Chinese competition in construction pushing Julius Berger into oil, gas industry
Leading construction giant, Julius Berger Nigeria Plc has given hint on plans to diversifying into oil and gas industry.
Construction industry pundits say the move stemmed from sustained stiff competition from Chinese construction groups which have been raking in jobs that would have ordinarily gone to Julius Berger in the last few years.
Trouble may have began for the construction giant since Lagos State Government and some other states started shifting a number of jobs to the China Civil Engineering Construction Corporation (CCECC).
Besides, in September 2016, the federal government joined the states as it signed a $5.1 billion contract with the CCECC for construction and rehabilitation of railway lines across the country.
Analysts say the Chinese firms can get cheap financing from their home country at single digit interest rates, and can also go ahead without waiting for mobilization. Excess capacity in China, means labour and equipment are available at a cheap price.
The federal government currently owes contractors including Julius Berger, billions of naira, and these loans have hampered their operations.
Again, costs of recession and forex crisis have also made the private sector to cut back on construction activities, and many real estate developments have seen a drop-in occupancy rates.
Whereas the target is to venture into the development of oil fields, the company said that it would provide further details to the capital market community as the transaction progress.
In a notice sent to the Nigerian Stock Exchange (NSE) by the company which was signed by the company secretary, Cecilia Madueke, Julius Berger Nigeria expressed its intention of going into partnership with Petralon energy an oil and gas firm.
Petralon energy began operations on its first oil field in partnership with Tako E&P Solution in 2014.
Business Hilights recalls that Julius Berger was established in 1950 and is one of Nigeria’s oldest construction companies and also the most favoured in securing both states and federal jobs until the coming of Chinese construction companies.
