is one of the top three companies in Nigeria today, and we are proud to support them. This includes their activities in oil, gas, and power, such as their role in the purchase of the Enugu Electricity Distribution Company (EEDC),” Odunewu said.
Kaztec’s Projects at Snake Island
Kaztec Engineering’s operations at Snake Island are a four-phase project, according to Dr. Edwin Ndukwe, Chrome Group’s spokesperson:
1.Phase 1: Fabrication yard.
2.Phase 2: Pipe rolling and coating yard.
3.Phase 3: Dry dock yard for refurbishing and rehabilitating boats, tugboats, barges, and similar vessels.
4.Phase 4: Logistics base.
Currently in Phase 1, Kaztec aims to complete all four phases by 2016, which will create an estimated 20,000 jobs (direct and indirect) and generate significant ancillary business activities.
Strategic Impact of the Ofrima/Udele Project
The Ofrima/Udele project will see Kaztec handle all of Addax’s fabrication processes, as it previously did for the OML 123 project. Construction is underway, with installation and commissioning to follow shortly.
Dr. Ndukwe emphasized the project’s economic and operational benefits:
“Kaztec will execute Addax’s fabrication processes entirely, contributing to local content and boosting Nigeria’s revenue. The Snake Island projects will also generate ancillary support companies, further stimulating economic growth.”
First Bank’s Vision for Local Content
First Bank’s unwavering support for Kaztec underscores its commitment to fostering local capacity in Nigeria’s oil and gas sector. By financing Kaztec’s groundbreaking projects, the bank is playing a pivotal role in driving economic growth, creating jobs, and reducing reliance on foreign expertise.
The collaboration between First Bank, Kaztec Engineering, and Addax Petroleum marks a new chapter in Nigeria’s industrial and energy sectors, showcasing the potential of homegrown companies to compete on a global scale while delivering world-class projects.
