Mr. Emeka Okwuosa, the Chief Executive Officer, Oilserv Group, believes that the biggest problem in any business idea is execution. For him, talk is easy, but execution is key. In this interview he addressed the challenges of proper execution of projects, especially in the power sector.
By Sebastine Obasi
THE government has talked about various incentives for prospective investors in Nigerian oil and gas sector. What incentive do you think should be given to those interested in modular refineries?
It depends on the model. From what I have heard so far, 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, fixed stock, off-take and all these will come into the model we are expecting from the government.
Virtual pipeline system
So, we have heard a policy statement but until they come up with a blueprint, for now, I can’t comment.
At what point will Oilserv participate in the issue of gas-to-power? Are you having a power plant or do you intend to go into distribution?
We have a company called TransPower. It is a gas to power company, from gas development to power generation, but the power we are talking about is not the power system connected to the grid. We are involved in the distributed off-grid power systems where we develop the gas transportation system.
If you don’t have a pipeline, we do have a virtual pipeline system where we use compressed natural gas (CNG) or we use micro-ornano LNG system. Now the clear thing is that we target end users. We store the power plant. We run it and supply the gas. That’s our model. Our model isn’t that one that will be embedded into the grid.
Has your company done any project on this power business?
As we speak, we are at a stage where we are developing working with operators in the oil mining lease, OML 56, which include about four or five companies. We are at a stage where we are trying to collect the gas, process and utilize. That’s is the first step. We already have Nano technology system where we have a project we are working on with an Argentine company.
This is a process, from the day you have your strategy and put it on the ground, it takes at least two years. Let’s be clear, this is real work and not talk. 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 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. So, we are working on it.
What’s the prospect of this micro-Ornano technology?
It is huge. If you go to Anambra State, where you have industries, you cannot imagine the number of industries you have, but there is no access to power. Their cost of power production is so huge that it becomes impossible to run their businesses. They cannot be profitable.
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. You guys have seen it because you report it. The distribution company that is there 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. If you go to Nnewi, it’s the same thing. These two clusters alone, can take more than 10million scf per day.
If you look at the two models, the LNG model is viable because if you compress gas with our weather, you cannot transport it for more than two hours on the road, otherwise, you begin to lose the pressure because once it is heated up, the gas leaks and by the time you get there, you may have lost most of the gas. That’s the problem with CNG.
But LNG is liquid. You liquefy it and it can be kept for one year. You can transport it to 300-500 kilometres. The only problem we had initially was that there was no technology to put it in micro form but now we call it ‘nano’ because we can now actually make it small enough and put it in a small truck-mounted container and move it. Initially, LNG systems were huge in nature. So that’s technology innovations for you.
How comfortable are you about the issue of lack of transparency surrounding the Nigeria Content Fund?
I believe I’m comfortable. 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 NCDMB is 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.
The Federal Government said it is establishing Project 100, where Nigerian companies that have capacity should not bother about funding because the government will help to secure funding. What are PETAN members, especially Oilserv, doing to key into this project?
It’s a very good idea because some of us have been saying this in different ways. Some of us that have built capacity all the years have to be sure that it will be utilized. If I have capacity based on $100million lying there and maintaining these equipment, I’m employing people and don’t have jobs for them, how does it work? There has to be a process of guaranteeing jobs for companies that have invested. It is not only Oilserv, there are quite a few other companies who have invested and taken 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.
Problem with power sector
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. We lack discipline in Nigeria. We also lack continuity. This government comes and says a thing, another government comes and says another thing. You have to be ahead of the curve, and you have to keep developing. When the United States started its power industry, it was just like Nigeria.
It was owned by big government entities but overtime, they had to privatize in a way that it works. The problem we have in Nigeria is that we say it but we don’t do it. 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 have 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, then you are constrained. The issue is that this is still being run in a government way in other to regulate and control. If these issues are not addressed, it will be discouraging.
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.