The Director of Department of Petroleum Resources (DPR) Engr. George Osahon has said that the banks in the country are not capable of financing deep offshore explorations.
This situation, he said was as a result of their low capital base which is not enough to cover the cost of a deep offshore exploration.
The DPR helmsman added that the total assets of the five leading banks in country were not enough to fund a deep offshore exploration.
According to him, “What is the success rate of exploration in the country? Take all the five leading banks, put their assets together, they will still not be able carry out a deep offshore exploration. In terms of financing E&P activities, Nigerian banks are still very weak. And if you are even talking about discovery and development, I believe the banks are not up to it, they don’t have the muscle required to flow with the industry.”
Osahon further added that “in 2003, a law stipulated that the banks should recapitalize. They move from a capital base of N5 billion which is about $33m to N25billion which is about $166, it reduced the number of banks but provided more confidence and better borrowing abilities for the banking sector. In fact without capitalization local companies would have found it very difficult to show the same zeal in acquisition of assets recently as we have seen by major operating companies.”
He however added that capitalization is very important but when we are talking of the recapitalization of the banks, it can only apply to some extent to production aspect. Our banks are still very weak to carry out exploration.”
He stated further that the recapitalization process did little to help the Nigerian banks to fund big projects like offshore exploration.