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Nigerian gambit signals India’s Africa strategy

Nigerian gambit signals India’s Africa strategy
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First Published: Tue, Jan 05 2010. 12 00 AM IST
Updated: Tue, Jan 05 2010. 12 00 AM IST
New Delhi: India is offering help to oil- and gas-rich Nigeria to build infrastructure, especially power plants, emulating China’s strategy to secure access to oil and gas blocks in energy-rich Africa.
Around 15% of the crude oil India imports comes from Nigeria.
As a beginning, the state- owned Bharat Heavy Electricals Ltd (Bhel) may sign an agreement with the Nigerian government for setting up three coal-based power projects with a total capacity of 3,500MW involving an investment of $2 billion (Rs9,300 crore), during commerce minister Anand Sharma’s visit to the African country starting 13 January.
“Though Nigeria has a lot of gas, they have been unable to use it to plug their electricity shortage on account of repeated terrorist attacks in the Niger delta which has damaged the pipeline infrastructure. Now, they have decided to exploit their coal reserves to meet the power demand,” said a senior Bhel executive who did not want to be identified.
The coal projects are expected to be funded largely by the government of Nigeria with some funding coming from India.
Nigeria has 36.2 billion barrels of proven oil resources and is a member of the Organization of Petroleum Exporting Countries (Opec). It has the second largest hydrocarbon reserves in Africa after Libya.
“The visit is part of Ficci’s Namskaar Africa initiative and the minister will hold bilateral level talks with his counterpart,” said a senior union commerce ministry official who did not want to be identified. Ficci (the Federation of Indian Chambers of Commerce and Industry) is an industry lobby.
The Indian delegation includes other state-owned firms including State Bank of India and RITES Ltd, a subsidiary of Indian Railways.
While the Nigerian embassy in New Delhi did not respond to questions emailed by Mint, Emmanuel Egbogah, special adviser to the Nigerian president on petroleum couldn’t be reached for comment.
India has, in recent years, scrambled to come up with a cohesive, economic diplomacy policy in Africa, where it has lost ground to China. The Indian government has had very strong relationships with most African countries, stemming from India’s support for their independence. India’s trade with Africa is worth around $39 billion.
The other issue expected to be discussed during Sharma’s visit includes reviving NTPC’s proposal to secure 3 million tonnes per annum of LNG (liquified natural gas) for its fuel-starved plants in India. In return for the gas, NTPC was to build a 700MW gas-fired power plant and a 500MW coal-based plant in Nigeria, and renovate a 200MW unit at a 1,320MW plant. It had also offered to train around 30 Nigerian engineers and set up a training institute in the country. The deal was delayed after a change of government in Nigeria in 2007.
“We will use this opportunity to take up the issue with the Nigerian government,” said a top NTPC executive who did not want to be identified.
India depends on imports to meet its oil needs and is particularly vulnerable to price volatility in crude oil. As the world’s fifth largest energy consumer, India imports 78% of its requirements and accounts for around 3.5% of the global consumption of crude. It will become the third largest oil importer after the US and China before 2025, with its energy demands expected to almost double by 2030, according to the International Energy Agency.
This year, India seems to have launched a charm offensive to woo African countries. A delegation led by vice-president Hamid Ansari will leave on 5 January to visit Zambia, Malawi and Botswana. Ansari is expected to sign an agreement with Zambia for a line of credit of $50 million for the development of Intezhi Tezhi hydropower project.
Another delegation led by petroleum minister Murli Deora is expected to leave for Nigeria later this month. Interestingly, Ansari will be the highest ranking Indian official to ever visit these countries.
A senior official in India’s external affairs ministry tried to downplay the competition between India and China for Africa’s oil and gas which the two countries desperately need to fuel their growing economies. “We are not in competition with any country in Africa or elsewhere,” said Vivek Katju, secretary (West).
Africa is estimated to have around 10% of the world’s oil reserves and a number of Indian hydrocarbon firms are interested in acquiring hydrocarbon blocks in Nigeria. ONGC-Mittal Energy Ltd, a venture of state-owned Oil and Natural Gas Corp. Ltd (ONGC) and Mittal Investments Sarl, a firm owned by the family of steel magnate L.N. Mittal, was awarded rights to explore for oil and gas in two blocks in 2006.
Asit Ranjan Mishra contributed to this story.
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First Published: Tue, Jan 05 2010. 12 00 AM IST
More Topics: Nigeria | Crude oil | India | Imports | Opec |