10 June 2018

Nigeria: Rising Oil Prices Present Nigeria Opportunity for Economic Diversification

In line with its forward looking strategy, and adapting to market demands, Propetrol Limited - owners of the Propel brand - will be opening new branches internationally, as well as diversifying further into the renewable energy market, MD/CEO Harry Ebohon tells Demola Ojo

There's a saying that the lower your voice, the more people pay attention. It takes a little adjusting to properly hear Mr Harry Ebohon, despite seating across the table from him at the Lagos head office of Propetrol, the company he started 16 years ago. But with a 20th retail outlet to be opened in a few weeks, as well as branches to be opened internationally, you suspect that Ebohon would rather his business did the talking.

The office has little indication of the type of business being undertaken, apart from Propel-branded signpost somewhere downstairs. No trucks or tanks. At least not visibly. But it certainly is the brain behind a body spreading its tentacles nationwide, starting from the south.

Propetrol's journey has been one of taking advantages of opportunities and moving swiftly to fill the gap. The company started by providing services for oil majors before branching into retail, and further expansion.

"We were providing haulage services for oil majors like Total, Oando and Mobil. When we noticed there were service gaps in the retail market, we decided to branch into retail and set up our first retail outlet in Ikeja about 15 years ago. We've grown our business from that single outlet to about 19 today. We've branched out also into other aspects of the industry value chain," Ebohon says, the beginning of what would be a series of short and crisp answers. "We provide bulk sales of petroleum products both inland and in the bunkers market," is the only elaboration.

Outlet number 20 follows the pattern of Propetrol's organic growth. It will be in Port Harcourt where there are numerous retail stations already. "We have a very strong brand presence in Port Harcourt and we enjoy significant customer loyalty in that part. There are specific areas in that market where we believe the service we provide is required and because of that, we've picked our next location somewhere within the metropolis of Port Harcourt," he explains.

How soon before the next outlet which is a significant number? Ebohon doesn't think it's that much of a big deal in his line of business. He comes across as someone who would rather it is the hundredth.

"The property is secured; designs have been done, so we're moving to site in another four weeks. I want to believe that before this year runs out for sure, it will commence operations."

I have been using the names Propetrol and Propel interchangeably. Ebohon admits that a few people aren't sure about the difference. "Propetrol is the parent company, the registered business. Propel is our trademark, it's the brand under which our retail business runs on," he says.

With this clarity, it is easier to understand what he means when he says opening another outlet, and opening branches internationally. The one is Propel, the latter, Propetrol.

"Some time ago, we announced plans to partner with an international bunker trading company. We have already made moves not just to partner but to acquire a company based in South Africa. We're in the process of concluding that and we'll soon be opening shop in South Africa. There are opportunities we've identified in South Africa that we believe we can take advantage of.

"Apart from that, we have a very global perspective as far as our business is concerned. Our plan is also to open shop in some specific markets outside Nigeria where we have identified opportunities.

"I don't want to go into too many details but by the last quarter of this year, we will be providing some of the services we render here in Nigeria in South Africa and one or two other locations that we will reveal later."

If you guess he'd rather be watching out for new trends to take advantage of in the industry, rather than talk about his plans, you won't be too far from the truth. A couple of times, he declines to elaborate, a slight smile accompanying the low tone.

I quiz him about the recent increase in oil prices and the projections by the IMF that it will hit $100 per barrel in a few months. Surely, there are opportunities to be taken advantage of knowing this, right?

"The sudden jump that we saw in oil prices can be traced to some geo-political tensions essentially in the Middle East," he says. "The fact that the USA pulled out of the Iran Nuclear Deal was one of the major drivers of the current high prices that we see in the market.

"However, I want to believe that these prices are not sustainable because with the level of production going on in the USA with shale oil, I foresee a drop in oil prices and I think at the end of the day, oil may stabilise between 60 and 70 which is much more sustainable.

"Another reason why I believe oil prices may not remain high for so long is because of renewable energy. Some countries have come out to say that in the next few years, they're going to place a ban on vehicles running on fossil fuels. On this basis, I don't believe oil prices can remain high for too long.

"I believe Nigeria should take advantage of these prices while it lasts and also look for ways to diversify its economy."

How will Propetrol adjust as a company, especially regarding alternative energy then? "As long as you're in the oil business, you have to be very mindful of that. We have both a short term and long term strategy. We're considering our options in the renewable energy space, and we have identified some companies we want to partner with to develop that market in Nigeria. We're actually making very concrete steps towards the actualisation of this.

"In the meantime, the best thing for Nigeria to do regarding improved oil revenue is to start saving for the rainy day. I want to believe that the government is making serious efforts towards diversifying this economy. I see a lot of traction as far as that is concerned. Diversification is what we should be looking at, at this point."

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