Engr. Emeka Okwuosa is the Chairman/Group CEO of Oilserv Group, an integrated conglomerate that straddles various sectors of the economy. Most of all, the flagship subsidiary – Oilserv Limited, engineering, procurement, construction, installation and commissioning (EPCIC) company, has distinguished itself in Nigeria’s energy space. It has competently handled projects thought impossible for an indigenous firm, which were delivered on schedules and within budgets.
In this interview with journalists, Okwuosa who is an honouree of the Commander of the Order of the Niger (CON) fields questions on issues in the oil and gas industry including security and funding constraints, challenges of the energy transition and the importance of major gas projects such as AKK and OB3 pipelines, petrol subsidy, recent Vanguard award of Energy Icon of the Year and his company’s corporate social responsibility activities, among others. EMEKA UGWUANYI reports.
Entrepreneurship in Nigeria is difficult in view of funding challenges and operating environment, how did you overcome this?
For funding, most of the projects we handle are not viable from the point of view of execution. So, to overcome such, it revolves around being robust in the way you take the mix of funding and how you get efficiency in the execution of your project to reduce your cost. But funding remains a problem in the industry and projects execution. However, by and large, Oilserv has distinguished itself by the fact that we have been able to prove ourselves in the industry and we have lower risk in raising funds as far as the financial institutions are concerned. But of course, the cost of fund remains the same and it’s still an issue.
As industry leader in gas expansion projects in Nigeria, what is your assessment of the gas sector?
The oil and gas sector has come a long way and what it means is that we have a more robust industry now with far more participation of Nigerians across board, that is, across industry’s value chain – exploration and production, service delivery and financial services, among others.
We have a more robust industry today than what we had previously and it has continued to grow since the enactment of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, which drives the local content capacity building. Nigerian Content Development and Monitoring Board (NCDMB), which manages the local content activities, I can say, has actually done a lot and is still doing more to build capacity. As you can see, the capacities in the service industry have improved tremendously because the service industry is the most important in the oil and gas industry value chain.
Enhancing the service industry is how you trickle down values in the industry to the economy of a country. So, a robust service industry means a lot of the value and is in basically developing and operating oil and gas facilities, as well as gas assets that are domiciled within the country. Remember, it’s not just about the ownership of these assets, it’s about the services rendered as you develop and keep running these assets.
So, we have come a long way. There is also a lot of participation of Nigerians in exploration and production (E&P) sector of the country’s economy and it has continued to grow. Of course, there are still some gaps in efficiency and gaps in the ability to deliver especially local participants. But there are reasons for these and there are also some of them which are not an issue.
What it means, in essence, is that Nigerians have grown a lot and with the coming up of the Petroleum Industry Act (PIA), which has been effective and being operationalized. You can now see us (Nigeria) with an NNPC that has transmitted to NNPC Limited. With all these implications, there are also much more implications in upstream operation than we previously had in the E&P industry as well as the service industry. So the bottom line is that the industry is getting more robust as we are adapting to best practices and at the same time we are adapting to changes in the world reflected around environmental, social and governance (ESG) requirements and that’s the way it is.
Currently, your major commitment is to the AKK project. What is the situation presently as there are insinuations in some quarters that the project is facing some financial challenges? Specifically, China, the main financier is said to have pulled out, what is the situation and how are you sourcing for funds to complete the project and when is the job expected to be completed?
The AKK project is a very crucial and important project. You may wish to know that the importance is underpinned by the fact that for us to develop as a country we need energy and the most abundant source of energy to Nigeria is gas and fortunately for us, we have a lot of gas reserves in the country.
For Nigeria, we have the energy but gas is meaningless if you cannot produce and transport it. Transportation is the most important because unlike petroleum products you cannot store gas very much, you need to move gas from the point of production to the point of utilization and be able to match the availability of gas to utilization of gas.
So AKK is a major part of the Nigerian gas master plan, the backbone of the transmission system of gas. As we speak, we have gone pretty far as the execution of the project is concerned. The AKK will be finalized and delivered this year as work is fully ongoing and we are working closely with NNPCL as the client to have it delivered.
The project is based on a build and transfers model. What it means is that the funding has to come from a partner. China was approached, negotiations were made, and NNPCL and the Federal Government met all the conditions to be able to secure the loan for the project.
Unfortunately, as we speak, nothing has come out of that, in terms of what China would bring. I am not in a position to state why, but all I can say is that all the requirements from us as a contractor for NNPCL as the owners of the project and from the Federal Government including the sovereign guarantee which the president signed and made available, everything needed by Nigeria was done.
Also I can tell you that irrespective of that, NNPCL has moved in to make sure that funding does not create a problem for the project. NNPCL has been funding this project from inception to navigate the negative impact of the non-availability of funding from China.
As I said earlier, I am not in the position to say why the China funding has not materialized. It’s not because Nigeria failed to do what it ought to do in line with the requirements for the Chinese funding. We did all that should be done and the project is moving smoothly. It is not hampered much by the non-availability of financing from China and that is where we are currently. And of course, in the future, we will see how it works.
What of project completion target?
As stated earlier, the project is going to be completed before the end of 2023, the project is ongoing and of course, we have had our fair share of setbacks, the most difficult was the COVID-19 period which impacted so much on the project.
If you recollect, there was a total lockdown from March to September of 2020 that impacted the project. Thereafter, the restriction of movements and travels also affected the project. But having said that, the other impact came from the huge flooding that happened in the last rainy season which cut off a lot of places where work were ongoing. It took about three months of waiting for the flood to recede before we could resume work. In some areas, we couldn’t have access to the areas we were working until December last year because of the flood. That is it.
Also, we are not oblivious of the coming election and we know how it works in Nigeria. Therefore, we are doing everything possible so that there will be no impact of the election period on the successful project completion target.
However, of course, we know few days before the election, we will not be able to work because of the restriction of movement. So, we are doing everything to mitigate it. Barring all of these, the project will be delivered in 2023.
How can Nigeria and maximize production and utilization of gas as energy transition fuel?
Well, it is said right that gas is what we call transition energy. Gas is in a position to enable us to meet some of the requirements of the framework of the environmental target. In sub-Saharan Africa and the developing world, you need gas to be able to develop because our needs are different from the developed world. With that, we have to adapt and that is why we are keeping in mind the requirements of the ESG targets.
What is your assessment of Nigeria’s commitment to gas industry expansion? What can the private sector do to encourage its growth?
Private sector involvement is key for any industrial development. Don’t forget that we have all decided that as far as the economic model is concerned that is what we are practicing in Nigeria. What it means is that private sector participation has to be involved in the market, industrial development, and economic development and that is how a country builds capacity.
Gas industry already has a lot of private participation from the building of the infrastructure to developing the capacity for utilization of gas. When you talk about utilization, you are talking of gas-based industries of all sorts from a power plant to basic industries that use gas to fire their boilers to heat in and all of that. So, the bottomline is that private sector participation is making a lot of difference in capacity building and that will continue to make a whole lot of difference. Nigeria today is seeing a lot of participation of the private sector in the gas industry and that will keep increasing in the foreseeable future.
Security remains key in the execution of pipeline infrastructure, how are you able to overcome this?
Well, security challenges like many other challenges are things we have to live with in our country. Every country and any country has one challenge or the other and Nigeria is not different.
We cannot wish away the security challenges. Of course, I am aware that the Federal Government, business operators, and individuals are all doing a lot to find a way out of these security challenges and we are hopeful that as we keep developing our democratic system we will over time reduce the occurrence and incidence of this security issues bedeviling the country.
But as of today, we live with it and we have to find ways to mitigate it as well as find ways of living our lives irrespective of what I can call the setbacks of this occurrence.
So, in the industry, we have methods and ways to mitigate the issues by working with security agencies and stakeholders to be able to continue executing and delivering our project even with these constraints.
For us, it’s a problem that already exists, but what I can say is that it is not stopping us from being positive and looking forward to making sure that we work to develop capacity in the oil and gas industry in Nigeria.
Don’t forget that in pipeline construction you are exposed to a lot of environmental problems because you go through every inch of the space by building the pipeline which means you are exposed to everything, not only security but to all manner of issues. But we deal with this because we have a methodology to work with.
On Subsidy and deregulation debacle, as an industry operator, how can we deal with this issue to grow the economy?
From industry and economic perspective, it’s no brainier for us to know that what we term as a subsidy is unsustainable. It disturbs the demand phenomenon, creates cabals, and creates inefficiency. Make no mistake, the facts remains that the less privileged welfare is the responsibility of the government and every government manages the country’s affairs in a way as to make life easier for its people who are at the lower ward of the economy.
But having said that, it has to be done smartly as subsidy is not the smart way of doing it and subsidy is not sustainable. You need to know that subsidy is consuming a lot of revenue of the country and making it impossible for the government’s good intentions and programmes to materialize as well as mitigate and reduce poverty.
Now, you find out why subsidy appears not to help people who are at the lower level of the economy, the bottom line is that it is impacting them negatively. Another way to look at it is that when we are talking about subsidy it is mainly on petrol. Automotive Gas Oil (AGO) also called diesel, is not subsidised. The question is who benefits more from petrol subsidy in Nigeria? They are those who have cars. Anybody who has a car is not a poor person and should be able to fuel the car. Otherwise the person won’t be able to drive the car.
The poor don’t drive cars. You may also make an argument that some of this premium motor spirit (PMS) popularly called petrol is used to fuel some transportation systems but remember that it is not in a very large proportion.
A big proportion of mass movement vehicles like buses are powered by diesel and of course as the country moves forward some of the buses would be driven by electric systems. So, the point is that processes can be put in place to reduce the rate of petrol-driven cars or vehicles for transportation while encouraging the use of electricity, gas and diesel.
In that way, you will find out that the petrol that is being used is majorly used for private transportation. However, when we get to that level I don’t see why there should be a subsidy. The money used for the subsidy, if you look at the budget for this year’s subsidy plan, will almost wipe out our entire revenue generated from the oil and gas activities. Who is losing, the answer is Nigeria because we want to help and lose as well.
For me, the subsidy should be quickly be removed but a mitigation system must be put in place and made in the short term to lessen the impact of those at the lower level of the economy. For the long term, we need to take action to make sure we are utilizing energy as against what we are doing in terms of transportation.
How did you receive the news of your nomination as the Vanguard Energy Icon of the Year? How would the award propel your to do more in your contribution to the economic growth of the country?
I am quite happy that Vanguard deemed me qualified for the nomination as the Energy Icon of the Year. I believe it is in recognition of my contribution to participating in the oil and gas industry, especially in building capacity across board.
The system I have built has very strong management efficiency. We have an employee base of close to two thousand people and we contribute a lot to the national economy in many ways. Of course, am not talking about our vendors and community and many stakeholders. What is important is that all these sum up the means of developing our country Nigeria.
As such, I am happy about this and all I will say it gives me more impetus to continue to work hard in developing these capacities and building up our capabilities in the oil and gas industry to make Nigeria better. I would say I am happy to receive the honour as I never expected it.
You’re known to have been doing great things through your philanthropic arm, what is the reason behind your philanthropy?
My philanthropic activities all underpin who I am as a person and my upbringing. I come from a family that has a strong family system and have done so much at various levels. They have encouraged philanthropic activities which I imbibed. My parents helped communities, helped people and like to impact positively on those around them and so that underpins my attitude as a person.
To have these philanthropic activities carried out in a more organized manner, I set up Sir Emeka Okwuosa Foundation. We have been involved in education since we started by offering scholarship at all levels from Primary to Secondary down to University both in Nigeria and Overseas.
We have also built a convent girl secondary school, the population of this school is more than three hundred and they are increasing. As of now, I think they are about four hundred in this session and they are increasing as we look forward to about six hundred and seven hundred. This will make a huge difference in the girl child education as well as providing quality education for the younger generation which will help develop the capacity for tomorrow to have future leaders that are well educated.
Also, we have been involved in the development of infrastructure within our immediate community in Anambra State and beyond. We built roads and drainage systems; we have built an erosion control system; we have built town halls to help people for better communication. We have gone ahead to undertake some projects that have completely impacted positively on the lives of people.
We have also built water delivery system, drilled boreholes and installed huge amount of storage system, and reticulation of this water to homes to enable them have clean water made available to local people.
Finally, we have set up and built a hospital. It is a cardiology hospital. This hospital is the first of its kind in the area and I’m talking of the South-East, Nigeria. It has state-of-the-art facilities and we are managing it with the support of a foundation that is based in Texas in the US.
The hospital was opened for operation in May last year. We had a medical programme where 25 open heart surgeries were executed and a few others catheterized. There were also specialized pediatric cardiology procedures.
So what we have achieved has not been done in Nigeria and the reason we are saying this is because it is known to us that generally, in a whole year, you need to do more than 50 open heart surgeries in Nigeria across the various hospitals that have the capacity.
But here, within ten days we did 25 and you may wish to know that all these individuals that had the operation done did not pay anything as it was free and we had 100 per cent successful surgeries. They are still following up for a medical check-up.
What we have done at our Foundation is to have a medical delivery system that will impact positively the health of people, individuals and the country at large. So, it goes to add to our philanthropic activities and the model of what we have in mind. It gives me joy and I hope we will be in a position to continue to do more and impact positively on the lives of people.
Can you tell us something about yourself and how it all started?
I was born 60 years ago in Oraifite, Ekwusigo Local Government Area of Anambra State. I attended the Community Boys Secondary School in the same town before proceeding to the University of Ife (now Obafemi Awolowo University) in Ile-Ife, Osun State where I bagged a degree in Electronics and Electrical Engineering in 1982.
I’ve travelled widely and worked in Europe (France and Scotland), North Africa (Libya), West Africa (Mauritania, Senegal, Côte d’Ivoire, Ghana), Gulf of Guinea/Central Africa (Nigeria, Benin, Cameroon, Gabon, Congo and Angola), and Indonesia in various capacities, ranging from field engineer to technical manager.
Oilserv Limited is my first entrepreneurial venture. It started operation fully in 1995 and worked exclusively for Shell for five years. It was incorporated on my return to Nigeria in 1994 propelled by the vision of building local capacity in Nigeria’s oil and gas technical services after working for Schlumberger Worldwide.
Oilserv started with building flowlines for Shell and eventually began building trunklines and pipelines for them, after which we delved into building facilities like manifold stations including the largest of such facility in Nigeria.
Our excellent performance with Shell, opened the gate of engagement with other international oil companies (IOCs) and for the Nigerian Liquefied Natural Gas Limited (NLNG) in maintaining their pipeline transmission systems. Our firm stands out for its strong technical deliverability.
