LADOL is on the Path to Make Nigeria Hub of Africa
LA DO La key player in Nigeria’ s oil and gas, maritime and logistics sector, how has it been so far? LADOL is one of the facilities in Apapa port but we are also an industrial free zone. We cover a lot of sectors and in doing that we really understand how the economy is going and particularly how the private sector is faring. What I will say is that in the maritime sector, the Nigerian Ports Authority (NPA) has really done well. I think the Managing Director of NPA is really taking some giant strides in revolutionizing NPA and making it a modern parastatal, running a modern port. Of course, that cannot happen overnight. For instance, when the FPSO was coming, they formed a special committee and brought everybody together; brought in their new tugs and buoys. It was very professional. They were able to stand toe to toe with the international players when it comes to bringing in a vessel which is one of the most valuable in the world. That is really impressive and for a private investor, it means that we can continue to invest in development and reach for these massive projects – even beyond Egina – beyond Nigeria, for West Africa and for Africa. We have the confidence that the NPA can parley with us to make a greater success. I think in terms of the economy – we obviously had a recession but I also look at things from a global perspective. From a global perspective, compared with other export commodities-dependent countries, Nigeria has relatively done well.
If you look at what is happening in Latin America – even a powerhouse like Brazil and you look at what is happening in Nigeria – we are actually doing better. But are we doing well enough? Of course, not. We still need to improve. What the past few years have shown me is the importance of having a striving private sector. What that means is that we need to see more efforts now in supporting the private sector. We need financial reforms so that we can give long-term loans – not just to companies like LADOL but to small and medium-sized companies. We need to create tens of millions of jobs and that means you need to support small, medium and large companies; and to do that we need those financial reforms to go hand in hand with the enabling environment.
Let’ s talk about the FPS O vessel that sailed into the country recently. What is happening atthemoment?
Our role as far as the Total FPSO was to provide the facility in which the top sides – there are 18 top sides with the giant module that sits on top of the FPSO vessel. Out of these 18, six were fabricated in LADOL, which is the first for local content and going forward we would be able to do many more that for two reasons. First, when we started the Egina project, the shipyard in LADOL was not even built yet. So we have shown that local content capacity development works extremely well. We can build a facility. We can be operational and we can contribute to a project within a shorter period of time than people estimate. So our own facility will continue to support and do more fabrication and more integration. But more important, by being able to receive the FPSO vessel – this is the largest FPSO in the world being 70m-wide and 380m-long, I think must be about three football pitches – we are showing the world that we can receive that vessel and we have the crane capacity. Nigeria currently has the highest crane (lifting) capacity in Africa. Showing that to the world will definitely increase the local demand for fabrication because from now on everybody knows that whatever you manufacture in Nigeria can be fully assembled and integrated in Nigeria as opposed to what was happening before where you manufactured something in Nigeria and sent to the other side of the world to be made part of something bigger.
Naturally, the economics in that situation is not too attractive. The other side is that now that LADOL has received the FPSO whether you are making another ship or an Aeroplane or railway components, all of those pieces can be fully assembled locally. That would naturally and dramatically increase local demands and we are estimating a far increase in local demand for fabrication engineering and that increase will not be satisfied by LADOL. That is why we say that we estimated that 50,000 direct and indirect jobs would be created. For every job we create in LADOL, we think 10 jobs will be created outside of LADOL due to the increased demand for fabrication and engineering. Fabrication yards currently exist across Nigeria, it doesn’t matter what geopolitical zone you are in – we are all in Nigeria. As time goes on we will need more yards to be built so that we can keep more people perpetually employed.
What is the update on the issues LA DO L haswithSamsung?
Samsung is the contractor that was appointed by Total to carry out the EPC for the Egina FPSO. So what that means is that for this first project, Samsung did the fabrication, engineering and procurement for the FPSO. Going forward, what we are looking at is having a situation where we work with our technical partner that, maybe Samsung, and over an agreed period of time that technical partner transfer technology to us and the other Nigerian companies that they are working with so that similar to what happened in the United Arab Emirates (UAE) within a 10-year period Nigerian companies will have technology to do that EPC work by themselves.
Now that the FPS O had come in, what is the next step for LA DO L?
We have been very busy since 2001 fulfilling this long-term vision. The FPSO coming in is an important milestone. But it is a milestone on a very long path which we clearly charted out in the past 17 years. The next milestone that we are looking for is further development within the free zones. We have already started building additional infrastructure. The construction of the power plant is ongoing. We are building new roads and more storage areas. We are doing that to accommodate our non-oil and gas clients. For instance, in the agricultural sector, one of the biggest issues Nigeria faces for agriculture export is the lack of processing and storage facilities. We are building new cold storage and processing facilities so that we can work with the agricultural companies that we are in discussion with to help them export from Nigeria. Many people know that in some agricultural areas such as yam and cashew nuts, we actually have high levels of productions but we don’t export (them). They get exported from neighbouring countries because we don’t have the type of facilities that LADOL is currently building.
Are you looking at the possibility of extending LA DO L’ s expertise to West African countries to see if they can take advantage ofwhatyoudohere?
A core part of LADOL’s mission is to make Nigeria the hub. We started out saying that we should be the hub for West Africa. We have now expanded to say we should be the hub for Africa. With the shipyard, we have the highest lifting capacity in Africa. In terms of our neighbouring countries, they will gain a lot of benefits by building manufacturing engineering in Nigeria – because as the largest market, the Nigerian market is large enough to justify the type of investment that LADOL is making. Other neighbouring countries are smaller. Therefore, they cannot justify those kinds of investments. So they can use us as a regional hub for some of those high-value, massive industrial projects that the Nigerian market can cope with. The benefit they get is by working with their neighbours as opposed to working with people from the other side of the world; they get tremendous cost-savings. They also are able to absorb more of the technology, not to mention the fact that you can create a West African period of prosperity because we are able to collaborate, trade with one another and help one another–not justin terms of industrialization but sharing know-how and service provisions. That is really something that leads to prosperity within the region and we know that if we look at the success of the European Union (EU).
The EU is having problems now but when they first came together, it was very successful. One of the keys is whether people like it or not. If Nigeria is the hub, it will lead to great prosperity for everyone. If Nigeria is not the hub and our massive population now has to pay high prices to get services from other places, it is very likely that the entire regional economy will also suffer. It is important to them that we work together and collaboratively. It is beneficial to them to leverage facilities, infrastructure and know-how that we are investing in Nigeria and jointly we can create a prosperous West Africa.
Three years ago, oil prices dropped drastically. The news in town then was that there will be no further investment in FPS Os. Now oil prices are moving up. In terms of investment in FPS O, what are the possibilities?
For us, FPSOs are not really all that; what I mean by that is we are not focused on the petroleum sector exclusively. The real significance of the Egina FPSO coming in is that it proves that you can handle the most complex industrial project in Nigeria. But FPSOs are only going to come around once every five years. That is not the basis you develop a business model. We have actually developed a business model based on a range of other industries outside of oil and gas. So there is the railway, aviation, agriculture and even technology and having that shipyard enable us to participate in all of those sectors. In terms of what is happening in the oil and gas industry, prices are going to go up and down. Honestly, Nigeria has very little control over those prices. So my focus is or I think Nigeria’s focus should be on lowering the cost of doing business. We are blessed with an abundance of natural resources in oil and gas, in crops and minerals and other areas. The important thing is to make the industries we build around these sectors as efficient as possible. If they are very efficient and competitive, it will not matter what global prices are set. We still have a striving industry by servicing our own market, then eventually servicing the international market.
Have you ever thought about the political risk to your business?
In terms of what is happening in the maritime industry and how politics plays into it, I think there are different business models that people pursue at different times. Anybody who has studied economics or even anthropology and development of society, when you have lowincome high growth countries at an early stage,