16 June 2017

Nigeria: 'Power Sector Requires Proper Strategy, Management'

interview

Emeka Okwuosa is the Chairman and Chief Executive Officer of Oilserv Limited. He is also an active member of the Society of Petroleum Engineers (SPE) Nigerian Council, and the Petroleum Technology Association of Nigeria (PETAN). In this interview with ROSELINE OKERE, he offered possible solutions to Nigeria's electricity challenges. Excerpts:

Regular electricity supply has remained a challenge to businesses operating in Nigeria. How do we solve this problem?

Anywhere in the world, power issue isn't an easy situation to deal with, but it requires proper strategy, execution and proper management. All these come with discipline; and we lack discipline in Nigeria. We also lack continuity. When the U.S. started its power industry, it was just like Nigeria. It was owned by big government entities, but overtime, they have a way of privatising it in a way that it works.

Capacity to improve power means you have to align the generation to transmission to distribution. But all you hear is that distribution companies collect money, but they don't remit. If you do not remit it to the aggregator, how do you want the transmission company to get paid? The whole system breaks down. If you are able to generate power and you are not able to transmit it through the transmission system, then you are constrained. The biggest problem in any business idea is execution. Talk is easy, but execution is key. If we don't execute properly, it's not going to work and we have that problem with power sector.

Are there plans by Oilserv to explore the gas to power subsector?

We have a company called TransPower. It's a gas to power company, which is involved in gas development to power generation. But the power we are talking about is not the system connected to the grid. We are involved in the distributed off-grid power system, where we develop the gas transportation system. We do a virtual pipeline system where we use Compressed Natural Gas (CNG) or Micro-nano LNG system. We store the power; we run it and supply the gas. That's our model.

As we speak, we are at a stage where we are working with operators in the OML 56, which include about four or five companies. We are at a stage where we are trying to collect the gas, process and utilise it. We already have a nano-technology system where we have a project that we are working on with an Argentine company.

First, you have to sign a gas-purchase agreement with gas owners, you build the processing system. From the processing cycles, you take the lean gas and then you now deliver. The power plant is the simplest thing; you buy the power plant then you install. The process of getting the gas there is the most difficult.

What's the prospect of this Micro-Nano technology and how does it work?

You cannot imagine the number of industries you have in Anambra State, but no access to power. Their cost of power production is so huge that it becomes impossible to run their businesses. Business cannot be profitable under such circumstances. Several diesel generators are scattered all over the place. What is going on today in Eastern Nigeria is a disaster from power supply point of view. The distribution company in that state is a disaster. They are not able to give power to anybody, so industries are dying. The only way to bridge that gap is to ensure power is available because power changes everything.

There have been concerns about the long tendering process in Nigeria. What do you think the government should do to ensure we are at par with other countries of the world?

I think it has to do with the owners of the projects; whether it is the NNPC or the International Oil Companies. When you start a tender and the tendering process goes beyond six month, you are in a different territory. You have a situation where inflation may have changed, prices may have changed. Some tendering processes take up to 18 months. That should end. It requires concerted efforts. There should be a way to streamline the process of tendering to make sure that it is within a shorter time.

The Federal Government said recently that it is establishing 'Project 100' where some Nigeria companies would be assisted with funding opportunities. How would this help in Nigeria's economic recovering?

Project 100 is a good idea because some of us have been saying this in different ways. Some of us that have built capacity all these years have to be sure that it will be utilised. There has to be a process of guarantee jobs for companies that have invested. It is not only Oilserv, there are quite a few other companies who have invested and taking the risks.

It is important that going forward, there would be guaranteed jobs, instead of trying to give contracts or opportunity to briefcase contractors. Project 100 concept will help address that because they will look at few companies with capacity and help them raise fund for business and this will enable us employ more people. But don't forget, as we get the details, we know how to move into them.

Government also talked about various incentives for prospective investors in the Nigerian oil and gas sector, what incentive do you think should be given to those interested in modular refineries?

It depends on the model, and the model is not yet out; only when they come up with a model that we will look at it and examine how they will guarantee finances, feedstock and off-take. All these are expected to come into the model the Federal Government is initiating.

Local content is seven years, what is your opinion about the policy?

A lot has been achieved. The first is the setting up of an agency to manage the policy and this is the Nigerian Content Development and Monitoring Board (NCDMB). You will agree with me that it takes time to build. But I believe that with time, they will settle very well. They have many other processes in place to encourage training. My assessment is that they have achieved quite a lot, but there is enough room for improvement. I am one of those who believe that NCDMB has come a long way and they are moving, not gotten to their target, but still have a long way to go.

Indigenous oil companies have been complaining about lack of access to the Nigeria Content Fund (NCF). One year after, what has changed?

What has changed is that we have an Executive Secretary who recently took over the position and very interested in addressing the issue.

He has said that he is doing something about it. The primary aim of that fund should be for capacity building. So, there are many ways you can deploy that fund to support capacity building. You can provide funding at an affordable rate for Nigerian companies that are investing in the sector.

This is not money to be thrown away but returned. You can also have the local content board be involved in the development of key sectors like pipe-mills.

What is your opinion on the lack of transparency surrounding the disbursement of the fund?

We have to bear something in mind that we should not over criticize. I believe there are records and these records are available. I don't believe they have no records. This money accumulates based on records. Do not forget that the local content development board, also a young entity that's learning and developing its system.

We have to give them time to do that. What is happening right now is that NCDMB is managed by very competent people with good knowledge of best international practices. I believe we have to give them time because I believe they are doing the right thing.

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