Playing to your strengthsCapturing the CNG and LPG market in Nigeria 22 August, 2013

www.pinnacleaquasystems.com

PwC

This presentation covers ......

1. Overview

of the local

content Act/PIB

2. Business

opportunity/Challenge

3. The way forward

1Overview of the Local Content Act/PIB

PwC

Overview of the Local Content Act

• Signed into law - 22 April 2010

• Local content also coming up in other areas (Cabotage, PIB etc)

• Key objectives are:- Local capacity & job creation- Technology transfer - Economic independence

• The Act defines Nigerian content as:

“the quantum of composite value added to or created in the Nigerian economy by a systematic development of capacity and capabilities through the deliberate utilization of Nigerian human, material resources and services in the Nigerian oil and gas industry” 4

PwC

Overview of the Local Content ActThe journey so far

• NCDMB playing a key role

• Nigerian Oil & Gas Industry Content Joint Qualification System (NOGIC JQS) was established to consolidate data on stakeholders activities in the Industry

• NCDMB-Nigerian Content Development and Monitoring Board

• http://www.ncdmb.gov.ng/

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Business structuring considerationslocal content incentives

Potential incentives and planning opportunities include: Income tax relief/pioneer status Gas utilisation incentives Establishment in a tax free zone Import duty waiver / TIP VAT exemption Investment allowance Tax free dividend Potential ITF refund claim R&D incentives

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Overview of the Petroleum Industry Bill

• The Petroleum Industry Bill is a new and unified legal framework for the re-organization and operation of the Nigerian Petroleum Industry.

• This bill is therefore expected to:• (a). Guarantee the uninterrupted flow of the Nigerian oil

and gas with a view to restoring, recapturing and creating investor confidence in the industry.

• (b). Address or redress the issues that gave birth to current challenges in the Niger Delta.

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2Business opportunity and Challenges

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Manufacturing is way under-developed ...

Source : UNCTAD report to Nigeria 2009

Oil

dom

inat

ed

Sect

oria

l out

put

shar

e (%

)

Milli

ons U

SD m

anuf

actu

ring

outp

ut

MAN/NEMT/2012

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Business Opportunity in LPG

• Trucking

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Business Opportunity in LPG

• Gas dispensing station + Cooking gas accessories

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Business Opportunity in LPG

• Jetty + Tank Farm

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Business Opportunity in LPG

• Signing Off take agreement with LNG

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Business Opportunity in LPG

• Acquisition of marginal field• Divestment

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Business Opportunity in CNG

• Vehicles (Trucks)• Industries

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What is Government saying ? The Eko Gas Scheme would promote the safe use of LPG and is targeted at the low income earners who are of the erroneous impression that LPG is expensive.

The scheme is expected to enable about one million people who use firewood and kerosene for cooking to switch over to LPG (cooking gas) in the next five years.

The Lagos State Government would also be bearing 20% of the cost of cylinders in order to encourage Lagos residents use LPG.

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3The way forward

PwC

The way forward

• The key aim of the Local Content Act is to improve participation by Nigerians in the oil and gas industry but there is a risk of focus on form rather than “substance”

• Notwithstanding the potential challenges, the Local Content Act holds great opportunities for the future

• There has been series of hearing on the Petroleum Industry Bill by the National Assembly when the final amendment is adopted and passed into law it will cause a strong impact on the industry.

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“Entrepreneurs are simply those who understand that there is little difference between obstacle and opportunity and are able to turn both to their advantage”

Niccolo Machiavelli (1946–1527), Italian Philosopher

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, Pinnacle Aqua system Limited, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © 2012 Pinnacle Aqua system Limited. All rights reserved. In this document, “Pinnacle” and “Pinnacle Aqua system Limited” refer to Pinnacle Aqua system which is a member firm of Manufacturers Association of Nigeria, Port Harcourt Chamber of Commerce, Agriculture ,Mines and Industry and also a registered with the Corporate Affairs Commission of Nigeria as a legal entity.

Thank you …This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, Pinnacle Aqua system Limited, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © 2012 Pinnacle Aqua system Limited. All rights reserved. In this document, “Pinnacle” and “Pinnacle Aqua system Limited” refer to Pinnacle Aqua system which is a member firm of Manufacturers Association of Nigeria, Port Harcourt Chamber of Commerce, Agriculture ,Mines and Industry and also a registered with the Corporate Affairs Commission of Nigeria as a legal entity.