In a warehouse in Ikeja’s sprawling industrial zone on the outskirts of Lagos, printing machines at Superflux International reel off documents at a rate of 200 metres a minute. Nigeria’s biggest banks and insurance groups outsource their printing to the company, which is growing as fast as the machines can run.

But despite the pride 48-year-old chief executive Tokunbo Talabi takes in his profitable business, the price he pays to power his printers is a constant sore. The monthly bill to run four diesel and gas generators comes to much more than his payroll for 200-odd employees. “The lack of electricity is a fundamental issue for us that people in government just don’t understand,” he says. “Every day we have to judge which generator to use to drive the level of machinery. Believe me, tempers flare if you use the wrong generator and waste electricity.”

Nigeria is Africa’s biggest crude oil producer and has enough natural gas to fuel hundreds of power stations, yet chronic electricity shortages kill off all but the most tenacious businesses. It’s a paradox that leaves Nigeria’s 140 million people dependent on expensive and polluting diesel generators or struggling on a few hours of electricity a day.

Nigeria’s story has been one of contradiction, tantalising potential and frustrated entrepreneurialism for a while. Now far-reaching reforms, decades in the making, are inching closer to reality under President Goodluck Jonathan. Writ large in the Petroleum Industry Bill (PIB), a power-sector reform programme and root-and-branch banking reform is a call to the private sector to invest in Nigeria that could finally turn the page.

It also offers mouth-watering opportunities for investors. With its abundant resources, massive market and GDP estimated at between 6% and 9% in 2011, Nigeria is one of the most exciting frontier markets. Fabulously successful telecom investors prove how explosive growth can be under the private sector. Nigeria has 70 million mobile subscribers since deregulation in 2001 – and that’s just half the market. Plans to lure investment into other crumbling state-run industries have become a crucial pillar in the government’s pledge to make Nigeria one of the top 20 economies in the world by 2020. It’s 50 years since independence from British rule and it could just be that Nigeria’s time has finally come.

OIL PRODUCTION

Lauded as the biggest shake-up in Nigeria’s oil industry since Royal Dutch Shell’s first crude exports in 1958, the PIB will end the major oil groups’ grip on 90% of Nigeria’s reserves. In a bid to shift the balance towards newcomers and independents, legislation will set out fiscal incentives for new operators to develop fallow acreage. The idea is that foreign investors will team up with local companies and trigger the growth of a world-class industry built on local content. “It takes about 10 years for a country to build up its own production industry,” says Dutch consultant Pedro Van Meurs, who has worked with the government to shape the legislation. “Once the infrastructure and fiscal system are in place, it is remarkable how soon it develops.”

It is music to the ears of independent Africa-focused oil groups like Afren. “The bill is encouraging majors to think hard about their fallow acreage and we are well positioned to offer a potential solution,” says Galib Virani, associate director at Afren, who estimates there are around 120 fallow fields holding up to 120 million barrels of oil. Active in Nigeria for a while, and ready to pounce again through its 45% stake in First Hydrocarbon Nigeria, the company has few doubts about the actual bounty of marginal fields. “Exxon discovered the Ebok field in 1968 and thought it had a capacity of 25 million barrels of oil. That is now at 105 million with an upside of 600 million,” says Virani. Afren took a stake in Ebok in 2007.

Nigerian refining and distribution group Oando is also snapping at the heels of the majors in a bid to move its business upstream in what CEO Wale Tinubu describes as a coming of age of Nigerian corporates. “The writing is on the wall,” he says from Oando’s Lagos headquarters.

“We are interested in a number of assets and have a good track record.” The company, which is listed in South Africa and Nigeria, is planning a London listing to fund upstream ventures. The legislation will also offer a chance for Chinese groups to increase their Nigerian production assets beyond Sinopec’s $7.2bn purchase of Swiss firm Addax in 2009.

The legislation will kick-start a new wave of investment from oil majors in what could be some of the biggest financing deals of their kind. They’ve held back on investment during the laborious and stalled passage of the bill, waiting for clarity on new fiscal and regulatory frameworks. UN figures show foreign direct investment, mostly in the petroleum sector, sank to $5.85bn last year from $13.96bn in 2006.

In recent months there has been progress on sticking points like the future structure of the oil groups’ joint ventures with the state-run Nigerian National Petroleum Corporation (NNPC) and the amount that royalties and taxes will increase, designed to make offshore contracts more equitable to Nigeria. “They’ve lobbied hard and had some success,” says Nigeria expert Antony Goldman at PM Consulting. Under the legislation the NNPC will also be better able to fund its share of the joint ventures, another brake on investment. It’ll be stripped down to a profit-driven firm that can fund investment through its own earnings and raise money on the capital markets, explains Van Meurs.

Elsewhere, the government has revived efforts to privatise its refineries and solve another uniquely Nigerian conundrum. The country imports 85% of its fuel needs because of the hopeless condition of its four state-owned refineries. It costs the government around $4bn (€3bn) a year to fund a subsidy that keeps prices at the pump artificially low.

Talk of privatisation has prompted some interest. In May, China pledged to invest $23bn to build three oil refineries and a petrochemical plant but this was more a bid to improve its chances in the upstream arena than a commercial move. Until the sector is deregulated, private investors have little incentive to build refineries – and besides, other challenges lurk.

Some of Nigeria’s most powerful tycoons make a lucrative living importing generators and fuel and pocketing the subsidy. The central bank says 60 million people rely on generators and spend $13bn (€9bn) a year fuelling them. “One of the least transparent areas of the whole industry has been the awarding of trading contracts for importing refined products,” says Goldman. “There are a lot of well-placed people who will make reform very difficult.”

GAS AND POWER

Investors could get an easier ride in the gas sector where efforts to harness reserves, estimated at 180 trillion cubic feet, and drive domestic electricity generation have gained momentum.

“The reason we are doing it is because the opportunity is simply huge,” says Scott Aitken, CEO of Seven Energy, Nigeria’s largest privately owned gas development firm. “Nigeria has the eighth-largest population in the world but energy consumption per capita is lower than most countries in Africa.” Set up in 2004, the company has invested $320m (€230m) in developing onshore gas fields and a pipeline network and is negotiating with seven off-takers that include business clusters and state-owned power plants. “Other companies may own the gas or the pipelines, but we are the only one with the complete supply chain under our leadership and control,” says Aitken.

Others circling include Russian giant Gazprom, which signed a $2.5bn joint venture with the NNPC to develop an integrated gas business last year. Reforms outlining the sell-off of stakes in state-run electricity distribution and generation firms in 2011, and a new $3.5bn (€2.5bn) national electricity grid, will attract more.

Midstream operators, from pipeline companies to manufacturers of metering equipment and transmission lines, are also eyeing a new gas-pricing regime that will pay big energy groups more for selling their gas to the domestic market. Van Meurs says: “Until now the government’s attitude has been that gas is a by-product of oil and should be made available for free.” This has led to oil groups exporting their gas as liquefied natural gas (LNG).

He adds: “We have worked very hard to try to explain to the government what it will take for the private sector to invest in the gas industry.” Nigeria accounts for almost 10% of the world’s LNG supply, much of it to Europe and North America.

But investment isn’t for the faint- hearted. “Projects take a long time and require a lot of interaction with regulatory authorities,” says Sergey Tagashov at Gazprom. Raising finance among “sceptical investors” and instability in the Niger Delta, where Seven Energy’s traffic- light system of green, amber and red zones guides investment, are other factors. Putting in place ostensibly simple off- take agreements to guarantee payment is fraught with risk and ensuring gas fields are big enough and close enough to market to actually make a profit are other concerns. Nigeria’s long-suffering consumers will also see their prices go up. Yet Aitken is unwavering: “There are no shortages of challenges but we are absolutely determined to overcome them.”

BANKS

Banks are also jostling for pole position as the big deals flow. For those already established, the competition is about to get tougher. The government is selling off hastily acquired stakes in some of Nigeria’s biggest banks after a $4bn bailout by the central bank in 2009. There’s never been a better time for foreign banks with African ambitions to pounce on once-glittering national champions such as Union Bank (one of the country’s oldest lenders), Oceanic and Intercontinental. Russian bank Renaissance Capital has planted its stake in the ground with a full fleet of investment banking services. “Our reasons are obvious,” says Rotimi Oyekanmi, head of the group’s West African operations on Victoria Island, Lagos. “Whether it is levels of banking penetration, power per capita or kilometres of road laid, all you need to do is look at the potential.”

The bank sell-off has been carefully crafted by one of Nigeria’s most competent reformers, central bank governor Lamido Sanusi. His invitation to foreign banks to buy into Nigeria comes with root-and-branch regulatory reform to tackle the reckless lending and corruption that caused the crash. He has backed up talk with action, pursuing criminal cases against four bank chief executives for money-laundering and fraud.

“We keep talking about our financial system but we never talk about our value system,” he says. “We will never have the long-term growth we deserve if we don’t trust our senior managers.” It’s a process that’s brought about a clean-up at the Nigerian Stock Exchange, where reform will include demutualisation, turning the NSE into a listed company. “The stock market is for long-term investment. It is not a casino,” says Sanusi.

Slight and softly spoken, his influence has extended to wider policy-making. He champions the partial privatisation of electricity generation and distribution and has pushed for reforms to help fund infrastructure, such as letting Nigeria’s pension funds invest more in the sector. And working to better Nigeria sits well with the former commercial banker. “In the commercial sector I felt a tension because it was of no real value to society. I don’t have that same tension in my life today. I am contributing to society.”

Sanusi argues that banking reform is “ongoing”. The fact that Nigeria’s banks have been whittled down from 89 in 2003 to 24 by repeated rounds of merger and consolidation illustrates his point.

Similarly, other reforms in the power and oil sectors are works in progress that have floundered under successive governments, only to be dusted off at later stages, and it’s likely the PIB won’t now pass until after elections next year.

But the expectation that Nigeria’s time has come is growing. It is visible in the ambition of the reforms, the investment and people like Kunbi Oguneye, back home after 12 years in the US and CEO of a telecoms company at 34. “I’ve jumped straight into the fire but I was given the opportunity and I had to take it,” he says.

Tokunbo Talabi, resigned to large power bills and mismanagement, expects little, but even he can’t hide his hope. “They’ve got to get it right at some point,” he says.