The Managing Director of the Nigeria Sovereign Investment Authority (NSIA) Mr. Uche Orji on Monday said the agency is investing in infrastructure because the future of oil which the country depends on now is challenged.
He also said the NSIA made N44billion profit in 2018 and N24billion in the first six months of this year.
He said the agency will join forces with other international investors to invest in Mambilla Hydro- Electric Power Project.
He said the cash from the Sovereign Wealth Fund (SWF) is safe and there is no cause for alarm.
Orji, who made the disclosures at the 2019 Leadership Forum of Pilot Newspaper in Abuja, urged the Federal Government to exploit as much crude oil as it can and sell as much as it can.
He said: “The essence of having NSIA is to prepare the country for when hydro-carbon resources are no longer pre-eminent.
“My view is that the outlook for oil is challenged, giving the growing interest in electric cars and the diversification from hydro-carbon. I will advise the government to bring out as much as it can and sell as much as it can.”
Already, the Sovereign Wealth Fund (SWF), he said, has started hedging against crude oil price volatility because of the future of oil. As a result, the NSIA, he said, is now investing more in infrastructure.
On the safety of the SWF cash, Orji said it is safe because NSIA “relates with reputable organizations.”
He said: “risk management is something we take seriously. We keep our funds with JP Morgan in the United Kingdom. So, in terms of custody, they are safe.
“To us in NSIA, safety is more important, profitability is second. We relate with reputable retail organisations.
“Since the global market is volatile, we are very careful on our investment in equities in the United States and Europe.
“We have to be careful about how far we stretch these funds. I would have loved that we have more than what we have now.”
With regards to investing in infrastructure, Orji cautioned that making profit from infrastructure does not come as quickly as people would normally expect.
He said it takes a while from when investment is made to when profit is realized from infrastructure.
He added: “For instance, $10million was invested in the Cancer Centre at the University of Lagos Teaching Hospital (LUTH). It took us six months to get to where revenue is now feasible. It will take the next six months before profit is made.
“Some of the infrastructure that the NSIA is investing in are the Lagos-Ibadan expressway, Abuja-Kano expressway, Second Niger Bridge, East-West road and the Mambilla power project.”
He said the road projects will be tolled to make profit from the investment, stressing that “we only invest in viable road projects.”
Because of the importance attached to infrastructure, he said a portion of the funds from the capital going to infrastructure has been increased to 50 per cent “because of the need to grow infrastructure.”
“The NSIA will engage in co-investments with partners to expand the impact of the funds,” he said.
Speaking on the slow take off of investment activities on the Mambilla power project, Uche Orji said: “Post -privatization, we couldn’t see where to participate. But now, we are aggressively looking for where to invest in power, but we want to address all the risk elements before investing.
“The PIDF project covers Mambilla Power Project and power is one of the five focus areas. We know there are problems in power, but it does not make it un-ivestable. We are absolutely interested and we will guide our investment.
Initially, the NSIA, he said planned to invest $5 billion in the Mambilla power project, but getting the partners and stakeholders assessments, contributions and evaluation before final investment is made, the actual value of investment in the Mambilla power project, is still unknown.
Orji said he was excited that the major shareholders in the Sovereign Wealth Fund (SWF), the three tiers of government under the National Economic Council (NEC), had approved an additional equity capital of $250 million to the fund being managed by the NSIA. This, he said, has swollen the investment capital available to the NSIA to $1.75billion.
Though the equity capital of the SWF is small when compared to other SWFs, he said the additional capital has given the NSIA confidence “to match co-investors when the time comes to make funds available and also show them that the shareholders are behind us and we can put up funds as our co-investors.”
Orji said co-investors are not limited to foreign investors but is also open to local investors like Pension Fund managers stressing that institutions with a pool of funds can participate.
The NSIA boss also said the Authority has recorded six straight years of profitability with last year’s profit standing at ?44billion and the first half of 2019 has so far recorded ?24billion profit
He said most investments embarked upon by the NSIA are risk covered because the NSIA takes risk management seriously.