In the 2015 interview, Oluseyi Makinde stated that Makon Engineering and Technical Services Limited operated in an environment dominated by foreign companies. Has your clientele changed as indigenous companies like yours increased their contribution to the industry?
Increased participation of indigenous companies in the oil and gas sector is a government initiative through the local content philosophy (Nigerian Content Development and Monitoring Board) however, progress has been slow as pointed out by Engineer, Oluseyi Makinde. For Makon, our clientele has remained essentially the same over the past years. SPDC novated some of the contracts, one of which was with Eroton Exploration and Production Company Limited, and another was Nigerian Petroleum Development Company with ND Western as Joint Venture Partner. The composition of our clients is still skewed towards International Oil Companies and local indigenous Exploration and Production players. We bid for projects with both local and international companies, for example we are working hard to be part of major players for Nigeria LNG's Train 7 project, which would be a major deal for us.
Last year, Makon's Managing Director, Oluseyi Makinde, told TBY he expected 2018 to be a good year for indigenous companies once all debts had been repaid. How was last year for Makon Group?
2018 was a better year for us at MAKON. I understand by my training that debt is cheaper than equity, therefore we utilize debts as a tool for business growth. We are committed to keep servicing our debt. 2017 was a rough year, where we could not conclude many of our projects due to cash call challenge, but in 2018 we made remarkable progress with projects such as Egbema NAG/AG Gas plants, Ughelli East, Ughelli West and Utorogu Gas Projects (3Us) which will remove flares from different flow stations. We also progress NLNG Central Control Room upgrade project near completion. We ensured very consistent and steady growth. Previously concluded projects such as Utorogu NAG2 for ND Western/NPDC JV which delivers 150 million standard cubic feet per day (MMscfd), are kept up and running among other projects
Can you elaborate on your projects?
Our major projects involve installation of gas handling and processing plants. Nigeria flares a lot of gas which is a drain on the economy as well as being hazardous to the environment and lives, therefore the decision to reverse this trend. We have contributed significantly in this regard. We have the Utorogu NAG2, 150MMscfd natural gas handling and processing facility, the Bonny AG, 5MMscfd gas project, and the Adibawa AG, 5MMscfd gas project. Other projects such as Alakiri Non Associated Gas, Egbema Associated Gas and Non Associated Gas processing plants and Ughelli East, Ughelli West and Utorogu Plants are in process at different stages of completion.
To what extent does gas factor into your operations?
At the commencement of our operations, we started with metering contracts, we have since scaled up as an EPICOM company with our foot print majorly in the building of gas plants; we are twenty one years this year in the Oil and Gas Industry. The shift from being an Automation, Instrumentation and Controls company to an EPICOM is as a result of the vision of the pioneer Group Managing Director, Oluseyi Makinde, whose ambition is to have an organization that can be benchmarked to international standards, true to that dream, MAKON is ISO 9001:2015, ISO 14001:2015 & OHSAS 18001:2007 certified.
How challenging has it been to deal with high interest rates and inflation rates?
Our contracts are denominated in naira and dollars. For the dollar component, interest rates are near single-digit, and we try not to be particularly exposed to naira because rates can be volatile.
Going forward, will debt continue to fund further growth?
Like I said earlier debt is cheaper than equity, so we will still depend on debt for our operations, as a private company we endeavor to be prudent to keep our cost at reasonable levels. I will not be able to disclose to you if we are considering being listed on the stock exchange right now.
How do you assess investment sentiment and activity in Nigeria's oil and gas sector?
There is a lot going on in the industry. The government is determined to reduce the burden on its cash calls; this is made clear in the budget assumptions, and we expect that the move will result in public private partnership in a bid to self-fund projects. I feel excited by this move because it would afford creativity in our approach to business. That's why we see much on the horizon for us, making time for strategic thinking and paying attention to what the government has planned for the rest of the year. There are so many upcoming projects in gas, which is our area of focus. Moreover, Nigeria still has an estimated 165 trillion standard cubic feet of gas including 75.4 trillion standard cubic feet of non-associated gas. We certainly have ample opportunity for our operations within the country.
What contribution do you make to reducing gas flaring in Nigeria?
Enormous, from the listed plants built by us we have a cumulative reduction of 300mmscfd of NAG and 15mmscfd of AG per day reduction in gas flare.
What's your expectation for 2019?
I foresee a bright future. Our slogan is “consolidate and expand," and we are looking to complete three major projects in 2019, with the possibility of signing on additional contracts. We want to ensure better brand visibility. We currently have a very good and strong brand which we intend to leverage on for better growth. We have a very strong workforce with tremendous competence in-house. We will also seek strategic partnership in areas where it is considered necessary. We are a local company with a global perspective.