LOCAL COMPANIES

Nigeria 2018 | ENERGY | B2B

With investments and activity picking up again, companies are optimistic that growth is around the corner.

Gerardo Della Santa
GERARDO DELLA SANTA
Managing Director
Alcon Nigeria Limited
Tunde Ajala
TUNDE AJALA
Founding Executive Director
Dovewell Oilfield Services Limited

Can you update us on the company's operations and major projects in the last year?

GERARDO DELLA SANTA We are currently active in eight projects, two of which are in the power sector. One is the 460MW Azura power plant in Benin City, Edo State, which we are working on with Siemens. The other is Afam III, which we are working on with GE and is almost complete. This is in Okoloma Community on the outskirts of Port Harcourt. In addition to power, we have the Forcados Yokri Integrated Project (FYIP) plant, where we have two stations, an oil and gas field, and a refining station. The FYIP plant is one of the largest fields in a swamp area, and we are working on the north bank and the central processing facilities. We also have three other projects in Bonny Island. In December 2017, we completed SOKU K2S for Shell and are under the warranty period. Shell is one of our largest clients.

TUNDE AJALA The country is trying to stabilize; we have a government that seeks to set guidelines that were not in place before. There was instability with the naira foreign exchange in the last year, though the situation has gradually improved. The president has all the cabinet in place and everything is running smoothly. The crude oil price is stable, not falling as it was before. In 2016, the financial budget for oil and gas was not even established yet. Dovewell Oilfield Services Limited is doing better now compared to a year ago and has several engagements in major projects and maintenance contracts with IOCs. Since the oil price has stabilized, there is capital budget approval for new projects by NNPC, and some ongoing projects are progressing due to availability of project funds. Project execution has helped the economy as a whole and in regard to profit for the organization.

What is your assessment of the oil and gas industry in Nigeria today, and what challenges do companies in the sector face?

GDS Nigeria is not yet completely out of recession, even if there are estimates of 3.5% growth in 2018. These percentages do not always reflect the reality, though we are optimistic that 2018 will be a better year than 2016 and 2017. Alcon has about USD750 million in offers already presented to our different clients in infrastructure, oil and gas, and others. This is no small amount considering that the award of just 10-15% to Alcon will be significant, especially in the prevailing economy. Since I assumed the position of Managing Director, we have submitted four major bids and have won three of them. For a company such as ours that is familiar with the market, the major challenge is finance. Financial institutions charge high interest rates on loans, reducing profit margins and mark-up windows. A resolute way to deal with this is to obtain financing from outside, which we have done through a local bank that has access to the UK financial market. This way, we are able to get a slightly lower interest rate.

TA I foresee an increase in profitability, which has fallen as a result of insecurity. The nation and the president are moving toward diversification. The industry as a whole will be important in the future. For example, the gas sector has not been capitalized to the level it could be, and there is a great deal of potential there. Many other elements have not been capitalized to their best, resulting in huge revenue generation. There is a great future in the energy industry because of the gas projects that have not been developed fully. Regarding the challenges for the industry, they include insecurity in the Niger Delta, non-implementation of capital projects, project funding, and government policies. The lack of adequate government funding is the reason why we have not been able to embark on gas projects. If there are no strong policies in place, international players will not be willing to invest billions of dollars, unless safety can be guaranteed. Even when policies are in place, they are not effectively implemented or regulated. Also, having more refineries will help the sector and the country.