PRIORITIZING LOCAL CONTENT

Nigeria 2020 | GAS & POWER | VIP INTERVIEW

TBY talks to Lanre Runsewe, Group Chief Executive Officer of Rungas, on expertise, collaboration with other firms, and expectations for the coming years.

Rungas is involved across all areas in gas management. What are your main areas of expertise within LPG and CNG?

In order to do this question justice there is need to identify the various areas that we have involvement in across the entire value chain of gas in Nigeria. Quite simply we have categorised our activities into gas trading, cylinder manufacturing, and storage. As a business, we understand that to grow the LPG market in Nigeria (and Africa as a whole), we need to ensure that the right infrastructures are available for the gas to be used. This is why our focus from the onset has been cylinders – we have worked at ensuring that safe and compliant cylinders that are being produced in and for Nigeria meet all safety standards and are made accessible and available to all. Our cylinders are unique: they do not explode in fire, they have a shelf life of 30 years, they are 40% lighter than conventional steel cylinder (thereby easier to carry and handle) but most importantly they have a gauge that tells users how much gas is left. These features are what have led to the success of our cylinders in the Nigerian market. We supply oil companies like MRS and Forte Oil one of our biggest clients is OVH Energy (formerly Oando). We currently also supply ENYO Retail and Supply, Sublime Oil and Gas, Ultimate Gas, MOB Integrated Services and a few Government Bodies across Nigeria. We started to import cylinders with our Portuguese partner (Amtrol Alfa), who is currently the largest in the world after its merger with Worthington Industries of the USA. The starting point for importing was to ensure that we had all the regulatory licenses for Nigeria; the next hurdle was importing the cylinders and raising awareness by collaborating with 10 gas plants owners across Nigeria – to distribute our cylinders with their own gas. Our next steps was to ensure that would be able to access affordable gas for the masses – we achieved this by aligning with the Nigerian National Petroleum Corporation (NNPC) to procure gas in bulk at a cheaper price and this was how we commenced our trading activities within the Rungas group. We approached NNPC about revamping two of its strategically located facilities, and we now repair those facilities and supply gas there. That will help the country tremendously because there will be fewer trucks going to Apapa in Lagos for gas (as this area is congested). We continued to build our capacity in terms of volume so we are big on trading. We trade both domestic and export, and we do storage (both box storage and cylinder storage). Our engagement in gas will not only have financial and socio-cultural benefits for Nigeria, we also going to create a range of jobs across our manufacturing and support services from facilities all over Nigeria. In our support of the Local Content Act of Nigeria we will also be training 15 engineers in Europe to learn all elements of the technology involved in making our cylinders; they will in turn be responsible for training and all local staffs in our countries of operation.

Could you elaborate on your collaboration with the United Group of Egypt and your other projects in the pipeline?

Our first international exposure was as an exporter of natural gas liquids for NNPC. Going back to Egypt, Egypt has three manufacturing companies, all controlled by the National Organization for Military Production. It has been operating since the 1960s, but now imports CNG cylinders because many cars in Egypt use CNG. Thus, the government was interested in manufacturing these cylinders domestically. Because we had demonstrated we had the technology and explained our Nigerian experience in LPG, it joined us in a partnership to build a CNG plant. Rungas funded the partnership, while the government gave us the land and the regulatory backing we required to set up in Egypt. The company will be called Rungas Egypt. The Egypt market has opened up for us the Eastern African, North African, and Middle Eastern markets. We are already approved in Ghana, so we will supply cylinders in Ghana as soon as we start domestically producing in Nigeria. We are also going through the approval process in Cameroon and the Ivory Coast at the moment. Our agenda basically is to make this a project for the continent. In addition to the contracts that we have in place to supply cylinders to FORTE Oil and MRS Oil Nigeria; we were also given a separate contract to deploy skid tanks in all their stations across the country. We found a company in France that produces vending machines that allows individuals or customers to automatically exchange an empty cylinder for a filled cylinder—which would stop filling on site and unsafe practices that ensue at this locations. However, we had to go through a five-year process to get it approved, and by then, we discovered it was too costly for some people. Now, as part of our emerging strategy, we are looking at a different alternative which will be showcased across Nigeria in the very near future having been approved by government.

What is the private and public sector doing to contribute to making LPG more accessible in Nigerian homes?

In Nigeria in the LPG Industry we have associations, government agencies and private investors. All the bodies are working to deepen the saturation and use of LPG because of the numerous benefits associated with it. However more collaborations are needed to accelerate the uptake of LPG across Nigeria. Noteworthy Associations pushing for the use of LPG and adoption as the fuel of choice in Nigeria are the Nigeria Liquefied Petroleum Gas Association (NLPGA), the Lagos Chamber of Commerce & Industry (LPG Group) Women in LPG – Nigeria Chapter (WINLPG), the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM) and the Nigerian Content Development and Monitoring Board (NCDMB). As a company Rungas Group has been dealing with state governments who seek to implement programs but not everyone knows them. NTMBD has a clear focus to drive the LPG market by providing funding for local cylinder manufacturing. There is the Federal Executive Council, with a dedicated project management office headed by the vice-president, also set in place to deploy 5 million cylinders. People are definitely using gas, and we cannot drive the market without cylinders. Hence as a company our contribution to the growth of the LPG industry will be significant.

How do you envision the sector in the next five years?

As someone who has been involved in trading crude and gas, gas is the future, not just for cooking, but for power. It can be traded on international markets, and the finished product can be used for multiple purposes. Gasoline was the fuel that powered America; coal powered Europe, especially the UK; and crude oil powered China. I see gas as the fuel that will power Africa.

What are your key priorities for your company in 2020?

My key priorities are to use our Egypt project as a stepping point to import CNG cylinders to other parts of Africa. Once we have the local manufacturing in place and fully operational, the next step is making it affordable and spreading the use of composite cylinders as a way of encouraging the use of cleaner fuels. People are afraid that these traditional steel cylinders will explode. Once you provide packaging that is cleaner and safer, it will give people more confidence in the product. As a business, we also have the Rungas Foundation, which puts 1% of our profits into funds for projects connected to food banks in three regions of Nigeria. We started with three key areas where we can provide basics—like soup, bread, indomie and water. We are also linked to and support organizations such as the Gas to Health initiative, which gives out free cylinders for rural people cooking on roadsides. As a company—we believe in gas and are doing all we can to make it the fuel of choice in Nigeria and Africa as a whole.