Africa Trade Magazine

Steel-pipe manufacturing in Nigeria is set to expand on the back of a law that reserves supplies to the energy industry for local companies, the implementing agency said.

The 2010 Nigerian Content Act requires international energy companies working in the nation's oil and gas industry to end imports of pipes and buy instead from local companies to meet annual demand of 800,000 metric tons a year. Royal Dutch Shell Plc (RDSA), Chevron Corp. (CVX), Exxon Mobil Corp. (XOM), Total SA (FP) and Eni SpA (ENI) run joint ventures with state-owned Nigerian National Petroleum Corp. that pump most of the country's oil.

"We'd like to see four to five pipe mills in the country" with demand for steel pipes increasing as the country builds new gas-pipe networks and replaces old ones, Ernest Nwapa, executive secretary of the Nigerian Content Development and Monitoring Board, or NCDMB, said in an Oct. 5 interview in the commercial capital, Lagos. "Investors in pipe mills must be seeing these opportunities."

Nigeria is Africa's biggest economy and oil producer and has the continent's largest gas reserves. Under a plan to use natural gas to meet its electricity needs, the government is expanding the country's pipeline network to reach far-flung power stations. Since the law came into force four years ago, the NCDMB has been working out terms of engagement with prospective investors in mills.

Nigeria-Flag

The 2010 Nigerian Content Act requires international energy companies working in the nation's oil and gas industry to end imports of pipes and buy instead from local companies to meet annual demand of 800,000 metric tons a year. Royal Dutch Shell Plc (RDSA), Chevron Corp. (CVX), Exxon Mobil Corp. (XOM), Total SA (FP) and Eni SpA (ENI) run joint ventures with state-owned Nigerian National Petroleum Corp. that pump most of the country's oil.

"We'd like to see four to five pipe mills in the country" with demand for steel pipes increasing as the country builds new gas-pipe networks and replaces old ones, Ernest Nwapa, executive secretary of the Nigerian Content Development and Monitoring Board, or NCDMB, said in an Oct. 5 interview in the commercial capital, Lagos. "Investors in pipe mills must be seeing these opportunities."

Nigeria is Africa's biggest economy and oil producer and has the continent's largest gas reserves. Under a plan to use natural gas to meet its electricity needs, the government is expanding the country's pipeline network to reach far-flung power stations. Since the law came into force four years ago, the NCDMB has been working out terms of engagement with prospective investors in mills.

'The Lifeblood'

Among the early investors in domestic steel-pipe production is Lagos-based Technova Africa Group Ltd., which is building a $200 million mill and coating facility to be completed in September next year in southern Edo state, according to Chief Executive Officer Norbert Oleah.

"The lifeblood of the oil industry is pipes," Oleah said in a Sept. 23 interview. "As important as the oil well is, that's how important the pipe is."

Technova is in talks with international banks and hedge funds to raise additional capital either through debt or equity, and expects to reach a financing agreement before the end of the year, according to Oleah. He envisages a $1.2 billion investment over 10 years, including a fabrication yard, a jetty and a 10-megawatt power plant.

Technova has formed a technical partnership with Indian steel-pipe maker PSL Ltd. (PSL) and is negotiating with the world's largest steelmaker ArcelorMittal (MT) for the supply of raw materials, according to Oleah.

Output Capacity

Nigeria's steel-pipe output capacity will reach 300,000 tons a year when Technova's 200,000-ton capacity facility starts production that will add to the 100,000 tons currently produced by the country's only existing mill run by Abuja-based SCC Ltd. The existing gaps are met through imports. The NCDMB is discussing plans with investors to set up a 250,000 ton per year pipe mill in southern Bayelsa state to further boost self-sufficiency, according to Nwapa.

"There are about 50 suppliers bringing pipes from all over the world into Nigeria and they've been doing it in the most unfair manner," he said "For 50 years they've just been dumping their pipes here."

The leading suppliers of steel pipes to Nigeria include Luxembourg's Tenaris SA (TS), Moscow-based TMK OAO (TMKS) and China's Tianjin Pipe Corp. Nigeria now wants them to "set up some manufacturing facilities here" by forming partnerships with Nigerian companies, Nwapa said.

An Ebola victim who traveled to the United States and a case of contagion in Europe have triggered a global frenzy to act. While Africa welcomes a real international response at last, there are also fears the reaction may be more damaging than the disease.

No one can minimize the horror of the daily deaths and suffering in Liberia, Sierra Leone and Guinea, as the silent but aggressive sickness wipes out families and communities, nor the health risk the virus poses to an interconnected global village.

But Africans at many levels are bristling at an unfocused and lop-sided view of the health emergency they say ignores geography, distorts reality and will set back the real development advances made by a continent in the last decade.

"Hysteria and panic, I see, are really more contagious than the disease itself," said economist Carlos Lopes from Guinea-Bissau, who heads the U.N. Economic Commission for Africa.

With some U.S. politicians clamoring for a quarantining of Africa after a Liberian traveler - who died this week - brought the disease to the United States, Lopes, along with other economists, politicians and business leaders, is worried that Sub-Saharan Africa will face blanket Ebola "stigmatization".

The vision of Africa held by investors and tourists had been brightening. The region, its one billion people and natural riches, was starting to be seen as a promising beacon of growth. Old stereotypes of a dark continent of poverty, conflict and pestilence were starting to be left behind.

Now however the epidemic - in three small countries of the continent's western corner that together represent just one percent of Africa's economy - threatens to hurt that progress.

"There are two epidemics - the health epidemic and the epidemic of fear," said Mark Weinberger, global chairman and CEO of business services firm Ernst & Young, which has tracked Africa's increasing attractiveness to investors in recent years.

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SELF-FULFILLING SCENARIO

The World Bank warned this week that besides the severe damage to the epicenter economies of Sierra Leone, Liberia and Guinea - the latter two will see their GDP growth halved - West Africa as a sub-region could lose around $32 billion and even more than $40 billion if the Ebola emergency spreads to larger neighboring economies like Nigeria, Ivory Coast and Senegal.

The bank said that to avoid disruption to transportation, cross-border trade, supply chains and tourism in West Africa, remedial efforts needed to focus not just on "containing the epidemic" but also "mitigating aversion behavior".

In World Bank-speak, "aversion behavior" means knee-jerk panic reaction - flight and tourism cancellations, postponed business trips and meetings and shelved investment decisions, border closures, transport and travel curbs - which could multiply the economic damage of the Ebola epidemic.

"The impact is being felt all across Africa," Abdul Tejan-Cole, a Sierra Leonean who is executive director of the Open Society Initiative for West Africa, told Reuters.

Weinberger said the irrational fear factor could slow investment decisions about Africa and expressed concern that the World Bank's impact projection could become self-fulfilling.

"They are describing a worst-case scenario that may or may not happen," he told Reuters.

EBOLA "GOES ANYWHERE"

Ebola could have "dramatic consequences" for West Africa if it spreads, the International Monetary Fund acknowledged this week in its World Economic Outlook. But it maintained a bright forecast for Sub-Saharan Africa's prospects overall.

Forecasting the region's growth would accelerate to 5.8 percent next year from a buoyant 5.1 percent this year and in 2013, the IMF said: "The outlook is expected to remain favorable for the lion's share of the region's countries."

It's a broader perspective that Nigeria's finance minister, Ngozi Okonjo-Iweala, thinks should be kept at the forefront.

She bridles at what she terms sloppy media reporting about the epidemic, which she says unfairly paints the whole of West Africa, and the wider continent, with the same toxic brush.

"There is a danger. People are really scared of Ebola. We must manage the views on it properly," Okonjo-Iweala said on the sidelines of an FT Africa Summit 2014 in London.

She and others believe the media and experts should focus less on worst case scenarios and more on examples of success in containing Ebola. For example Nigeria, Africa's most populous nation and biggest economy, appears to have checked its own small outbreak that was imported by a sick Liberian.

Senegal has also contained a similar imported outbreak.

In the Ebola hot zones of Liberia and Sierra Leone, reactions are torn between welcoming the increased international attention and rejecting its Doomsday focus.

"They've splattered photos of hopeless patients lying on the floor without showing any respect for their dignity as human beings," said Ibrahim Kamara from Makeni in Sierra Leone.

Obsessive Western media cover of the United States and Spanish cases - so few in comparison with daily death tolls in West Africa - also prompts fierce objections.

But others believe it will at least keep the world focused on fighting the epidemic.

"The more they delay, the more bad it becomes for the world. Ebola has no boundary, it goes anywhere and attacks anytime," said Richard Kemokai, a social worker in Liberia.

(Additional reporting by Umaru Fofana in Freetown, David Lewis in Dakar, Karin Strohecker in London, Ed Cropley in Johannesburg, and Alphonso Toweh in Washington; Editing by Sophie Walker)

Tanzania has granted a licence to Vietnam-based telecoms operator Viettel to build a third-generation (3G) mobile phone network in the east African country, a senior official said.

Viettel will compete with the four other main operators: Vodacom Tanzania, a unit of South Africa's Vodacom ; Bharti Airtel ; Tigo Tanzania, part of Sweden's Millicom ; and Zantel, a unit of Etisalat.

Three other mobile phone operators - state-run TTCL, Benson and Smart - have a tiny market share.

Viettel will start building its national network on Nov. 1 and is expected to launch its mobile services in July 2015, Tanzania's deputy communication, science and technology minister, January Makamba, told Reuters late on Friday.

"We also like the fact that they will roll out broadband through fibre-optic cable to rural Tanzania. These plans align with the government's objective of digital inclusion," he said.

Tanzania's mobile telecoms sector has grown rapidly over the past decade. The nation of 45 million people has 28.88 million mobile subscribers, representing a mobile penetration of 64 percent, the regulator says.

Viettel Logo

Makamba said Viettel plans to focus on rural areas where about 4,000 villages currently without a network would be covered by 2016.

"Viettel network will be 3G everywhere," he said. "We've also asked Viettel to deliver fibre to 150 district hospitals, 150 district government offices, 65 post offices and 500 secondary schools."

The Vietnamese firm would build 13,000 km (8,000 miles) of fibre cable to add to the existing 8,000 km network, he said.

Viettel operates in markets in Asia, Latin America and Africa, and has more than 60 million subscribers worldwide, according to its website. Its revenues in 2012 were $7 billion.

(Editing by Edmund Blair and Pravin Char)

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