SELF SUFFICIENCY
TBY talks to Tayo-Adiatu Adeyemi, Managing Director of Tulcan Energy Resources Limited, on the evolution of the company's operations, the need to develop a robust downstream sector, and the opportunities in the sector.
BIOGRAPHY
Tayo-Adiatu Adeyemi is an astute businessman with over 20 years of productive experience. He holds a bachelor’s degree in pure and applied chemistry as well as an MBA marketing degree from Ladoke Akintola University of Technology. He is a member of professional bodies such as ASME, SCSN, and CSN. He currently runs the Owner/President Management (OPM) program at the Harvard Business School in Boston.What were the main drivers behind the establishment of Tulcan in the downstream energy sector?
Prior to Tulcan, I worked with Negris Limited, an oil and gas service company. My experience in Negris attracted me to the oil and gas industry. In 2010, after my MBA program, I approached a friend for partnership and support to set up a company. We decided to start with trading in the downstream sector, which was less regulated. Tulcan Energy Resources Limited was registered in 2011. Downstream operations require extensive experience, funding and asset ownership to support and enhance reasonable trading and we have done well. We transitioned from bulk buying and depot allocation trading to becoming an importer with a focus on the local market. We started working with licensed depot owners to get direct allocations from Pipelines and Products Marketing Company (PPMC), which has allocations for almost 6 million liters monthly. At the moment, we actively import approximately 20,000-40,000MT of products per month. Although it was not easy to obtain licenses, permits, funding, and bank lines to execute the import, we managed to get it done all the same.
Nigeria relies heavily on foreign countries when it comes to finished, refined products. What is your vision for the sector to become self-sufficient?
A solution is on the way, though it may not be enough. Nigeria has great potential; however, its refineries are not working efficiently enough to meet the needs of such a heavily populated country. A recent solution in the pipeline is the Dangote Refinery, which might come on-stream in 2018/2019 or 2020. We are working to see where we can collaborate with refineries and help them get the products out. It is competitive; however, we are working out a structure where we can play a role in supporting refineries by buying some of the refined products and blending them further. It is doable, though it will take a great deal of persuasion and strategies. In that way, we can play the role of an important distributor. One day, perhaps we may not need to import anything if we are able to put all of the products we are already producing to excellent use, thereby becoming exporters as a nation. The simple model we seek to work on is either being able to use enough raw material directly or synergizing between companies to make sure we get what we need. If we achieve that as a company and other companies do as well, Nigeria will export more than it imports. If we can locally refine enough products for the local market, it goes without saying that the scale of operations will be large enough to then export as well. That is where we would like to operate, as a company and as a nation.
What is it like to do business in the downstream sector in Nigeria?
It is challenging and extremely tough, though it is interesting as well. The challenge is to gain a place in the market, and there are many steps to take before companies can have access to imports. There is a great deal of regulations and government bureaucracy to pass before a company can be approved. Furthermore, bank support is also extremely necessary. If companies have the integrity and transparency to convince a bank, they must also demonstrate that they operate with best practices and certain standards. Getting all of that in place is challenging. However, if the company is set up well to do business, it will not see many problems. In fact, there is plenty of room to capitalize on opportunities in Nigeria and expand to other points of Africa from here. We have a great deal of credibility by operating in Nigeria, and that is exportable to the East African Community (EAC), which we are exploring at the moment.
SELF SUFFICIENCY
TABLE OF CONTENTS
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