‘Private investors will run Nigeria’s refineries better’
Mr. Anthony Okolo is the managing director of a Lagos-based oil, Royal Niger Emerging Technologies Limited. In this interview, he speaks on issues in the nation’s oil and gas sector.
Where would you say our oil industry should be since 1956 when oil was first discovered in Oloibiri?
The position I would like to take is that we have made a lot of advances but there is lot of room for improvement. Nigeria, despite all the issues we have recently, is still one of the most viable oil producing nations in the world and still the largest producer of oil in Africa. We can’t say that the industry has failed especially when you look at the upstream which has done quite well. The midstream and downstream sectors are where we have had as Nigerians the most opportunities for complaint.
Will it be viable for government to sell off major refineries and create mini refineries as being planned?
Well, I don’t see any reason why we can’t do both. My opinion is that government is not really the best vehicle in any country for private or commercial investment. Where we are now, government needs to intervene. The sale of the refineries, if you look at it from a purely commercial standpoint, you would see the benefits of allowing private individuals to bid for those refineries, either to revamp or build new refineries. Any action that government would take now and it will affect product availability, it is reluctant to take it because of the negative reaction it would get.
Probably a better way to do it would be to allow private interests to set up on their own, relax the regulation, create the incentives for private investors to put in refineries. When their production is enough to start supplying, then government can move to sell the refineries. But to do it now without any buffer from private enterprise is suicidal.
How about refineries plan? the mini
When it comes to the mini refineries, that is simpler because already there are young men in the Niger Delta who are currently refining diesel and they are doing it with drums and firewood. The vice president has already said that and I believe he has the backing of the president.
If these boys who are blowing up pipelines are given licenses today to refine crude, do you think anyone can blow that pipeline again. This is why we who are private enterprises see the solution which is not easy for the government to take.
Are you advocating for the legalisation of illegal refineries?
Illegal refinery is a homegrown technology, no matter how crude it is. What we have now are people who have the natural idea but they lack the health and safety consciousness. Instead of chasing these people round the creeks, government should bring them out and upgrade them. It is not a case of legalising an illegal thing; it is a case of harnessing the local potential. Once do you that, you have turned illegality into the right path and created jobs.
The local content law is now seven years old but only three firms have accessed the fund. What are your concerns over this?
The inability to access the fund is the only bad part that we see in an otherwise vibrant Nigerian Content Development and Monitoring Board (NCDMB). Some right things have been done. It has given companies like us the platform to speak, and the ability to compete. It has even helped us compete in areas where competition would have been difficult. We know cases where NCDMB has insisted that certain investment should be put in an indigenous company and people have done so and are reaping the benefits today.
However, accessing the fund needs NCDMB to be directly involved. We need the Central Bank of Nigeria (CBN) to waive some requirements for the parastatal. It is that NCDMB has not made the money available; it is that none of us can pass through the requirements of Nigerian banks. So local content should be focused on manufacturing and not contracts. Banks should be asking us about our manufacturing capacity and the outlook that what we manufacture are being patronised.
How is your company coping with the economic recession in the country?
The main characteristic of any successful business is the ability to adapt and ensure a business plan is flexible enough to adapt to current situation. We have been able to stage our investments. We are building the service centre first so that small service jobs would be coming in to survive. It is still being a very difficult period and I don’t think that we could have survived it so far if it was not for the selflessness and hard work of our team.
How did the company spend the $2m for umbilical project?
We announced building a plant where we repair and test umblicals, and to replace or refurbish parts of it on request. We were supposed to build a second plant for the real manufacturing, for building new cables. Unfortunately, the industry took a downturn, so we slowed down on that plant. We had hoped to commission the plant in the first quarter, but now we have moved it further.
On job creation, we started with 31 staff. As we opened in Port Harcourt, we moved to 71. When the contracts are not coming, you have to see how to keep your cost reasonable. Though we have not done any rationalisation but we can’t say if things continue this way. We hope that the positive light we are seeing would mature to real opportunity for us. Once the plant is finished, it should be running at an extra of 80 people.