Kayode Ekundayo
5 October 2008
interview
Lagos — Kola Oyefeso is the managing director of Kotco Energy. In this interview, he argues that the federal government should allow all contractors handling various projects under the National Integrated Power Projects (NIPP) to return to work in order to solve current electricity problem in the country. Excerpts:
What is your assessment of the nation's state of economy in the last 16 months?
Yes. I will not say we have achieved much in terms of development. The federal government has spent a lot of time talking, but I hope by the time it puts its act together, the system will have a headway. I can say that in the last 16 months, nothing much has been achieved. Government alone cannot do it all but if we continue to criticizing what our predecessor has done, we won't be able to move forward. So by and large, the resources are there to develop, we have the oil, human capacity; we have no excuse to suffer in this country because Nigeria is richly endowed. Countries that are doing well today are not better endowed than Nigeria is. The only problem has been the lack of focus.
Which aspect of the nation's sector that you think government should re-focus its attention in the coming year?
Well, that is very clear and distinct. Energy is to the development and progress what water is to life. Basically we will need to focus seriously on the energy sector because it still remains the main pivot on which any nation's economy rotates. Without solving the energy crisis, the nation can't move forward. So it is compulsory to do that for the nation to move forward.
In your own view, what do you think happened to the sector?
It is just policy somersaults. Different governments came with different policies, no consistency. We spent too much time on that. Look at the present government; since the past 16 months, we are assessing what the past government did in the sector. Under a normal situation, assessment of the previous government's activities should not take more than three months . We lack consistency in our zeal to solve the problems.
So what do you think should be done?
Firstly, government should allow all the contractors under NIPP to go back to their respective projects sites. If we cancel the projects it will cost us more money. So, I will suggest that those contractors should go back. While they are doing their jobs, if there are certain things the contractors have not done well, these can be corrected. Abandoning the projects is very dangerous to the economy. We have to quickly resolve all those issues surrounding NIPP. Moreso that some of them have been paid between 30 and 40 per cent of their contract sums.. They should be allowed to finish their jobs and if we can actualize those contracts, the current energy situation in the country would have improved considerably from the current level of 3,000 megawatts to about 15,000 mw. We just have to go ahead and do it.
Kotco is one of the manufacturers of distributive transformers in the country. What is the company doing to assist the federal government in finding a lasting solution to the epileptic power problem in the country?
Yes, as manufacturers of transformers in Nigeria, we are contributing our little quota to the economy and that was why we decided that we would not import transformers but must be produce and assembled locally in Nigeria. Today, Nigeria is 48 years after Independence. If after these years we are still importing those things we can manufacture locally, what is pride in it? What do we tell our children? Those who are manufacturing this equipment are not better than us. The only difference is that they are better organized, and if that is the problem, why can't we be better organized? So what we did was that we approached one of the manufacturers who are our partners. We asked them to come to Nigeria and manufacture transformers, and this, to me, is another dividend of democracy. Because of democracy, we were able to lure the manufacturer to the country, to replicate exactly what they are doing in their country. In Ogun state alone, we have over 4,000 Kotco transformers and the governor, having seen what we are doing, has recommended us to other state governments. Already, we are in about eight states and that is one of the reasons why the company has gone for private placement. Why are we going for private placement? We went into it because of the electricity problem in the country. The electricity situation in the world is such that people don't buy transformers ahead of needs. All over the world, placements for transformers are done six to nine months ahead, but here in Nigeria, everybody wants it as at when the need arises. We also went into placement for expansion purpose, to meet the exigencies of demand and, as such, we need to have reasonable stocks.
What is the company's production turnover per year?
We are currently producing about 150, 000 transformers every month.
And you get demand for them?
This is a product that is being used by the federal government through rural electrification projects. When you talk about rural electrification, only 40 per cent of Nigerian communities are currently enjoying electricity. As the government is trying to electrify the rest of the 60 per cent, the transformers of the 40 per cent are breaking down. So the market is too large. Look, we have federal and state government projects all over the place and all private estates are in dire need of transformers.
So investing in Kotco engineering is not a waste?
I can tell you that 20 of our companies cannot meet the current demand for transformers in Nigeria. A former special adviser to the president on private sector visited our factory. He marvelled at what he saw. He told us that if he can see100 transformers unsold, he would recommend to the president to ban importation of transformers into the country. So the demand is enormous. Last year, we had about eight containers of transformers, all have gone. I must say that the potential in the energy sector is enormous, untapped. So the placement is meant for expansion as I said before. The expansion will also include us veering into solar energy in large scale. Not everybody needs electricity generation from turbine. Solar is a source of energy for Nigeria. We want to invest in solar. There are lots of areas. We were in China two weeks ago. In spite of the large volume of electricity the country generates, there are still lots of solar panel on the roofs of many homes. There are so many things we can do if we get good investors. If the investment climate in the country is right, we don't even need any investor, but we need investors in order to have required capital to meet our demand as quickly as possible so that in the next two or three years, we will be meeting the demands of other countries. Today, besides South Africa, nowhere in West Africa are transformers manufactured, except Kotco power. We have our plans also. We have short, medium and long term plans. Our immediate plan is to be able to meet our local demand. The short term plan is to expand to the entire West Africa sub-region and the long term is to be the transformer company to beat internationally. Today, we have over 77 people made up of engineers, technicians understudying our foreign partners. Again, they are overseers today. Within three years of the training, Nigerians have mastered the technology.
Technically, which types of transformers are you producing?
We manufacture power and distribution transformers that are of highest standard, and rank among the best across the globe, from 10KVA up to 20MVA ratings and within 33KV/11KV voltage class in conjunction with our ISO 9001 overseas partners. As we are expanding, we can go up to 200MVA, if the climate is right. There is a power generation company at Egbin called AES. The company has a faulty 40 MVA. The company asked us if we can refurbish it. Surprisingly, we did it for them. That was the first time such a thing would be done in Nigeria. Under normal circumstances, the company would have placed order for a new transformer, but we did it for them. That was about two years ago and it still working perfectly. Initially, we gave them a guarantee of five years, but we have written to them to say that the guarantee is continuous because we are sure of what we did. One thing we should know is that energy is a continuous thing. There is no country in the world that has ever solved its energy problem completely.
How much do you want to raise in order to meet your expansion need?
Just N2 billion. We want to spend the money to bring into the country more components so that we can produce more transformers. We also want to expand our information technology and our scope so that we can have two or more branches.
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