SPECIAL ISSUE JULY 2015
SPECIAL FOCUS: HYUNDAI CONSTRUCTION EQUIPMENT ENGR. EMEKA EZEH, DG, BPP SPEAKS ON PROCUREMENT STANDARDS UNA & ASSOCIATES SET STANDARD
OIL AND GAS REPORT: TECHNO OIL’S NEW DEAL INCORPORATING
OIL AND GAS REPORT
OIL Will the indigenous players take the plunge? Consulting + Outsourcing www.natafamdavidconsulting.com
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KNOWING HOW TO BUILD A TEAM MAKE YOUR DAY BETTER
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5 LEADERSHIP SECRETS BANKING REPORTS
ALH. ALIKO DANGOTE, CHAIRMAN, DANGOTE GROUP
Building business bridges across the continent
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4 | CED Magazine June 2014
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INDUSTRY INTERVIEW amenities that makes life a little better for all to live. The policy issues as regards your operations. Educate all would be project bidders. Basically, the idea of procurement require that when you consider you're to be in a sector, it is expected that you must have complied with the basic requirement of being a good corporate citizen first of all you must have legal existence, you must be incorporated or otherwise corporate affair commission would have established you as entity to do business in a particular sector. And once that one has been established, and then you are expected to comply with issues that have to do with pension, ITF and pay all our taxes. These are the things that you need to have to give you the moral and legal authority to allow you to participate in public bidding. When you have established yourself to be operating in the construction sector as consultants or contractor. You can then register with the cooperate affairs and be verified online through the BPP online portal which will verify your claims using the method established after which you can be classified depending on your claims of sector you have worked or wish to operate in if the your have the capacity and capability. It will be thoroughly verified anyway by our team. The classification is to make it easier to know those to be expected when jobs are advertised by ministries and government agencies. Whatever you get from there becomes the price, you can then respond to advertisement. For instance, as a
professional with all the knowledge acquired on how to build road will not be qualified because I do not have the facility, equipment and man power to build the road. And if along the line the individual has done something wrong, there will be petition through the normal process that has been provided for such, and what is the process? There is need to inform the agency that you believe something has gone wrong somewhere, and the agency have no option than to reply within 15 days. It is not discretional but compulsorily you must be given reasons why you were not successful in the bidding. And thereafter, if he gives you or he doesn't within a particular time, or he gives you and you are not satisfied, you can then come to us as regulators, once we get a complaint from you, and we are satisfied that you followed the laid down procedure we will now intervene by asking the agency, by writing that we received a complaint from XYZ and we are satisfied that XYZ met the required procedure and that there should suspend any further action, so we can the agency's your own opinion, because you must also give them fare hearing and depending on the outcome of what you say, we can now intervene either to uphold the ministry's position or the contractor's petition or something else can happen. That is exactly the way it is in procurement processes. What are the roles you have played so far for the government as a professional Engineer? Because I'm an Engineer, it is easy for me to see when wrong thing is done. And
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many a times, that has pinched me against my professional colleagues. Because where the untrained eyes can't see, I can see. Because there is this saying "that you need to understand the sector to know when there is success in it and try the risk in the sector". And I am an engineer and active participant in the profession; I know where and when certain things are done wrong. And that is not always in the interest of my colleagues who naturally will want to get away with huge sums of money. I'm not particularly liked by my colleagues and friends, in fact I've lost a lot of them, some of them are so caustic in their remarks about me, and it has to go with the job. It is better you don't do the wrong thing to make a friend or to keep one. If you want to be a jolly good fellow, then you will be dishing out favour to people and be the nice guy, unfortunately, I'm not that kind of person. I would rather be alone than be in company of people whose value and my value don't come inline together. In the issue of policies where they land many policies to various sectors, health sectors for instance, many times government institutes will go and procure all kind of medical g over nment institutions will go and procure all kind of medical equipment that would hardly last for six months and will develop a policy working with the ministry of health and all other regulators to develop a hand book of policy on procurement, isolate to hospital equipment. This is basically to ensure that only equipment that has durability is procured. And we have done the same for the auto industry
OIL WILL INDIGENOUS PLAYERS TAKE THE PLUNGE? With the passage of Local Content Bill into law in 2010, indigenous companies started to record bold feat in the oil and gas industry, previously dominated by the International Oil Companies, IOCs. CED Magazine reports that many of
30 SPECIAL INDUSTRY INTERVIEW SETTING PROCUREMENT STANDARS In an Exclusive Interview with CED Magazine, Engr. Emeka Muomah Ezeh, FNSE, FNAE, DG, Bureau of Public Procurement (BPP), Bears His Mind on the Need for Professionals in the Country to Embrace Accountability and Transparency as the Agency Preaches.
SPECIAL FOCUS: HYUNDAI HEAVY EQUIPMENT
STRONG, DURABLE IN DESIGN AND PERFORMANCE Hyundai Heavy Equipments and machines are different in design and built with specifications that can fit into all variations from the ones being exported to Europe and America says Omar Alkalaani,
CED PROPERTY SETTING GROWTH PATH Professional Builders at the 45th Annual General Meeting 2015 at Ibadan, Oyo State, set growth path for the construction industry
www.cedmagazineng.com July 2015 | 3
DEPARTMENTS OIL AND GAS REPORT
23 LEADING WOMAN Mrs. Nkech Obi, Chief Executive of Techno Oil is taking the firm to greater height with the coming of the LPG Plant wit a target of 5m LPG Cylinder yearly.
The world market is dominated by five lift makers: Kone, Otis, Thyssen, Schindler and Fujitech. However, many medium sized lift and elevators manufacturers such as Mitsulift, Isuzu, etc are
23 BEAUTIFUL BRIDE India’s appetite for West African Crude oil grades sees big boost
24 SAVING THE ENVIRONMENT According to the Mrs. Nkechi Obi, Executive Vice-Chair of Techno Oil, a major player in the oil and gas industry, adequate us of LPG will check environmental degradation 32 ENGINEERING Q & A SETTING PRACTICE STANDARDS NIQS urges local materials, private sector-driven housing market
SPECIAL FEATURES 44 TELECOMS DRIVING TELECOMS” GROWTH Broadband penetration to drive Nigeria’s GDP growth 28 CONSTRUCTION INNOVATION RE-ENGINEERING PRACTICE 8 reasons why the global construction industry needs to Innovate 39 ISSUES BATTLING THE ODD Effects and remedies of falling oil price in Nigeria 34 DEVELOPMENT SMART SHELTER Anew-age smart home is an integration of automation services with the digital and electrical infrastructure of buildings as reported by CW
45 DESIGN TECHNOLOGY BOOMING VERTICAL TRANSPORT MARKET 4 | www.cedmagazineng.com July 2015
9 CORPORATE STRATEGY RAISING THE BAR The NIS ISO 9001:2008 Certificate Award to Una & Associates has placed the firm as front runners in the Estate Surveying and Valuation practice. 11 NEWS EXTRA POTENTIAL FOR GROWTH Africa’s richest man, Alh. Aliko Dangote, President, Dangote Group,predicts rapid industrial growth in East Africa
ith the acceleration of the urbanization process within the last few years in Nigeria's real estate sector, the elevator industry will keep experiencing a forward thrust, which will persist in Nigeria for the foreseeable future. The world market is dominated by five lift makers: Kone, Otis, Thyssen, Schindler and Fujitech. However, many medium sized lift and elevators manufacturers such as Mitsulift, Isuzu, etc are consistently pushing for dominance in the African market. The market can be divided into four main sectors: Installation, Modernization and refurbishment; repair and maintenance; and export orders. Installations has consistently accounted for 40-43% of the market, while maintenance and repair takes the second place with 38 40% of the market. Modernization and refurbishment is also a significant contributor to the global market with a 16-18% share. The market is quite competitive as lift and elevator contractors are responding by absorbing inflationary costs, reducing operating overheads and cutting the price of their products, which have come down in real terms. According to Technavio's analysts report on the Nigerian Elevators and Escalators market over the period of 2012 - 2016, growth in the industry is expected to be at about 12-75%. The presence of new generation vertical transport equipments and the increase in construction activities are major contributors to this market growth. However, change in customers' preference could pose a challenge to the growth of this market. The key vendors dominating the Nigerian market space include KONE Corporation, Mitsubuishi Electric Corporation, Otis
Elevators Company Ltd, and Koyo Elevators Company Ltd. Each of these vendors are constantly developing and rebranding to further suit the customers' changing needs. In fact, some Japanese brands are beginning to look at installing toilets in elevators and providing an emergency supply of drinking water for people trapped by the nation's incessant power failure. The industry, in common with many other industries, is constantly refining its product ranges in response to advances in technology, the demand of their customers and changes in policy regulation. In terms of customer demand, and the disability discrimination act, all building owners and occupiers are required to make the structures accessible to persons with any form of disability. This has helped the disabled persons get access to modern structures/facilities, as these building owners and managers need to comply with the disability discrimination act 1995 passed by the 6th national assembly. As a result of this action, the elevator market in Nigeria now encourages a healthy competition, and is on the path of bring a source of economic prosperity for the nation. Construction activities are constantly on the rise, and the emergence of high rise buildings has made the installation and maintenance services of elevators and escalators very expedient. Many prominent elevator engineering companies are being represented in Nigeria, and have been able to secure the hearts of the high end populace with different strategic maintenance schemes. Most of them believe that Nigeria is filled with opportunities for vertical construction as the construction environment is embracing international building standards and practices and therefore encourages more indigenous and foreign investors to participate in the sector. As much as the industry has the capability to be an engine driven of growth for the national economy, this dream can only be achieved under the right policy regulations, best global practices in construction, more indigenous participation and an infrastructure friendly environment.
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DRIVING TELCOMS’ GROWTH 'Broadband penetration to drive Nigeria's GDP growth’
VAILABILITY of broadband and stakeholders to jointly address the its penetration in Nigeria would challenges of low broadband penetration play a major role in further growing as a community of concerned parties with the country's Gross Domestic Product benefits from improvement poised to (GDP). This was the view of the Chief accrue to all. "The Broadband Summit Executive Officer, MainOne Cables, Ms. provides a platform for the telecoms Funke Opeke, recently at a broadband industry to articulate its perspectives on summit in Lagos. Nigeria's GDP, after the the landscape, and devise strategies that rebasing is said to about N80.2 trillion (or will hasten Broadband penetration in Nigeria. $510 billion). We are excited to bring the industry Currently, with an investment of about $7 billion in the landing of about five together in partnership with BusinessDay submarine cable system and several towards the achievement of this critical logistics around them in Nigeria, developmental objective for Nigeria", she broadband penetration is still at a meagre said. She called on all stakeholders in the 10 per cent. These facilities are adjudged to have industry and the government to take about 19.2 terabytes and over 340 necessary steps towards achieving the Gigabytes bandwidth capacities, but massive infrastructure rollout required to utilizations have witnessed less than 10 per bring broadband services to more cent Opeke, at the summit with the theme: Nigerians, stressing the role of broadband in driving GDP growth in the "Driving Accelerated economies of developing Broadband Penetration in countries. N i g e r i a " , o r g a n i z e d by In his comments, MainOne in conjunction with BusinessDay Publisher, BusinessDay Media, urged for Frank Aigbogun, said the further collaboration in the choice of MainOne as the industry in order to provide host for this year's b r o a d b a n d c o n n e c t iv i t y Broadband Forum was easy services to more of the given the company's Nigerian populace. reputation as a foremost She noted the need for Ms. Funke Opeke 44 | www.cedmagazineng.com July 2015
organization in the broadband landscape in Nigeria and what the company had achieved over the past five years. Already, the General Manager, Corporate Services, MTN Nigeria, Funmi Onajide, has stressed that Nigeria's telecommunications sector will need to have access to sufficient spectrum frequencies, if broadband penetration must be depeened in the country. In an email chat with The Guardian, Onajide, said a major challenge is the unresolved issues pertaining to spectrum. Onajide, citing examples, said licenses for 4G spectrum have still not been issued by government. She added that there was need for more investment in metropolitan and national fibre by the Information and Communications Technology (ICT) industry. "As you are aware, a large part of the challenge in this regard is the lingering difficulties with Right of Way permits and the associated bureaucratic bottle necks. When all these have been done, and 4G is mainstreamed, then we are in for great things in Nigeria", she stressed. She disclosed that multiple taxation and other operational challenges have had negative impacts on penetration. Nigeria currently has 10 per cent broadband penetration. Onajide explained that taxation alters incentives for production and consumption, "and so economic distortions will be prevalent where the burden of taxation is high. The burden is subsequently transferred to end users, which makes costs higher and affordability slows penetration. In view of this, there is the urgent need to address imposition of unstructured fees and charges by the various labels of government and service interruptions arising from collection attempts". On the impact of National Broadband Plan on penetration strategies in the country, the MTN Nigeria's chief, said the broadband plan is a most forward-looking and progressive instrument. According to her, the right policy framework is a critical issue, "but it cannot be taken in isolation because it is only when the enabling environment and the necessary resources are put in place that the true promise of the digital future and digital economy would be realized. So essentially, the key challeng e is implementation, and the urgent resolution of some of the challenges raised on spectrum availability.”
NEW DAWN FOR INDIGENOUS PLAYERS?
"The indigenous Nigerian companies have been presented with the opportunity to develop local operatorship capacity as well as boost
or the past 50 years, there has been endless discussions on the need for Nigerian investors to take up active role in the lucrative but highly technical oil and gas industry, and several governments of all political positions, including the military government have toiled with several policies. After several decades of being dominated by multinationals, Nigeria's petroleum industry is seeing increasing participation by local operators. Indigenous companies have purchased billions worth of assets from firms such as Eni, Shell, Chevron and Total in the past five years. Shell, along with many other oil majors is going through a broad process of asset sales in the country in an effort to cut costs and boost profits. Other companies, including Total, Eni, Chevron and ConocoPhillips, are divesting from Nigeria's oil and gas sector, which has been plagued by rising oil spills, sabotage and industrial-scale theft from Nigerian wells and pipelines of up to 150,000 barrels a day. Shell recently sold its 30 per cent shares in four oil blocks in the Niger Delta - Oil Mining Licence (OML) 18, 24, 25, 29 - as well as a key pipeline, the Nembe Creek Trunk Line. Oando's $1.79 billion purchase of ConocoPhillips' Nigerian interests, and other indigenous companies like Seplat, Afren have mustard courage to acquire many of the assets that where hitherto controlled by International Oil Companies (IOCs). Aiteo's recent purchase of some IOCs assets and its ability to create a niche for itself in the country's oil and gas industry, has been described as a major breakthrough for indigenous operators in the country. Aiteo is one of Africa's fastest-growing energy leaders. "An integrated energy group with a clear vision for the future and the experience and assets necessary to provide oil and gas on a regional and global scale. The company discover, produce, store and deliver energy resources to marketplaces worldwide. "Furthermore, Aiteo is working on opportunities to responsibly develop energy resources in some of the world's most significant basins, including the huge potential of the Niger Delta basin in West Africa's offshore fields, and of the Benue Trough", it said. According to the company, it is strategically focused with major prospects for immediate revenue growth and market penetration through exploration and production, bulk petroleum storage, refining of petroleum products, trading, marketing and supply and power generation and distribution. "Each of these areas holds massive potential, with global focus on the future of energy generation, significant oil and gas reserves still to be found throughout Africa, and a large number of alternative revenue streams to be found in the refinement of different petroleum products and derivatives", it added. The former Minister of Petroleum Resources, Diezani Alison-Madueke, stated earlier in the year that the divestments by IOCs is a blessing to indigenous operators in the petroleum industry.
Alison-Madueke, noted that the trend actually provides opportunity for indigenous oil and gas companies to become active players in the upstream sub-sector of the industry. She explained that with the divestments, indigenous oil and gas companies now have opportunity to acquire the assets being divested as springboard for the development of local capacity. The minister stated that the divestments by the IOCs were creating opportunities for indigenous oil and gas companies to partake of the upstream sector of the industry and grow capacity. "She also, while trying to ally the apprehension by investors that the spate of divestments would not lead to crisis in the nation's oil and gas industry, rather the divestment by the majors is changing the onshore corporate landscape and creating material brownfield opportunities for upstream players looking to enter the Nigerian upstream space. She observed that the divesting IOCs were not leaving the country but only shifting their focus from onshore to the more challenging frontiers of deep offshore which currently accounts for 60% of Nigeria's production. "The IOCs remain very much present in Nigeria. Shell still retains ownership of 34 onshore blocks while Total, ExxonMobil, and Chevron are still committing large amounts of capital to assets offshore Nigeria," she explained. The development, according to Alison-Madueke while highlighting the opportunities inherent in the divestment: "The indigenous Nigerian companies have been presented with the opportunity to develop local operatorship capacity as well as boost local production and consequently grow into major upstream players". She cited the Nigerian Petroleum Development Company (NPDC), the upstream subsidiary of the Nigerian National Petroleum Corporation (NNPC), as an example of indigenous Nigerian company that has tapped into the opportunity provided by the divestment to transform from a small time player with a production of 60,000 barrels per day (bpd) in 2007 to a mid-size player with a current production of over 140,000 bpd through the assignment of 55% equity in 8 divested blocks. She disclosed that NPDC has grown to become the biggest producer and supplier of gas to the domestic market through its aggressive development of the assets assigned to it from the divestment process, adding that the Federal Government was ready to strengthen and support the company toachieve its medium term objective. NOW THIS The fall in oil price globally is seriously affecting major producers of the product, including Nigeria and the lending agencies are not lying low in their resolve to get back the loan given to these firms. It is apparent that indigenous players will not to get back to the drawing board to work on their business strategies and financials to ensure to current development does not end up hurting Nigeria’s economy the more. This form the basis for our cover story this month. We hope that the Indigenous players will not take the plunge.
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ISSUES countries as it would lead to lower oil revenues for our country. Vis-à-vis, the low oil price would lead to a depreciation of our currency, negatively impacting our economy. Emphatically, with about 70 percent dependency on crude oil for external revenue, the drop in world oil prices is tremendously affecting the Nigerian business space. From the look of things, it is posited that the persistence of the oil price crises may lead to lower GDP growth and higher unemployment in the nation and other oil-rich countries across the globe. Fingering of politics in oil in Nigeria Globally, the evidence of the corruptible finger of politics, though detestable, has been detected to be meddling with the affairs of oil even in the national context. Notably, the hesitance of OPEC, of a cartel of oil producers, to agreeably intervene and stabilize prices and output levels of oil production is descried to have to some political taints at an international level. Rather than stepping in to still the stormy weather of the oil industry by working t to push prices back up by limiting production to balance price, it is espied by some oil executives that the Saudis want to hurt Russia and Iran, and so does the United States. However, the efficacy of fuel crises is quite delicate and major as almost anything that affects oil resolves and revolves to affect the world's economy. We ought not to forget so quick that in the 1980s, the downslope in oil price did help bring down the Soviet Union As such, oil talk is quite economical sensitive and generally impacting therefore cannot be easily shaded by political shadows being thrown at it, national and across the borders. Recently on the Nigerian periscope , the Former Governor of Lagos State, Alhaji Bola Tinubu, in an essay on "Slump in Oil Prices: A Progressive Way Out'', in response
SMART SHELTER their homes as a retreat and like to be in control of the ambience that suits their moods, personalities and occasions,¨ says Sumit Joshi, Marketing Head, Philips Lighting India. He highlights some of the company´s popular smart home lighting solutions: " LivingColors: An innovative table lamp that can match lighting with moods by bathing rooms in truly personal colours. It lets you create dynamic home ambiences by 6 | www.cedmagazineng.com July 2015
to Federal government resolution to adopt austerity measures as a way to curb the effect of dwindling oil prices on the economy argued that the austerity measures proposed by the government would further enrich the affluent, fastening the grip of the wealthy on the economy, while weakening the position of the middle class and the poor-as a result, put average Nigerians into more hardship and economic depression. Conclusion Conclusively, the confounding reality of the jeopardize oil industry is that it may end-up reverting the world and our nation economy to a sea-bottom level of recession. Today, the oil industry is quite vulnerable to price decline compared with what it was during the previous five or 10 years. As such, unless the industry takes a different well structured and nurtured approach, investors and the oil companies or countries might meet their economic waterloo which can be tantamount to an absolute catastrophic economic disaster. As such, the options of divestment and merger cannot be over-emphasized as they have been identified as the few possible, effective and efficient ways for the gasping breath companies in the industry to regain strength from their fainting state (particularly financially) , since the industry's reliant on high-cost projects, including offshore drilling and oil extraction or exploration. Auspiciously, oil investors or companies, globally and nationally, by tapping into the effective options merger and divestment can better contain and mitigate the consequential cancellation of drilling projects, significant reductions in oil investment, hurrying of asset sale programme, retrenching of workforce and suspending/cutting dividends paymentsall of which are due to the high cost operations and exploration the oil industry is inevitably dependent upon. giving access to 16 million colours. " Philips Dynalite: This range consists of concealed ´controllers´ to which lighting and other loads are connected, ´user interfaces´ that give customers the power to interact with the system and ´integration devices´ that connect your home´s services so they communicate and perform seamlessly as one. These solutions ensure lights are only used when needed, at a level that minimises energy consumption, without disturbing
Increasingly, divestment and merger is sounding more and more like the smart play for investors as both approaches or doctrines have been greatly admissible in the oil industry in enabling the cushioning of the economy from exogenous shocks by attaining the required resilience needful to surmounting any price or economic resistance, bearing in mind that the reliance of the industry on high cost and budget is inseparable. In recapitulating, these options also enhance and invigorate the chances and conduciveness for indigenous oil companies and investors in Nigeria to have access to control and management of oil assets and operations. The indigenous control and management gained would in turn result in a positive shift for the Nigerian economy as we would have an upper edge in stabilizing price. That is, the local ownership and management of the oil assets would further solidify the independency of our national economy thereby ameliorating and stabilizing our grossly devalued Naira against other international currencies. Notably, French oil giant Total, commendable for demonstrating an hallmark of resilience in Nigeria has continued investment and operation in the country despite the unfavorable and harsh economic and political environment, especially that of the falling oil price and political instability. The survival and youthful mechanism repeatedly adopted by this company in face of the crumbling oil economy is sourced from the option of divestment among others. In closing, in performing the hemostasis processes to clot the blood the bleeding of the oil industry, renew/replenish the economy cartilages and tendons of the falling apart oil companies and rebuild the bones of national and international oil economy, the options of merger and divestment seem to be our cotton wool and iodine. comfort. Quick Bytes " Smart components: Integrated systems of lighting, security, HVAC, home theatre, wireless PC networks, etc. " Makers of smart homes include prominent members of the builder fraternity. " Big takers include the youth and audience especially in the IT & ITeS sector; but elderly desist. " Cost var y depending on components. www.cedmagazineng.com July 2015 | 43
ISSUES recapitalization (merger) was compelled by a governmental reform in the banking industry, the merger being experienced in the oil industries (particularly with small oil producers) is as a result of the falling oil price that has pushed the debt and cash strain of these companies to the wall or limit. The coming together of small oil producers to become refortified and rejuvenated is better pictured with the example given of the telecoms industry mention in the previous paragraph. However, the two processes, merger and divestment, could take different tones and coloration when carried out. The objectives of these two processes is to create resilience weather by adding weight to its financial and managerial substratum as in the case of merger or by the depilation of weight to a threshold level where the companies can sustain and operate sufficiently and effectively. Gaining indigenousity of oil operations in Nigeria For the discerning mind, the divestment of the falling oil price and stock is a blessing in disguise considering the opportunities this has offered indigenous oil players. Recently, The Nigerian National Petroleum Corporation, NNPC, stated that the Federal Government has maintained that there was no cause for alarm over on-going divestment of petroleum assets by multinational oil companies operating in the country, since those assets are readily taken up by indigenous operators. It is also observed that a lot of the oil assets that have been divested by the oil majors have mostly been beforehand abandoned and it was a quite positive thing that they are being taken over by domestic participants for a promising, onward and prosperous exploitation or production of crude. Referentially, the current wave of divestments appears to represent a shift in IOCs' strategy towards the offshore and portends the re-balancing of asset portfolios towards the offshore which now accounts for at least 80 per cent of Nigeria's total production. Shell, for example, divested about five assets which were taken up by indigenous operators. More so, there have been more divestments by the IOCs, including Conoco Phillips, Total and Exxon Mobil, and these assets are expected to end up in indigenous hands. What good news! Likewise, just last year, French oil giant Total concluded the sales of some assets, including the divestment of interests in Nigerian fields. The oil major said it would
The blessing of merger is best showcased using SEPLAT as a perfect exhibit. Formed through a consolidation in 2009, the development company has now grown into Nigeria's largest indigenous and independent company. As such, other companies and investors should be encouraged by their exemplary leadership and see this period in the oil industry as sell $5bn worth of assets globally in 2015 as it plans to accelerate its asset sale programme of $10bn from 2015 to 2017. It is also encouraging that there are other companies that could potentially put up their small stakes in Nigeria for sale, to be purchased by indigenous firm, as a way to improve their cash flow position. In addition, it reported that expatriates (due to their high salary and wages, even much so that are being paid in foreign currency) have been increasingly sacked while more indigenous vacancy have been made open. The blessing of merger is best showcased using SEPLAT as a perfect exhibit. Formed through a consolidation in 2009, the development company has now grown into Nig eria's larg est indig enous and independent company. As such, other companies and investors should be encouraged by their exemplary leadership and see this period in the oil industry as a conscious effort to build the capability and capacity of indigenous operators in the upstream sector of the oil and gas industry. Opportunities that lie within Just as it is said that there are pros without cons on any issue of life, it is believed that the slump in oil price may also create a sizable opportunity for new oil exploration projects, especially in deep-water oil and gas fields. Purportedly, there could be a shift in oil exploration-the drilling of new wells in new fields-away from the traditional basins to underexplored places. The fascinating thing about this is that companies that have capital to deploy for deep-water exploration and development still have attractive opportunities to do so as new growth in deep-water will come in part from underexplored basins where the governments is ready to attract foreign capital.
Invariably, the fallen stock price of oil is an uncommon and ample opportunity for anyone willing to invest in the oil to get more shares for lesser sum or price. In the way, Lower costs today are joyful news for projects that are now in the exploration phase and expected to produce five to eight years in future, when prices speciously could be higher. The idea behind the water exploration is applicable to many other frontiers in oil exploration and production, especially those in the onshore fields. On the contrary, The Nigerian National Petroleum Corporation (NNPC) through the Group Managing Director of NNPC, Joseph Dawha, recently expressed fear that the declining crude oil prices may lead to delay or cancellation of three major deepwater projects in the country because the oil price drop has made capital for exploration scarce. However, this is not to deter the hope or potential of exploration in the oil industry as it holds magnificent promises to daring investors. Fate of our nation in the face of falling oil price The falling oil prices would affect different countries in different ways. However, what general obtains from the dramatic drop in oil price poses a big challenge for oil-rich countries all over the world, especially Nigeria, where the oil industry can't function without high prices. The awful situation of the oil industry makes it particularly difficult for the countries (Nigeria) that are mostly dependent on oil revenues for optimally maintaining their social programs and balancing her budgets. Recently, the former Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala had to do a resubmission of the national budget to the National Assembly approval, on basis that Low oil receipts has disrupted Nigeria capital spending plans. Accordingly, Nigeria has more than sliced capital expenditure to less than 10 percent of 2015 spending, freezing the needed infrastructure investment and slowing growth, due to the collapse in the price of oil which is country's main source of revenue. In the same vein, the fall in oil prices may lead to lower oil exports and, consequently, lowering demand for the Naira. Quoting Lamudi Nigeria, 'Changes in the price of crude oil and the resulting currency devaluation have had a significant impact on the Nigerian economy.' That is, the low oil prices are detrimental for oil exporting
A 42 | www.cedmagazineng.com July 2015
HYUNDAI HEAVY DUTY EQUIPMENT
STRONG, DURABLE IN DESIGNS Hyundai Heavy Equipments and machines are different in design and built with specifications that can fit into all variations from the ones being exported to Europe and America says Omar Alkalaani,
ccording to construction enthusiasts, Nigeria has the potential to be one of the biggest construction markets on the planet with the incessant struggles to emerge from the global economic collapse; Nigeria's Construction Industry seems to be growing fast with the divergence of global companies' investment into the equipment subsector. Nigeria, being a developing country requires massive infrastructural development in terms of roads, earth dam, parks, canal channelization, drains, bridges and so many others. Lagos and many other states are trying to improve the capacity for service delivery to its populace, where new construction sites are beginning to spring up; and these sites constantly need mechanized operations for strategic planning. One major company that has made a significant mark in the Nigerian construction market is the Mikano International Limited, which has been
the powerful solution provider for the industry. This company has been able to bring about a harmony between power and technology, under a partnership with Hyundai heavy industries. Mikano international Limited acts as the official distributor for Hyundai's range of construction equipment products including Hyundai's
Omar Alkalaani, Sales Manager, Hyundai Equipments division, Mikano International
Hydraulic E xc a v a t o r, wheel loader, skid steer l o a d e r , backhoe loader and forklifts. According to Omar Alkalaani, the S a l e s Manager for the Hyundai Equipments division, " a f t e r carefully examining the Nigerian environment, M i k a n o delivered the studies to Hyundai, and they in turn produced tropicalised machines that are best suited for the Nigerian environment and clime". These machines are different in design and built from the ones being exported to Europe and America. "At Hyundai Heavy Equipments division, we are focused on the quarry, civil engineering and mining businesses. We therefore have specifications that can fit into all variations. We do no just offer sales services; we make machinery recommendations and offer advisory services to our clients. We believe that by doing this, we are investing in our clients' future, which is a top priority for us", he expressed. The Sales Manager for the Hyundai Heavy Equipments division also expressed confidence in their brands of equipments best suited for the industrial and manufacturing sector which includes the lifting equipments. "We supply both the different types of forklifts to clients according to their needs, and also with the attachments. We also provide operational and maintenance training services to ensure total operational success of our equipment. Hyundai is a brand that is incomparable to others in terms of www.cedmagazineng.com July 2015 | 7
SPECIAL FOCUS company to hit a production capacity of 70,000 barrels a day. Bolstered by the success of Seplat, more Nigerian companies have come together to synergize and form consortia that positions them readily balance, financially and technically, to expand upon acquisition of bigger acreages being relinquished by the IOCs.
MIKANO is a global brand that has added another attestable brand, HYUNDAI to deliver ease of operations in terms of technology. product elasticity. It gives three years warranty. We also have a very highly competitive pricing structure that accommodates high quality reasonable prices. In the construction equipment market, after sales services is the heart of our business, and MIKANO has made sure to deliver total customer satisfaction in this area. We have left no stone unturned, especially in the area of maintenance. Our equipments, altogether have the capacity to last longer than most brands, and in case of on-site challenges, we have in place a team that is in charge of that. MIKANO is a global brand that has added another attestable brand, HYUNDAI to deliver ease of
INCORPORATING OIL AND GAS REPORT
Construction and Engineering Directory 2015/2016
8 | www.cedmagazineng.com July 2015
operations in terms of technology. If you are looking for the best construction equipment brand, use H Y U N DA I h e av y e q u i p m e n t . MIKANO guarantees it.
Option of Divestment On the other hand, the alternative winning principle required to sail and save the sinking ship of the oil industry in Nigeria is that which follows an opposite approach to merger. More or less, it is better explained as an act of offloading excess load from ship till it reaches a weight level that affords it an increased sustainable stability. The process, divestment or divesture, as it is called in corporate circle, makes it possible for a company to concentrate on its core competency leaving out the extra workloads and operations (assets) which do not longer contribute majorly to its profit margin or existence. Divestment, like merger, ought not to be looked as an act of corporate cowardice or in light of a company downsizing. The decent idea behind a company divesting is that such company is shedding off its excess or no-longer wanted weight, hitherto its responsibilities or operations by selling the company's assets to new or other companies who will afterwards, take up these assets on a more competitive note and concentrate their resources on it for profit making. Accountably, Oil companies looking to raise capital and drive shareholder value will be separating core from non-core assets, and/or divesting underperforming or non-core assets in order to put capital to use more constructively profitably. More so, bearing in mind that part of the winners in this new cheap-oil world will be the firms that have cash to spend and governments that are good at attracting scarce new investments, the option of divestment is not farfetched. In fact, some inde pendents and indig enous oil companies in Nigeria are decisively and likely to consider far m-outs and divestments. With oil prices in the pit or basement, the capital available for exploring new basins is tightening and firms are becoming much pickier about where they invest or rather divest their money. However, it is postulated that the next several years could experience a good number of diversification of world oil supply-a good thing for all major fuel
tapping into the assuring and rewarding options of merger and divestment.
consumers since oil security is first and foremost a function of diversity. Recently, it was said in the news that the Nigerian oil and gas industry is expected to see more asset sales by International Oil Companies and smaller firms this year as the steep fall in prices continues to take a down toll on their revenue. Accordingly, IOCs including Shell, Chevron and Total have, over the past few years, divested some of their onshore assets in the countrylargely as a result of operational and financial risks. The reason(s) for this move, hither to, heavy lifting of capital investment underlies in the logic that divestment enhances the concentration of companies on the assets or responsibility they have selected to stick-to or introduce in place of the ones they have discarded (sold), having rigorously and satisfyingly compared and analyzed their strength and weakness in like of what obtainable in today's and the nearest future economy outlook. In truth, divestments creates a gateway for healthy competition and mops the industry floor of the incapacitated or incompetent (weak) company, making the industry roomy and ventilated enough for ready investors who are readily willing to leave a mark in the industry. In other words, divestment frees-up the congested atmosphere of the oil industry of the impotent or retired asset a company may be still be tolerating. That is, surrendering the assets to new investors, thereby making it more conducive and possible for the new investors who have a new or renewed hunger and thirst to push and manage the newly acquired assets more innovatively and competitively unto an much more effective and profitable production for the betterment of the economy. For example, new Plc like Frisson Oil and Gas Ltd and V.S.O.P. Oil and Gas Company, are set to kick off onshore operations including the haulage services of oil and gas products by
Lessons to be imbibed from the banking and telecommunication sector in Nigeria There are lessons, from the past, to be learnt from the Nigerian banking and telecommunication industry to drive the point of merger and divestment to point of absolute clarity and objectivity. The call of merger, as it is presently and heavily witnessed with small oil producers, is similar to the CBN reform, in 2005, to consolidate the banking sector through drastic increase of the minimum capital base of commercial banks from two billion naira twenty-five billion that led to a remarkable reduction in number of banks. However, it is notable that at the end of recapitalization deadline in December 31st, 2005, the number of operating banks in the country reduced from 89 banks to 25 banks but later reduced further to twenty-three banks. Today, the number of banks has increased and the efficiency of the survival banks have also increased, pointing to the fact that merger works and it creates an atmosphere for competition. As such, merger should greeted with high hopes and great enthusiasm instead of low morale and buy-in. Similarly, a few years ago in the telecommunication industry, when a few companies were grappling with shortage of funds and increased cost of maintenance of their facilities beyond what they could cope with, the options of divestment and merger were aptly exploited. Whilst some companies resulted to selling their assets, others resulted to constructively coming together to become big, better and stronger. Specifically, there was a merger of surviving CDMA operators involving Multi-Links, MTS and Starcomms into what is now known as Main one. Today on the achievement list , the move has bountifully yielded good tidings in communication as it created a headway for competition and mopped the industry floor of the 'incapacitated or incompetent' company, creating a more free and economical open-space for ready investors who wish to establish their ground in the industry's lithosphere. Comparatively, while the bank
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ISSUES available funding for property development which might have a long term effect on the real estate sector if it persists. In other words, industries like retail, banking or the housing industry are susceptible to suffering from the dampened demand due to the slowdown and bumpy ride in the oil industry. Implication and repercussion of falling oil price Note worthily, the oil industry is by nature designed to be highly reliant on high-cost projects, including offshore drilling and oil extraction. For instance, the cost of water exploration and development has quite increased over the few years when oil price was high. The oil industry is a capital intensive business having to spend over half of the percentage of the money being made back into the business. As such, companies increasingly now have less amount of cash to reinvest in business and this will impact capital investment and slow growth in production in the now and future. It's however quite more a pathetic case for small oil producing companies who, from cash flow that comes down to them, have lesser to invest back in the business as this will seriously impair their growth rate and that of their production. Thus, the prevailing condition in the oil industry makes it entangling and intractable for small oil producing companies to cope and or stay afloat in the industry and oil economy. Notably, some big oil firms are already cutting capital budgets and jobs in response to lower oil prices, but it is smaller players in the industry that are feeling the pain most acutely. Regrettably, the situation at hand is more excruciating for smaller oil producing companies that, in the past, have gone out to borrow a lot of money and have been spending above their means as there is going to be a real stress and strains on their businesses. Presently, in Nigeria, Small oilproducing companies are facing rising debt beyond what they can handle. Recently, Kola Karim, chief executive of officer of Shoreline Natural Resources Ltd made emphasis on the need for small oil producers to garner leverage by merger (corporate solidarity as have chosen to call it) as the rapid drop in oil price is unprecedented. Correspondingly, small producers may face serious problems in sustaining themselves especially the ones that are heavily in debt who may be forced out of business, ardently pressuring some banks 40 | www.cedmagazineng.com July 2015
CORPORATE STRATEGY compelling for small oil producers (small ones especially) to tinker with the idea of mergers as an option, as it's difficult in a down market when one is a small producer, yet trying to sail through the storm alone. Option of Merger inferably, it can be equally said in the oil industry that the falling oil prices necessitates and impels the companies, especially small oil producers, to recapitalizes themselves, else the shortage of cash and cutting of budget spearhead by the falling oil price will bury or keep their head under the water for as long they chose to remain adamant or close-minded to this option. Dr. Ibe Kachukwu, GMD, NNPC AAs a result, devising a principle to win in such die-hard times is to buy into a strategy that have lent to them. In other words, that concretizes a company's foundation Small oil-producing companies in Nigeria and structure- that is, capitally and may need to combine to survive because managerially. In other words, mapping out a smaller players in the industry might be strategic that reinforces and refortifies a squeezed out if they remain isolated. As company's foundation (capitalization & such, merger seems to be the only or cash inflow) so that it doesn't get leveled to quickest way to beat the tides by the oil ground by the wind of the falling oil price or companies. eroded by the water of daredevil fall in oil Extrapolating from the aforestated, the price. It is a principle that imbibes pitiful shoes in which the world oil constructive and detailed fusion of two or economy finds itself; the newly shaped more 'weak' companies to become bigger, topography of the oil industry landscape- it stronger and better. Thus, the newly is expository and glaring enough for us all to attained level of the company gives them, as discern that the bearing and status-quo of a whole, leverage on both the rainy days and global and national oil is in perilous times sunny days of the industry and economy. and the onus is on us to manage and This explains the idea behind 'merger' as it is mitigate, as best as we can, the adverse called in the corporate environ. effects. However, a bigger and better picture of Drawing from history, this is a time in what merger resonates is necessitated as the oil industry when the whirlwind and many characterize companies that go into tornadoes are blowing through, sweeping merger as showing signs of high volatility off companies that don't have solid and instability. Contrary to the common but foundation hitherto a robust capital base inferior understanding of merger people and solid management. This is a time in the generally have, it is convincing for us to note oil industry when the titanic companies of and always remember that it was during the the oil industry might get struck down by a depths of the recession that swept the singular iceberg of the falling oil price or country's and global economy of her feet in where other smaller companies in the 2009, Platform Petroleum Limited and industry might get blown away or capsized Shebah Petroleum Development Company by the stormy weather. In other words, this Limited merged to form an independent is a time in the oil industry when boys will be company(Seplat Petroleum Development set aside from men. Company) which represents a landmark For Nigeria, the present situation we have consolidation that took the both in the oil sector is quite synonymous to independent Nigeria companies to a new what we had in the banking industry a few level. years ago when a new capitalization base The establishment of Seplat Petroleum was enforced which went a long way in Development Company, an exploration and determining how successful and resilient production company incorporated and some of the banks were and could survive operating in Nigeria, marked a milestone in in trying times till date. As such, the new the operation of the Nigerian independent down-turn in economy in which the oil companies as it became the first Nigerian Industry is throat level immersed makes it
Pat Una being presented with the Certificate by Mrs. Ayeni of SON A
RAISING THE BAR The NIS ISO 9001 - 2008 Certification presented to to Una & Associates by SON has placed the firm as front runners in the Estate Surveying and Valuation practice.
he real estate sector of the Nigerian economy is fast adopting global standards in professional practice and quality service delivery with the award of the NIS ISO 9001:2008 Quality Management System Certification to a foremost Multi-disciplinary Estate Surveying and Valuation Firm and Capital Market Consultants, UNA & ASSOCIATES on the 28th of July, 2015 at the NECA House, Ikeja. UNA & ASSOCIATES has always been at the forefront of providing innovative and result-oriented services to discerning clients with diverse and challenging needs for real estate valuation and property investment services in the Real Estate Industry. The firm is registered with the Securities and Exchange Commission (SEC) as Capital Market Consultants to provide valuation advisory services in the Capital Market. Its exceptional resourcefulness and professionalism has earned it a feat as the pioneer and only ISO certified estate surveying and valuation firm in Nigeria. The ISO 9001:2008 Quality Management System certificate awarded to this outstanding estate firm is the first of its kind in the professional practice sector nationwide.
The ceremony was graced by Barr. Nsikak Ekure, former Managing Director, FBN Trustees Limited and Director, First Bank, Senegal, Mr. Tunji Timothy, the Chief Executive Officer, Qualitext Consulting & Associates Ltd, ESV. Patunola Ajayi, first Vice President of the Nigerian Institution of Estate Surveyors and Valuers, Mrs. Oluremi Ayeni who represented the Director General of the Standards Organization of Nigeria (SON), Engr. R.A. Adewuyi, Elder W.O. Odudu, Chairman, ESVARBON, Mr. Nnaji Igwe, Company Secretary of Nestoil Plc and Elder Sam Enyinnaya, Managing Director, Value Capital Limited, among others. ESV. Patrick Una, CEO, Una and Associates expressed his gratitude to everyone present at the ceremony, recounting the experience leading to the achievement of this amiable height of international standard certification in the industry. "We set out by building a company that is well structured, a company that will stand the test of time, a company were things are done very differently from the norm; a firm that will consistently provide unique and high quality service to clients that want a satisfying service provider. The process of getting the
International Standard (QMS) began in October 2013 by investing in human capital development and office infrastructure to ensure continuity, consistency and sustainability in business. A Management Representative was appointed and six system auditors were trained within the organization to work with the Consultant, Qualitext Consulting & Associates to achieve the certification. This took approximately two years as the Certificate was awarded in May 2015. He stated that this significant milestone marks the beginning of internationalization of the organization's system and processes to enhance global competitiveness and compliance with International best practices. This certificate would not have been possible without the contributions of the company's Human Resources Consultant, Mrs. Enobong Akpabio of Blazer Consulting Services Limited in conjunction with Qualitext Consulting and Associates Limited team and the Management Representative in charge of the ISO Implementation, Mrs. Funke Bello. He acknowledged the contribution of Barr. Nsikak Ekure, former Managing Director of FBN Trustees Limited and Chairman of the occasion, who gave the firm the wings to fly, and strife for excellence. The Standards Organization of Nigeria was also not left out in the commendations. The CEO, Una & Associates acknowledged SON as an organization with integrity and pledged the fir m's commitment not to disappoint the Standards Organization of Nigeria when they return for recertification in three years time. Speaking during the presentation, Mrs. Oluremi Ayeni who represented the Director General of SON, said that the achievement will not only list the firm among the leading class of companies with efficient quality management system, but also engender sustainable g rowth, which the organization is on course to achieve. Emphasizing the imperativeness of the quality management, she said; "we
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DEVELOPING STORY: NAE
commend your effort and we also want others to emulate this as we aim at sustainable development in our nation". We are at a very crucial stage in our national development; whatever we do from this time forward, we want to ensure that the growth we achieve either at company level or national level is sustainable. She added that the system will be placed on six months surveillance to ensure complete sustainability and effectiveness. She however, noted that any act of nonconformity should be rectified under a specified timeframe or will otherwise attract the withdrawal of the certificate. A professional colleague and friend of the firm, ESV. Patunola Ajayi who represented the NIESV President at the occasion described the firm as a front runner in the estate surveying and valuation practice in Nigeria, especially with the award of the NIS ISO 9001:2008 QMS Certificate; thereby congratulating them for the accomplishment ESV. (Elder) W.O. Odudu, Chairman of the Estate Surveyors and
Pat Una being presented with the Certificate by Mrs. Ayeni of SON
Valuers Registration Board of Nigeria (ESVARBON), also commented on this feat as a pride for the firm, the nation and the Estate Surveying and Valuation profession. He described Pat Una as a consummate Estate Surveyor and Valuer and urged the NIESV members to embrace the ISO Quality Management System, as it will enhance the standards of professional practice
Diversionary tactics The construction industry is adopting an increasingly sophisticated approach to waste diversion in order to lighten the load on the province's landfills
wo points does not always amount to much. It can be a single dunk in a basketball game, or the word "so" in Scrabble. But on a large construction project, two points can represent tonnes of waste saved from the landfill. There are 110 points up for grabs on the LEED certification checklist, and just two of those points relate to waste diversion: one for diverting 50 per cent of project waste, and another for diverting 75 per cent. Yet, mixed construction and demolition (C&D) waste is usually a serious issue for any city. Current figures are not readily available, but Statistics Canada estimated C&D materials accounted for 25 per cent of the province's municipal solid waste less than a decade ago. As recently as 2012, 20 per cent of the waste sent to Calgary's landfills was still generated by the C&D sector. Diversion may have a modest impact 10 | www.cedmagazineng.com July 2015
on the scorecard, but its importance to the environment is huge. So why, in a province rich with recycling options, is there still so much construction waste heading to landfills? In many cases, people simply don't know better. Nancy Burton, chair of the Alberta chapter of the Canada Green Building Council, discovered this first-hand when she began working in the province. Now based in Calgary, she moved to Edmonton from Vancouver seven or eight years ago. While working on her first local job, she asked to look over the project's recycling receipts. "I saw all these receipts saying that the drywall had gone to landfill and I was
in Nigeria. A lot of testimonies from clients, stakeholders, friends and wellwishers of Una & Associates made the official presentation ceremony a worthy one. Una & Associates has really set the pace for best global best practices in the real estate sector, and we hope that more Estate firms will join the league soon. shocked, because in Vancouver you can't send drywall to landfill," she recalls. "The contractor said, 'I don't know what you're talking about-it always goes to landfill.'" Since then, drywall has been added to Calgary's designated materials list-meaning commercial loads containing the material are charged higher dumping fees-while Edmonton's C&D waste recycling operations keeps the material from cluttering up the Clover Bar landfill. But this lack of knowledge remains one of the biggest challenges to improving waste diversion efforts. In particular, smaller businesses that cannot afford the sustainability departments seen in large companies like PCL and EllisDon may be unaware of many of the recycling alternatives on the market. "I'm used to working with large contractors and large hauling companies, but there are a lot of smaller guys out there, and they might not even have a website or they may still work from a phone or fax," Burton says. "They don't have the resources to do the research, so they just do what
BATTLING THE ODD An Extensive and Executive Summary of the Effects and Remedies of the Falling Oil Price in Nigeria By: Adebiyi Adeyemi
hough the oil industry is often eulogized or pampered with its history of booms and busts, the tumultuous nose-dive in the price of crude oil over the past few months has created for nothing short of a tenacious quiver down the spine and bloodstreams of our global and national economy. Accordingly, the price of oil round the world, which was fairly stabilized at around $110 a barrel over the last few years, has now dipped below $48 a barrel. What bloodshed in price? The diminishing feat attained by the falling oil p r i c e i s s o m e w h a t b e s t owe d a s monumental, bearing in mind that the price of oil per barrel has not sunk this low since the depth of recession in 2009. Consequently, the overwhelming plunge in the oil price and the rippling effect that heralds the truncated oil economy is quite magnanimous, however benevolent or malevolent, to the economy of our nation and the world. Consonantly, it may be sufficient to say that the ongoing global phenomenon in the national and international oil economy isn't all sunshine and daffodils as there are obvious winners (consumers at the gas pump) and there are losers (oil companies and oil-rich countries). From the consumers', hither to, the advantageous perspective; in a country like ours that highly consumes/produces oil, the plummeted oil price resultantly leaves more
In performing the hemostasis processes to clot the blood the bleeding of the oil industry, renew/replenish the economy cartilages and tendons of the falling apart oil companies and rebuild the bones of national and international oil economy, money in the pockets of consumers thereby increasing the purchasing power of their income as they are now able to spend less on fuel and more on other goods or services. The logical reason behind this is that, for a country that consumes a lot of oil, the economic effect of a big cut in oil prices is similar to that of a reduction in taxes for consumers. That is, it increases consumers' discretionary income - and all which adds up to indispensable elements in determining the economic growth of our nation and the world. Undeniably, the fallen oil price is fast crippling the financial backbone of most oil companies and amputating their income limbs, as the oil stocks are being negatively affected. Observably, a fall in oil price may make the production of oil in Nigeria economically unfeasible wherefore affecting investors via their investment
books, making them to rule out or pend most of their major to-do investments in the oil industry. That is, the drowning oil price has exteriorized as delay in the operation of the oil industry wherefore acting as if a clog in the wheel. However, though oil companies bear the hopelessness and headache of this economic predicament, it is not of their making but that of the falling oil price which has succeeded in incapacitating their finance and destabilizing their usual highcost operating system. In the same way, the lowering oil prices is gradually pressurizing some oil and gas producers to halt drilling, forcing them to scale-down rigs and hastily cut investments in exploration and production, since some fields will no longer be economically viable and sustainable. That is, the slump in oil price could also reduce the capital budgets of the biggest oil firms, whose cash balances are already strained in today's economic climate. Acknowledgedly, on the oil panoramic view, the adverse effect of the falling oil price often has a multiplier effect on the economy of a nation and the world in general. While the theoretical explanation behind the falling oil price in the world holds that it is as result of oil supplies outstripping that of demand and causing commodity prices to fall, the summed-up or vector effect of the two sides of the coin - of the fallen oil price - stretches beyond the oil sector and touches down to the crust of our nation and global economy big bang. Unarguably from facts, the falling stock price of oil has rebounded as the pulling back on investment spending, oil companies /investors having to retrench or layoff their workforce, suspending payments of dividends, cutting of dividends , buying back their own shares and there's also been a worldwide reduction in capital spending .Consequently, earnings are down for companies that have recorded big profits in recent years and as a result, there's been a powerful re-sketching of the economic landscape owing to the drastic down-slide in oil price. Reportedly, gross steep in oil price also have had an impact on the country's banking sector, where about twenty-five percent of loans are made to oil companies. Mr. Obi Ejimofo, Managing Director, Lamudi Nigeria, said recently that Nigeria's current currency devaluation- an offshoot of the falling oil price- has resulted in less
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WATER RESOURCE critiques of the Lagos water privatisation suggests that the PPP attempts so far have failed because the projects are not people-centred and that the privatization policies were never exposed to popular debate. Currently, Nigeria is one of the few countries yet to meet the water Millennium Development Goals (MDGs) and Lagos contributes a large percentage of the country's inability to attain this goal. Only half of the residents in metropolitan Lagos have access to pipe-borne potable water. To fill the void in supply, there are many alternative private sector driven arrangements of water provision; from pure water vendors at the more affordable end of the spectrum to home delivery via tankers and individual boreholes with associated small-scale treatment apparatus, which are expensive, at the other end. The city's primary water source is the Ogun River. There are no desalination plants in Lagos even though it runs along the coastal strip of the Gulf of Guinea. When the city's first water treatment plant was built, at the start of the 20th century, in the early days of Lagos's urban development, desalination technology was available. It was built by the Federal Government in Iju, at the outskirts of Lagos, because of proximity to the Ogun River, the plant's water source. The Iju plant has since been expanded and capacity increased over the years as demand has grown, but with an exploding population and continued migration, the supply and distribution networks remains overstretched. Ownership of Lagos's water supply system was transferred to the State Government in 1967, and between 1979 and 1983 during Nigeria's Second Republic, 10 mini-waterworks were constructed along Ogun River to
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Currently, Nigeria is one of the few countries yet to meet the water Millennium Development Goals (MDGs) and Lagos contributes a large percentage of the country's inability to attain this goal. Only half of the residents in metropolitan Lagos have access boost water supply. to pipe-borne water. Capacity though, as potable a whole remains grossly inadequate, due to poor distribution networks and insufficient/intermittent electricity interrupting treatment plant operations. The majority of the city's residents and water consumers are left to equip themselves with overhead water tanks and source potable water in other ways, chief amongst these are small-scale individual water treatment systems. These facilities vary in sophistication, but align with the ultimate goal of potable water which is to reduce contaminants to acceptable levels as recommended by the World Health Organisation (WHO) in its guidelines on drinkable water. A typical/traditional large scale water treatment plant consists of retrieving the water from a source (a river or lagoon), after which the water undergoes flocculation (the coagulation of small particles into bigger particles), then sedimentation (the heavy particles settle at the bottom of the tank), onto filtration (the clear water passes through filters which removes small particles invisible to the eye) and finally disinfection (traditionally chlorine is used to kill bacteria). Afterwards the wastewater from household use is returned to the source for the process to happen again. Technological advances have brought about a number of other treatment types such as Ozone based water treatment plants (Ozone is an excellent disinfectant that doesn't require adding any chemicals however is more expensive), Reverse Osmosis based treatment plants (using membranes to remove the particles and bacteria) and
Ultraviolet radiation for disinfection. Bridging the gap between capacity and the demand of end users requires a multifaceted approach. One of the possible options involves scaling up the individual house-hold water treatment systems to small community water supply systems that can serve at least 50,000 people. Continuing with the practice of individual house-hold water treatment facilities is expensive and unsustainable. In a PPP, market driven environment, profitable ventures are possible by addressing the 'point of use' of water i.e. mini waterworks at a neighbourhood scale. These mini waterworks can even be configured and constructed to serve particular end user needs, e.g. just a His Excellency, President of the Federal Republic of Zambia, Mr Edgar Chagwa Lungu; His Excellency, Vice President of filtration plant or portable reverse the Federal Republic of Nigeria, Professor Yemi Osibanjo; President/CE, Dangote Industries Limited, Mr. Aliko Dangote osmosis systems depending on the number of consumers and available funds. This communal approach is essential in Lagos as the city is at sea-level Dangote predicts rapid industrial growth in East Africa and therefore constructing individual boreholes is more costly. This is because frica's richest man, Aliko portal, Zambian President, Mr. Edgar the boreholes have to reach depths of up Dangote, has said the pace of Lungu, lauded Dangote for setting up the to 150m, much deeper than other parts of industrial growth in East cement plant and also investing in the the country, to get to aquifers and Africa is bound to increase mining industr y, infrastr ucture, uncontaminated waters. Boreholes at EPILOGUE with his recent investments in the region. equipment and other auxiliary services in such depths also mean increased Dangote recently inaugurated a state- the region. maintenance needs and costs, hence The Zambian president envisaged of-the-art cement plant valued at making the individual approach to more industries opening up, spurred by N78.8bn and 30-megawatt coal-powered potable water supply even more the projects, and leading to more jobs for energy plant in Masaiti district of Ndola, unsustainable. Since State funds to the country's citizens. Zambia and already, there are a lot of address these communal initiatives are He said, "What we are witnessing expectations about the number of jobs currently not available, other sources of today is a clear demonstration of the that will be generated by the cement plant revenue, such as PPP initiatives must be confidence investors have in the and related industries that are bound to considered to solve our potable water Zambian economy. I am confident that spring up. needs. With investments running into Involving private participation billions of naira, Dangote has expanded initiatives, like PPPs in the financing and into Kenya, Ethiopia, Tanzania and provision of urban infrastructure can Zambia and according to a statement have implications for the poor which are credited to him on the development, complex. The point to note is that the there are more projects lined up for implications are not necessarily negative, execution before the year runs out. and are determined by the extent of Dangote feels the region has been private participation and the nature of the starved of investment for a while. contract. Suffice to note Government is According to him, it is the duty of lacking in its duties and to achieve the Africans to drive investment on the MDGs, nowadays referred to as the continent. Sustainable Development Goals (SDGs) He declared, "We are strong advocates on access to drinking water and sanitation of Africans investing in Africa and we are (70% of the world's population are to for now using the cement sector, which is have access to drinking water). Therefore a key indicator of the state of economic it's essential to tr y alter native development on the continent, as our arrangements and not focus solely on an outdated, problem riddled, 'traditional' launch pad." method of service delivery by State and In a speech posted on his Facebook Alh. Aliko Dangote Federal Governments.
POTENTIALS FOR GROWTH
the sustained economic growth the country has attained in the last 10 years is a good sign that we are heading in the right direction. "My sincere hope is that with this project operating at its full capacity, we will see related industries mushrooming around this plant for forward-andbackward linkages. "Some of the industries I have in mind are the manufacture of lamp posts, railway sleepers, culverts and blocks. "Others are the manufacture of pavers which will accord well with my government's programme on pave Zambia. "A project such as this cement plant is critical to supporting the unprecedented pace of infrastructural development being undertaken in the country such as the construction of dams, roads, hospitals, schools, airports, among others," he added. For Dangote, the project is significant for being one initiated by an African in Africa. He stated, "Though this is a significant milestone for us as a company, we are also excited by the fact that it is an African company that is spearheading this economic revolution in a sister African country. "This shows that Africa is gradually taking its destiny in its own hands rather than continuing to wait for investors from outside the continent, as has been the case in the past." According to him, the belief that Africa's future growth is intrinsically linked to cement as the most basic input into building infrastr ucture has motivated the setting up of cement industries in 16 countries across the continent. He added, "In due course, we will consider investing in other key sectors of the African economy. We believe this is the only way that Africa can achieve the much desired double digit growth rates, which will enable us to catch up with the rest of the world." Dangote in his speech also recalled the enormous support he received from the Zambian government in terms of tax rebates and other incentives. He affirmed that the government had been instrumental to creating the
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GOOD TIMES AHEAD
URBAN POTABLE WATER SUPPLY; IMPLICATIONS OF THE DECLINING ROLE OF THE GOVERNMENT
Although private participation was widely debated in the nineteenth centuryâ&#x20AC;Śgovernments became convinced that good water and sanitation were important for both public health and national economic development. For these and other reasons, governments increasingly population somewhere between 17 and 20 million people and according to assumed the task of installing and managing piped water and water-borne sewerage systems, with the goal of universal provision." (Budds and McGranahan, p. 91, 2003). projections, will be the 6th largest city in
prestigious Annual President's Merit Award of the Exchange several times in the past, Berger Paints shall continue to Berger Paints assures investors of greater returns uphold the sanctity of the post-listing requirements, which place premium on he Managing Director, Berger full disclosure at all times." Paints Nigeria Plc, Mr. Peter Folikwe commended the Berger Paints Folikwe, has assured the Chairman, Dr. Oladimeji Alo, for company's shareholders that ensuring that good corporate governance its new growth strategy will lead to greater practices were a vital part of the returns. company's operations. Folikwe told capital market The Berger Paints MD, who beat the stakeholders on the floor of the Nigerian closing gong on the floor of the Stock Exchange recently that the Exchange, praised stockbrokers for their company had, in a strategic move to critical role in the development of the increase its earnings, acquired new capital market in particular, and the equipment worth millions of dollars to nation's economy in general. strengthen its operations. The Chief Executive Officer, NSE, Mr. He explained that the purchase of the Oscar Onyema, who received the Berger new machines was part of efforts to Paints team, commended the company improve the quality of the company's for sustaining a legacy of corporate products, reduce inefficiency, and Peter Folikwe A excellence. increase the company's turnover and He urged the company's board and He said, "Specifically, we are on track to market share. Folikwe, who visited the Exchange in build the first automated paint management to continue upholding the company with top officials of Berger manufacturing plant in the Sub-Sahara h i g h e s t s t a n d a r d o f c o r p o r a t e When completed, it will governance in order to make it to the Paints, explained that innovation was a Africa. revolutionise our production and NSE's Premium Board Index for vital part of the growth strategy. He added that the investment in distribution processes, enhance product companies that excel in corporate equipment would also enable the quality and delivery and reinforce our governance. The General Manager, Client Services, company to produce products at competitive edge. Compass Investment and Securities "As a stakeholder in the stock market, competitive prices. Limited, Mr. Sam Ndata, who spoke on Berger Paints identifies with all the Explaining the growth strategy further, behalf of stockbrokers, commended the efforts being made by the Exchange to the Berger Paints MD said it would board and management of Berger Paints attract more investors, both retail and involve strengthening the company's for the visit. institutional, to participate in the market. managerial capacity and restructuring of He, however, urged the company to "In no distant time, the Exchange sales, distribution, and marketing processes as well as the upgrade of its would celebrate more listing of blue chip interact with market stakeholders more companies. As a proud winner of the frequently through programmes such as plants. the NSE's 'Facts behind the figures'. NEWS EXTRA Cameroon, South Africa and Ethiopia, is DANGOTE CEMENT the fifth plant to be inaugurated in one "It is to his phenomenal enabling environment for his industrial year. ventures in the region. vision, entrepreneurship and A diplomat who spoke during a similar In his speech made available to our inauguration in Ethiopia said, "I am very commitment to the proud correspondent, Nigeria's Vice President, of what Dangote is doing by Professor Yemi Osinbajo, who flew to development of Africa and promoting intra-African investments, Zambia to inaugurate the plant, said the promoting regional development, Federal Government was proud of industrialisation and cohesion among Dangote. African nations with his investments." Osinbajo said, "The spotlight today cement plant. At the inauguration of its $300m "Alhaji Dangote is a Nigerian from falls very deservedly on an exceptional Greenfield cement plant in Senegal, the African entrepreneur, Alhaji Aliko Kano State and he is a pan-Nigerian and Senegalese government promised all Dangote, Grand Commander of the pan-African who has done us all proud assistance required for the plant to and his companies spread over 16 Order of the Niger. African countries, are a signal of an perform maximally as its entry into "It is to his phenomenal vision, Senegal had stirred up economic entrepreneurship and commitment to African multinational enterprise." activities in the country. Dangote cement plant in Zambia, the development of Africa and Africans that we are here today to inaugurate this coming after those of Senegal, 12 | www.cedmagazineng.com July 2015
BY LANRE SAGAYA JNR
istorically, at least until the nineteenth century, water sanitation and its i n f r a s t r u c t u r e we r e provided by the private sector, particularly in the newly emerging industrializing countries in Europe and North America. As the quote above infers, experience has shown that access was limited to the wealthy hence a shift in approach, the involvement of State enterprises in water and sanitation provision, was needed. Today, in Nigeria and many developing countries the governments continually fail to provide adequate water and sanitation services, particularly for a rapidly growing urban population. The reasons for this are many and run the gamut from low budgetary allocation to corruption and mismanagement of public utilities (diverted revenues, overstaffing of parastatals), this has led to a growing number of urban citizens lacking access to potable water. This lack of government municipal finance has also resulted in inadequate network coverage and unacceptable water treatment due to obsolete technologies. In addition our poor maintenance culture
and vandalism of the distribution networks has resulted in water losses due to pipe leaks. Population explosion and the bias towards urban dwellers in terms of e m p l oy m e n t o p p o r t u n i t i e s a n d government policies have led to a massive r ural to urban migration. This has reached pervasive levels in a number of developing c o u n t r i e s. Currently for the first time, more than half of the world's population reside in cities; the majority of which are in the developing world; and with this comes a need for an expansion of u r b a n infrastr ucture. Metropolitan Lagos, for example, currently has a Lanre Sagaya JNR
the world by 2050. This rapid urbanization will continue to put a severe strain on civil infrastructure and challenge the public sector's capability of providing a variety of municipal services including sourcing, treating and distributing potable water. The interest in adopting Public-Private Partnerships (PPPs) in the delivery of urban utility services is on the increase worldwide. Theoretically PPPs should bring innovation in service delivery because private sector participation eliminates the bureaucracy of government parastatals and replaces it with competition in the market place. However despite the many considerations related to the inability of state enterprises to provide basic urban infrastructure, the question is whether private sector participation can delivery of these services in an equitable manner. The argument is that the poor are more vulnerable in an environment of free market competition. However there are ways around this. Private sector participation can occur in a number of different ways; from privatisation i.e. the complete transfer of the provision and r u n n i n g o f infrastructure assets; to s e ve r a l m o d e s o f c o n t r a c t u a l arrangements (concession, buildoperate and transfer contracts to name a few); to small-scale provision by water vendors. Hence it is possible to not automatically subject the populace to the excluding 'invisible hand' of market forces. It is however a major concern and one of the
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DEVELOPMNET Raheja responds, ¨We have been providing it as an optional package for many, many years in all our properties. Apart from the tech-savvy and young target audience, the older age groups are not fond of technology and they are not willing to pay more.¨ India´s smartscape What is undeniable is that smart homes, despite being a relatively new concept, are increasingly finding acceptance across the Indian socioeconomic spectrum in some form or the other. To be able to set the mood in your home by controlling lights, music, curtains and heating with the touch of a button is a foreseen reality. The need to regulate devices with ease and adapt to sophisticated technology is paving the way and bringing that reality closer to us by the day. Eventually, smart homes will no longer be a choice, but a norm. Lutron Electronics Inc: Controlling lights and shades Lutron offers wireless and easy-to-install light controls for new and existing smart homes. ¨The more objects get connected, the more functionality the smart home will possess,¨ says Manjul Trehan, India Head & Director Sales, Lutron Electronics Inc. He introduces the company´s offerings: " Serena wireless shades: These affordable shades feature Triathlon™ power technology with a three-year battery life. Operated via a radio frequency remote, they can be adjusted from anywhere in the room. Serena honeycomb shades come in varying opacities; additionally, honeycomb shade fabrics have a white backing that acts as a reflector, keeping the space cool and comfortable. The Pico® RF wireless control can function as a tabletop control on a pedestal or be wall-mounted. " HomeWorks QS: Designed for exclusive homes, it integrates control of interior and exterior lights as well as electric-light and daylight. It also integrates with other manufacturers for audio-visual and HVAC control, and broader control of the home environment. It saves energy; a single button can set different lighting scenes, based on time of day. In case of midnight intruders, all lights get turned on and shades moved up and down. In the case of fire, it will light up an escape path. Anchor Electrical India: Smart on lighting and IAQ Anchor, a member of Panasonic Corporation Eco Solutions, has introduced
solar, lighting, electrical construction materials and indoor air quality (IAQ) related products and technologies to India from the parent company. ¨In 2014, we introduced the high-efficiency HIT solar PV modules of Panasonic to India and the response from the market has been heartening,¨ says Yoshiyuki Kato, DirectorLighting, Anchor Electrical India. He confirms that the IAQ-focused ventilation fans from Panasonic have also been wellreceived by the market. He shares more: " Since 2013, the company has introduced Panasonic LED lighting for residential spaces that bases its premium on the quality of light and reliable performance. " Anchor introduced special luminaires for the commercial, hospitality, retail and architectural sectors last year. " Anchor also offers custom lighting design plans for residential and commercial premises through the Symphony Lighting Concept from Panasonic. " It has introduced Panasonic´s light measurement index named FEU that turns the focus in lighting design from the conventional ´illuminance´, the amount of light striking a surface, to ´luminance´, the human sense of brightness. Legrand: Controlling life through a button Technology has constantly helped upgrade Legrand India´s product offering by enlarging the scope of sensors and redefining methods. ¨Also,¨ Sameer Saxena, Vice President-Marketing, Legrand India, says, ¨...the various international protocols developed (Zigbee, BAC Net Interface and SCS) have helped in smoother and seamless integration of systems and consolidation of the database.¨ He elaborates: " Zigbee Technology: Based on international low-consumption radio communicator, this solution is used via wireless transmitters and receivers. It controls lighting, roller blinds and technical alar ms. Products include scenario controllers, lighting control switches and curtains or blinds control switches. " BAC Net Interface: Legrand provides customers a unique opportunity to have an exchange between their system and any BACnet certified devices. The device ensures two-way communication between ´Our Home Automation´ offer and HVAC systems, specifically in case of medium and large installations. By using the proprietary driver software, one can command airconditioning systems (VRV, VAV, FCU, ATU) and have real-time feedback from
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these systems in the command units (3.5¨ touchscreen). " SCS: Simplified Cabling Systems is the company´s own proprietary protocol developed to provide a robust and reliable system. Designing with this protocol and installing products remain simple. ACC Ltd: Adding value to concrete smart homes ACC Ltd offers a wide range of value-added products (VAPs) to smart home owners that are not only sustainable and affordable but highly durable. Anil Banchhor, Chief Executive-Concrete Business, ACC Ltd, lists these for us: " Imprintcrete and Staincrete: Concrete can be printed or stamped for making decorative surfaces on porch, paving, footpath and walkways. It is durable a n d i m p a c t - r e s i s t a n t a s we l l a s weatherproof. " Permecrete: This cement allows easy and swift drainage of water; the large pores present in the no-fines concrete allow easy drainage into the ground under appropriate conditions. When used outdoors, it helps raise the water table as the drained water seeps down to the groundwater level. " Thermocrete: A layer of this customised concrete can be applied over the top layer of the roof slab to avoid heat or cold from directly entering the building. The trapped insulation in the concrete layer provides a bed for energy control in the cement. " Fixotile, DIY concrete: It is prepared simply by mixing water, takes barely 90 seconds to dry, and allows the tiles to be easily set within that period of time. " Ecocrete: It reduces the heat of hydration, provides excellent durability, and improves workability, pumpability and placeability during concrete pours. " Jet-setcrete: With self-levelling features suitable for faster construction demand, its benefit includes high early strength, which is developed after six hours and as early stripping of mould and faster use of moulds for precast application. " Colourcrete: Concrete available in different shades for the smart home owner. Philips Lighting India: Personalising lighting with LED Through connected LED lighting, Philips foresees a future where lighting innovations connect seamlessly with smart controls, networks, devices and apps to positively benefit and improve lives and drive new business value. ¨Consumers treat Continued on page 43
NIGERIA’S CONSTRUCTION INDUSTRY HALL OF FAME 2015 SEPTEMBER 25, 2015, LAGOS NIGERIA
Engineering And Economic Prosperity Guest Speakers Engr. Otis Anyaeji, FNSE, FNAE Deputy President, Nigerian Society Of Engineers
Engr. Olanrewaju Sagaya, FNSE, FNAE Chairman, Yolas Consultants Limited
Chairman Engr. Kunle Ogunbayo, FNSE, FNAE Chief Executive, KOA Consultants Ltd
Systems Comm. Ltd.
Discussants: Arc. Jimoh Faworaja, FNIA, PPNIA; QS, Segun Ajanlekoko, FNIQS, PPNIQS; Buld. Bala Kaoje, FNIOB, PPNIOB, Tpl. Moses Olubunmi Ajayi, FNITP, PPNITP
S T R I C T
I N V I T A T I O N
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Continued on page 43
With the passage of Local Content Bill into law in 2010, indigenous companies started to record bold feats in the oil and gas industry, previously dominated by the International Oil Companies, IOCs. CED Magazine reports that many of the oil companies have suffered setbacks
LOOKING FOR OIL
ontrary to the predictions of some observers, the global oil market continues to constitute a serious source of worry to stakeholders because of increased supplies, low demand and drop in prices. For instance, the price of crude oil hit its lowest level in six and half years last Friday amid concerns over a slowing economy in China. The U.S. crude contract fell to $41.35 per barrel, the weakest level since early 2009. The oil contract has been declining since touching a high of $61.43 on June 10, this year. Investigations showed that some nations have been able to forge ahead without much ado. Take the case of Saudi 14 | www.cedmagazineng.com June 2015
Arabia, Kuwait and United Arab Emirate as an example. They have over $2 trillion dollars in their Sovereign Wealth Fund (SWF) accounts; which is just one of their numerous fiscal buffers. Consequently, the prolonged oil crisis has not yet impacted much on their operations. Another example is Mexico that adopted a hedging mecha-nism before the oil downturn at $76.40 per barrel, thus preventing it from exponential loss in the wake of the free fall in price. But that cannot be said about Nigeria, especially as a result of its overdependence on crude oil production and export. An energy expert, Mr. Kazeem Bello indicated that the fluctuation in the oil market following the discovery of crude oil in many parts of the world and the new wave of alternative energy
sources, particularly shale oil, have had adverse effects on Nigeria. He maintained that the country's failure to take cushioning measures against vola-tility risks by implementing fiscal buffers and hedging mechanisms, has left her at the mercy of the crisis. The Chair of the Nigeria Natural Resource Charter, NNRC and former Minister of Petroleum Resources, Mr. Odein Ajumogobia attributed it to lack of planning. Speaking at a policy dialogue entitled 'Implications of the Fall-ing Oil Price for Policy in Nigeria', organised by the Centre for Public Policy Alternatives, a Lagos-based think-tank, he commented on the need for a hedging mechanism, saying, "because we don't have a hedging mechanism, we are completely left at the
projects require a rather high level of knowhow and capitalisation,¨ says Anuj Puri, Chairman & Country Head, JLL India. ¨The predominant buyer audience is the IT or ITeS sector, which is more familiar with the concept of technologyenabled homes and tends to command higher salaries and purchasing power. As such, smart home projects work best in and around IT-centric workforce catchments of larger cities.¨ In this context, Shresht Kashyap, Principal Architect, KNS Architects Pvt Ltd, recalls the talk about Bill Gates´ house, which at the time, seemed akin to science fiction. But similar technologies are easily available today. ¨Because of the progression in technology,¨ he says, ¨innovation has become reality and the cost is coming down, becoming more universal in a way.¨ But while ´universal´ is an architect´s take, a builder may see things differently. Nayan Raheja, Executive Director, Raheja Developers, believes smart homes to be more of a luxury quotient. ¨Software is too high in automation and the biggest challenge that Indian households face is that the housewife or servant who spends the maximum number of hours at home is not as technology-savvy,¨ he points out. ¨Hence, smart home automation has been a bit slow.¨ Still, all considered, Dinesh Dubey, Vice President, SD Corp, believes that the smart homes market is going to explode. ¨I see growth spanning from 30 per cent to 100 per cent year-on-year over the next decade,¨ he insists. Smart techniques There´s certainly enough happening.
Among its most recent innovations, Raheja Developers has cracked the code of voice recognition and integrated it with home automation systems - now, we have Talking Homes! ¨You can just talk to the house; there are sensors or micro devices being installed at the construction stage itself through the house that pick up your voice,¨ says Raheja. ¨These are actually the first steps of artificial intelligence and can be further upgraded considering future trends and buyer requirements.¨ This is a first-ofits-kind application that controls electrical appliances. Further, while the second level is actually connecting the Internet, the third application will involve e-commerce applied arts. Beyond this, too, there lies a world of possibility. Shapoorji Pallonji offers real estate projects at all price points. And, as Dubey says, ¨We consider home automation at the entry level itself in the form of safety and security. We also use the BMS to control utility to all developments.¨ For instance, the company has a smart car parking system - you swipe before you leave the home and by the time you reach the ground floor, the car has arrived. It also offers retractable curtain solutions and lighting, AC control. Going forward, he believes, health and air quality will become a priority. For his part, Raheja envisions a future with mandates to designing smart homes.
there is an incremental cost in smart homes, but it´s a small per cent compared to the returns one gets from smart features. ¨The initial cost is a bit higher but
¨In the next five years, probably all smart home components may become a standard feature for middle and upper segment houses,¨ he says. ¨Although this is not a huge market in India, the country is fast growing and, hence, smart homes will eventually pick up.¨ Smart, and green While home automation technology has been around for over a decade now, the need for ´green-technology savvy homes´ is being acutely felt. The imperative to cut costs for energ y and electricity has paved the way for energy-efficient solutions, even in home automation. Green homes and smart homes are similar in terms of using natural resources to their most optimal. Hence, they go hand in hand. To save electricity, LED lights have come into the picture and there are motion sensors to ascertain level of occupancy of a room and accordingly adjust the light. Timers too can be set for everything - from geysers to air-conditioners - to cut down that electricity bill. And in terms of water management, recycling will become a big thing. ¨Smart homes will lower electricity and water consumption and will actually benefit the green home revolution,¨ affirms Raheja. Smart Ps: pricing and premium The best part is that smart homes are gradually becoming economical. ¨Earlier, a three or four-BHK smart home would have cost you anywhere between Rs 10 lakh and Rs 20 lakh depending on the level of automation required,¨ says Raheja. ¨But with time, this has been getting cheaper.¨ Technology too has become more efficient and less problematic. As Kashyap says, ¨There was a time you had to route your wires from one end to another, which incurred double the cost. However, everything can now be controlled with a single wire.¨ That said, there is an incremental cost in smart homes, but it´s a small per cent compared to the returns one gets from smart features. ¨The initial cost is a bit higher but eventually you start saving money on your running cost, which is your recurring cost,¨ he adds. With innovative technologies and the benefit of payback, are developers able to sell these smart homes on a premium?
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A new-age smart home is an integration of automation services with the digital and electrical infrastructure of the building as reported by CW
n a fully digital world, technology has taken centre-stage. And it has completely taken over the home as well. Much more than just living spaces, homes have morphed to become personalised sanctuaries that understand their inhabitants and speak to them. In India, smart homes started off on a slow wicket, largely because of lack of awareness of the concept and, therefore, demand. However, the smart homes trend has caught on now. ¨Technology-driven smart homes essentially encompass a range of services that integrate systems of lighting, security, heating, ventilation and air-conditioning, home theatre, wireless PC networks, etc,¨ elaborates Sumit Joshi, Marketing Head, Philips Lighting India. And where does the benefit lie for the end34 | www.cedmagazineng.com June 2015
user? Sameer Saxena, Vice PresidentMarketing, Legrand India, responds, ¨Today, we have comfort and convenience at the touch of a button or swipe of an app. We can take care of our near ones and our homes through remote access (safety and security). We can set up an ambience or convert our living space at the click of a button (entertainment, climate control).¨ From prefabricated housing to steel buildings, lighting control systems to complete home automation, HVAC and solar rooftops for energy generation, smart home concepts are evolving day-after-day. A major revolution has been brought about by the internet of things (IoT). ¨Smart homes and smart living have become the new-age mantras and various technology players are eyeing their share of the pie through introducing a mix of products and
technologies that transform conventional housing to a smart home,¨ says Yoshiyuki Kato, Director-Lighting, Anchor Electrical India. To this, Manjul Trehan, India Head & Director Sales, Lutron Electronics Inc, adds, ¨With a few taps on your smart phone, tablet, or even a smart watch, lighting, HVAC, security locks of gates and doors and other systems can be controlled, thus ensuring improved convenience, comfort, energy-efficiency and security.¨ The home makers While vendors are on an innovation spree, what is on the agenda of realty master planners? ¨Smart homes are generally being developed by the more prominent members of the builder fraternity as such
mercy of the oil price." Expectedly, many oil and gas companies have been affected. Take S e p l a t Pe t r o l e u m D e ve l o p m e n t Company as an example. The company's after tax profit amounted to N4.83 billion at the end of the first quarter of 2015, which represents a drop of 33.4per cent year-on-year. Full year outlook indicates after tax profit in the region of N20.21 billion for the company in 2015. The company may therefore lose as much as half of the profit figures of N40.48 billion it reported in the preceding year. The bad situation has compelled operators to adopt some measures, including cuts in capex, downsizing of o p era ti o n s a n d ca n cel l a ti o n o r suspension of contracts. For instance, Shell disclosed that it has deferred spending in many areas and this would result in a reduction in capital investment from 2015 to 2017 of over $15bn. Chevron Corporation slashed its 2015 capital budget by 13 per cent to $35bn. ExxonMobil disclosed that it would slash its capital spending by 12 per cent to $34bn from about $38.5bn last year, while French oil major, Total, cut capital spending by $2bn to $3bn from last year's total of $26.4bn. Operators have also embarked on a lot of adjustments in order to survive. For instance, the National Petroleum Investment Management Services, NAPIMS, a subsidiary of the Nigerian National Petroleum Corporation has ordered a 30per cent - 40per cent cut in the JV budget. This has culminated in the suspension of several ongoing projects. A source in NAPIMS disclosed that investments in new opportunities have been deferred. This action led to a significant drop in the Nigerian rig count from 51 in September 2013 to 27 in June 2015 - a 47per cent reduction. The drop in rig count has had a negative effect on other manufacturing and services businesses such as drilling fluids and chemicals, drill bits, casing services, and marine vessels to name a few, leading to multimillion dollar losses to indigenous services companies who have made substantial investments towards acquiring assets, technologies and capacity to execute projects. But the highest losses are being
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Austin Avuru, CEO, Seplat
incurred by indigenous rig owners who are stipulated by the NOGICD Act of 2010 to acquire by direct purchase at least 50per cent of deep water assets which can be valued at as much as $650m and above. These local companies are expected to demonstrate this ownership at the tendering stage with no guarantee of contract commitment. Tendering is unusually lengthy because of bureaucracy and outdated manual processes with cases of tendering going on for over five (5) years with no conclusion in sight. Acquisition of these assets usually requires these companies' borrowing from local banks at interest rates averaging 20per cent or more. These rates make the indigenous companies uncompetitive especially when compared to foreign oilfield service companies who have access to finance at significantly reduced interest rates and grants from their governments. The past four years have seen most international oil corporations in Nigeria divesting their investments in the company's oil wealth; and many indigenous companies and investors eagerly trooped to the corporate fields of these IOCs to have their bites of the supposedly considered juicy cakes which these IOCs were leaving behind, with the economic gains expected, in mind. With the recent fall in global oil price, it is not out of place to say that these IOCs got a 16 | www.cedmagazine.com July 2015
Map of Nigeria Showing Oil Producing States
forecast of the gloomy days ahead when they took the decision to divest. Earlier in the year, the Former Minister of Petroleum Resources, Mrs. Diezani Allison Madueke, had said at a session organized by the Petroleum Technology Association of Nigeria (PETAN) at the ongoing annual Offshore Technology Conference (OTC) in Houston, Texas, USA that "the IOCs operating in Nigeria today have divested assets worth about 2.2billion barrels of oil equivalent of hydrocarbon reserves at an estimated corresponding monetary value of at least $5 billion, and by the end of 2015, the total number of blocks that are likely to
Emeka Ene, PETAN President
be divested is estimated to exceed 20 blocks with not less than 4 billion barrels of oil equivalent and a monetary value of about $11.5 billion". Who would not jump at such mouth-watering opportunities? Even banks and other financial institutions which are usually unwilling to commit finances to indigenous investors jumped at this tempting proposal, but is the outcome as expected and is there hope for a better future for local investors in the oil and gas sector? MODULAR REFINERIES: THE SOLUTION? A combination of falling demand for rigs and cheaper foreign options has led to local rigs being left idle - ac-cording to a February 2015 BBC report industry analysts have said this is the worst oil rigs market they have seen globally since 1985. Idle rigs are in itself cost centers as there is a daily maintenance cost to ensure they do not deteriorate and are ready to use as and when required. Consequently companies have to invest on manpower that supports every oil rig idling by- from staff on board the rigs to office support and supply related companies. In recent times, the DPR out to unveil fresh guidelines for the establishment of these refineries; the agency even took big leaps in reducing the licensing fee for new
developed countries is not comparable to ours here; therefore we cannot only rely on our veterans here. It is advisable for our professional bodies to have collaborative agreements with similar bodies in developed countries. I believe it will ultimately benefit our professionals. We need to find a way to encourage people to improve themselves. The adverse effect of training can be attributed to them taking off after training, but Sanni, Ojo and Partners have gone past that. We believe that we need to impact the knowledge we were given, and the ones we have acquired over time into the upcoming professionals. We counter that effect by taking as many trainees as possible, so that at least, a few of them will stay behind. Q: In your opinion, what would be the impacts of shifting focus from the oil and gas to infrastructure development to the Nigerian economy? A: Infrastructure is what facilitates the economy. Take a farmer for instance who has his farming area somewhere in Ekiti State, he wants to be able to have quick access to the market because some of the goods are perishable. So if he does not have that need met, there would be quite an amount of loss. He would not work as hard as he does anymore because the harvest is not yielding much to him. But if the infrastructure is there in terms of transportation and proper networking market systems and the farmer can make a decent profit out of his efforts, the economy outlook will be great for even the agriculture sector. Power is a major infrastructure that can be referred to as the bloodline of the
economy. Every sector depends on power for proper functionality. Because of this incessant power outages, a lot of companies have invested in generators, and this increases the cost of production which is counter-productive for the overall outlook of our economy. Most of the companies that deal in steel fabrication cannot compete well because nowadays you can bring in steel from China at a very reasonable price of about 30% lesser than what would have been locally produced. So this power issue is working against our indigenous companies. This kind of infrastructure should be provided by the government, and when it is not, the private investors will take over and this will inhibit our local companies' ability to compete globally because of high pricing. Government must pay close attention to the power sector. I understand we have quite a large quantity of gas, but the pipelines are still being worked on. Hopefully if that is done properly and effectively; in a short time, we might be forgetting we had power outages. Gas is a cleaner energy compared to diesel and the rest. It will generate employment for people, but the government has to spend investment in it first, which would be gotten from the oil sector. That is why we need to manage our resources wisely, as they will not be there forever. Dubai and Qatar both have oil, but they are already investing in the housing sector. We need a diversification into various sectors. Q: As a structural engineer, with the emergence of high buildings in Nigeria, especially in Lagos, what maintenance plans are being put in place? A: It depends on whether the high rise buildings are initiated by private individuals or the government. They are very serious investments, and there are facility management companies that take up the challenge of maintenance nowadays. Right now, only privately built high rise buildings engage the facility managers' services. For the government
built ones, the culture of maintenance neglect has not been abolished. The Public/Private Partnership arrangement (PPP) may be useful in that when the government builds, they hand over the maintenance to a facility management company. They in turn will make sure to provide adequate human capital for proper maintenance for a fee. Facility management is a specialized profession whereby there are standards. Most of the old federal government buildings are rotting away due to lack of maintenance. I classify this as a colossal waste, this should be stopped. Engaging facility management companies will provide a great level of maintenance that will counter a considerable amount of building collapse. Q: What direction would you advise the government to go in solving the power issue? A: There is a lot of technology for power generation; for instance sea waves, solar and wind. The rate of hydropower generation has not matched up with the level of development in the country. Lagos for instance keeps expanding daily, but the provision for these developments is not being made. All these other sources of power can be combined to generate more power to commensurate the rate of development. Some buildings in the world that generate their own power, a building in Guangzhou, China is a good example; it has a wind turbines designed into the wind operating on the principle that the higher you go, the higher the wind speed. Some buildings are able to supply the amount of power required and even more, thereby reducing the requirement from the national grid. We cannot solely depend on hydropower generation. Recently, I read about generating power from the motion of humans. Imagine a train station in a developed country, at close of work hours, there would be people traffic on the walkway, so energy of stamping on the ground can be transmitted to power. so technology is breeding a lot of things, all we have to do is to encourage the engineering professionals to think outside the box and bring out innovations. It can be done; we just need an enabling environment to push towards the right direction. www.cedmagazine.com July 2015 | 33
ENGINEERING A & A
ENGINEERING A & A
SETTING PRACTICE STANDARDS Sanni, Ojo and Partners have been rendering quality services in the engineering sector for twenty five years, setting the needed standards. Temitayo Badewole spoke with Engr. Sanni on the performance of the firm and the industry.
: Give us a brief background of Sanni, Ojo and Partners. A: Sanni, Ojo and Partners is a firm of civil and str uctural engineering consultants and project managers. We design, prepare the drawings for various types of projects - residential, commercial and industrial. Also when the construction is ongoing, we do the supervision to ensure that the contractor building on-site follows through with the specifics of the drawing prepared. We have been rendering these services for twenty five years. Q: Generally, what is your opinion of engineering practice in relation to our nation's economic prosperity? A: The practice of engineering in Nigeria is not yet the way it ought to be because quite a number of engineering firms like ours are not getting sufficient work to do. Secondly, the fee structure being charged does not allow quite a number of firms to employ high grade engineers that can be retained. A lot of engineering graduates who finished with good grades are looking for good salary, even from day one, and quite a number of consultants might not be able to afford these salaries; so you find them working in banks, oil and gas companies, because the pay is quite suitable for them. The Local Content Policy implementation is helping to some extent, because it is only active in the oil and gas sector. Outside the oil and gas, the emphasis is not much. From my own little interaction with local players in the oil and gas, the major part of the process is usually done outside the country; and the way it is being implemented now, there is a lot of room for improvement. We should definitely promote it, but it needs some modifications in order for us to derive maximum benefits from it. Firstly, I believe that the Local Content documentation should cover virtually any project that comes from the government so that the local professionals can participate and also take advantage of it. They may not be highly experienced as
32 | www.cedmagazineng.com July 2015
expatriates may be, but it provides a platform for them to learn. So rather than looking at just the economic benefits in terms of the fees shared between the locals and the expatriates, we should emphasize on technology transfer. This is to ensure that for any project that will be executed by expatriates, there must be local participation. Let us face it, these international companies are in Nigeria because of the commercial prospects; so when the project is done, they oftentimes go back to their country, carrying with them the knowledge and necessary documents. This means that at a later time when you want to execute a similar project, you have to go back to them for information. The Local Content Policy also needs to be modified in the sense of professional experience needed. Engineers who have the facilities, been properly trained and set up, should be encouraged to participate. How can they have the experience the government requires for local participation when they are not being given a first opportunity? It is almost a perpetual cut-off of the local professionals. There are various regulatory professional bodies who have lists of
companies registered with them. Not every consultant is registered with the COREN or ARCHON; registration is not automatic. I am there of the opinion that every company registered with any of these regulatory bodies should be qualified to participate in any government project whether they have the experience or not. There should nonetheless be an undertaken that these local consultants are willing to learn, and be actively involved in the project execution. I am quite sure that the government can find a way to assess the impacts made on the local participants by the project execution, so that we can be sure that the purpose of the local content is achieved. As time goes on, there should also be an annual impact assessment of the local content policy implementation in terms of technology transfer. The financial back up of the local content comes from the resources of the country, so there must be a considerable amount of involvement of the local participants. Q: how do you think our nation can leverage on manpower development to have a sustainable growth for the economy? A: Well as for now, the process still remains the same. The output from our universities nowadays is not enough to be reckoned with; even those who graduated with very good grades need to be rigorously trained before they can be adequately utilized within the profession. This is where the higher institutions have failed. Sanni, Ojo and Partners has a training facility where we train the engineering graduates we employ for at least the first six months of their employment. This is something we need to encourage other engineering firms to do in order to improve the quality of our manpower within the sector. Also the NUC and other educational regulatory bodies should do much more to ensure that students get more value driven education. There should be an incentive for training young professionals on the part of our government. Also, the professional institutions have to do more in organizing courses whereby young graduates can be familiarized with the new happenings in the industry. The rate at which technology is advancing in the
refineries from $1 million to $50,000 - "he maintained. evidence that these modular refineries Investigations showed that the might altogether work, if investors buy operations of some indig enous into the proposition. Will they take the companies, including Seawolf Lonestar plunge? have been affected. Seawolf has since The Group Lead of the NNRC Expert gone out of business with the Asset Panel Core Sector group, Mr. Gbite Management Corporation of Nigeria, Adeniji, said oil companies were be- AMCON seizing its three rigs. The ginning to renegotiate contracts, adding company terminated the contracts of its that some clients were delaying payments. 450 employees who are currently being "There is a general waiting game in the owed 22 months outstanding salaries. industry. In the service sector, several companies will go out of business. Borrowing from the banks in this kind of environment is almost suicidalâ&#x20AC;Ś Contractors are beginning to lay off staff. The implications remain that projects will be further cut, while the optimism that brought those indigenous companies into the industry is dampening, GMD< NNPC, Dr. Ibe Kachukwu: INSER - NNPC Building and logo
The future is not completely bleak as the many stakeholders such as Nigeria, OPEC and others can do a lot to tackle issues in the market. While asking the government to diversify its economy, the national President of Oil and Gas Service Providers Association of Nigeria, Mr. Colman Obasi has called on both major producers and consumers to cooperate in order to find lasting solutions to issues that affect the global market, and by extension the fortune of oil producing nations as well as operators. C O R P O R A T E GOVERNANCE IN THE OIL SECTOR The natural Resource Government Institute in conjunction with the EIE Nigeria recently released a report on NNPC oil sales and advocated for the NNPC's transparency and corporate governance to be www.cedmagazineng.com July 2015 | 17
LIST OF OIL AND GAS ASSETS SOLD FROM 2010 - 2015 S/NO
OMLS 4, 38 and 41
Deal not opened to public bid
First Hydrocarbon Nigeria
OMLS 71 and 71
First E & P
OML 29 and NEMBE CREEK TRUNKLINE
Pan Ocean Corporation
Only $100m paid
OMLS 52, 53 & 55
Seplat, Belemaoil and Amni Petroleum
Actual figure slightly less (Seplat paid $259.4m for OML 53)
OMLS 83 & 85
First E & P
Actual figure slightly higher
8.717bn Note: Brittania-Uâ&#x20AC;&#x2122;s $250m deposit for OMLs 52, 53 & 55 yet to be refunded LIST OF POWER ASSETS SOLD IN 2013
Integrated Energy Dist. & Marketing
Integrated Energy Dist. & Marketing
KANN Utility Company
West Power and Gas
TOTAL 18 | www.cedmagazineng.com July 2015
ATC & C determined winner AFC, UBA, FCMB & Fidelity raised $215m
UBA Plc raised $82m
improved upon and the Executive Director (Oil and Gas), Access Bank Plc, Mr. Elias Igbina Kenzua advised indigenous oil and gas players to embrace corporate governance. Growth and development in the oil rich economy of our nation could be enhanced through total reform in the industry. Many think it applaudable that the new government has made new appointments within the NNPC, but is that enough? The government must also focus on policy regulation and implementation within the sector. Private investors and indigenous players within the sector have to aid the government in achieving these aims. Agenda have to be set and met, and then economic prosperity from petroleum products can be achieved. DEREGULATION AND PETROLEUM PRODUCT MARKET Africa produces about 10% of the world's oil and only 3.6% of this is refined on the continent; its refining capacity has remained constant for the past 20 years. Cameroon and Cote d'Ivoire together export about 34kbpd, meeting only 10.2% of the west, and central Africa demand shortfall. Nigeria is unfortunately synonymous to the highest importer of PMS inspite of her huge resources. However, the NNPC has resolved to implement a new strategy to transform the Nigerian the rehabilitation of the Brownfield refineries, according to the GMD, NNPC, Dr. Ibe Kachikwu. On deregulation as a key to sustainable development, he added that fuel subsidy is unsustainable, citing an example of the total expenditure between 2006 and 2012 at over 5 trillion naira. "Subsidy creates distortions in government revenue distribution as a result of round tripping a n d u n n e c e s s a r y c a r r y o ve r o f expenditures every year in a way that is difficult for government to control. Subsidy accounted for 20% of FG budget in 2013, and we must also take into consideration that the FG is not in control of the factors that influence retail fuel price, particularly fluctuations of crude oil price at the international market. Therefore deregulation policy is essential to the transformation and growth of the downstream sector of the oil and gas
faced some of these challenges we are facing today in different sector of our economy. If Americans can survive we could equally survive even much better and faster because we have a lot of other countries of the world to learn from and technology has made lot of things easier now compared to 300 years ago. We are working on it; it's not something that can be done in 5 years to 10 years. And for the nation to develop faster the input of intellectual professionals' bodies like the Nigerian Academy of Engineering (NAE) is important and its activities must be recognized. Because they are there to ensure the right engineering curriculum are time to time reviewed, so as to meet the need of the modern time and address the immediate challenges as they occur, criticize anomalies in the profession and also carry out research so as to come up with the best way possible for the growth of the nation's infrastructure. Your view on the various policies regarding engineering practices in Nigeria? Naturally, because the Engineers are not so much involved in policy formulation and when they are not involved, those who make policy for them don't really understand the sector, hardly can you make a policy that will favour that sector when you don't operate or have knowledge about the sector. You must not single out one policy because no profession operates in isolation, every profession is interlinked for one singular purpose to make human person more economically viable. Everything that revolve around policy is about human being to provide the ware fare, water, good health, to make his life better, to provide good road, provide good water, health facilities, good education and of course good education leads to all those ones. So it is like a kind of circle. We can't just single out engineering or single out this or that there should be a holistic, each person understanding that you need the other person to achieve the bigger goal of having a good life for your citizens. We
need security because if you don't have good security, you cannot be free. You need money because if you don't have money, you can't do anything. And we need the human being who is capable of generating economic activities that can generate the money. It is all about a congregate of interconnected activities that make up the human capital and it requires people who can have that at the back of their mind. That you can't make a policy deliberately to hurt one sector thinking that you are doing it to hurt a particular sector. If a policy hurts one sector, it has hurt the whole sector, because every sector is connected. The engineering is connected to medical practice, it is connected to pharmaceutical practice and as well to economic practice obviously. The role of Bureau of Public Procurement (BPP) in the area of infrastructural development project
What the BPP does is to regulate procurement policy development and implementation in the country. We are to ministries, departments and agencies MDA's what the Central
bidding in Nigeria. What the BPP does is to regulate procurement policy development and implementation in the country. We a r e t o m i n i s t r i e s , departments and agencies MDA's what the Central Bank is to commercial banks. We issue guidelines and ensure that the MDAs follow them. Also we intervene as regulators to bring sanity whenever there is friction. Simply put, that is what we do. Within that context, we issue guidelines that ministries and agencies of government will follow. The MDA's we need to interface with the services providers who are either suppliers, contractors or consultants and that is why the engineers come in many at times some of these engineers are consultants, contractors and some are equipment suppliers among others. So for them to effectively play with the MDA's, it is important that they understand the rules of engagement. So our job comes in as to educating the MDA's and the service providers on the responsibilities of each party, what is expected of the MDA's and what is expected of the contractors or services providers and suppliers in that engagement. And once everybody get to know the rules and their responsibilities, it becomes easier for them to play in a competitive market environment. So those who comply with the rules will win. It is just way of encouraging honest hardworking and ethical people and that is exactly what we do as purely regulators of public procurement. The emphasis is on public, because public in the use of public funds to provide public services, because the money we are giving to manage does not belong to us, it belongs to the entire 170,000,000 people and so there must be rules on how they must spend it. Some of us are privileged to be in positions of responsibilities and if you don't have rules and guidelines, some people can do other things with the money, so there is need for rule on how they must act so that we can have water for our people, mosquitoes net for our children, class rooms blocks, primary health centers, good roads, power and all other basic Continued on page 46
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SETTING PROCUREMENT STANDARDS In an Exclusive CED Magazineâ&#x20AC;&#x2122;s Interview with Engr. Emeka Muomah Ezeh, FNSE, FNAE, DG, Bureau of Public Procurement (BPP). He Bears His Mind on the Need for Professionals in the Country to Embrace Accountability and Transparency as the Agency Preaches. By Festus oseji
uilt environment professional recently argued for proper implementation and administration of pr ocur ement act in the construction industry. What is your take on this issue? The act establishing the Bureau of Public Procurement (BPP) is as simple and clear to understand. The Public Procurement Act 2007 established the Bureau of Public Procurement charged with the responsibility to amongst others, provide Legal and institutional framework and A Professional Capacity for public Engr. Emeka Ezeh procurement in Nigeria. Procurement process is not as Why is it that Nigerian built complicated as people make believe, except environment professionals do not that for the first time we have it codified in succeed in the bidding of most mega a legal frame work. But it is as simple abc. project in the country? All engineers are involved in one way or the Nigerian profession in built environment other in the past in procurement, because cannot be different from Nigeria all over, what they do when they make a choice for if you pick a drop of water from the ocean; client is to decide who does what and in the they have the same quality as the ocean. process of that decision requires that you The Nigerian professional in the built should be fare to everybody, because there environment are Nigerians living in are so many people involved in the game. Nigeria, and therefore are affected by the And in procurement process, honesty and same circumstances facing other well sincerity is required. It is as simple as that, meaning citizens of nigeria, so when they so when people say there is need for proper say they don't participate in mega project, implementation and administration of the it's not because of anybody's making it is procurement act I begin to wonder if they all part of the globalization. For instance, have really taking time to read and If I'm going to build a ten(10) story understand the acts itself and the its building, I need somebody who have the equipment, the proven track record of objectives. proficiency, have the capacity, capability The objectives of establishing the Bureau and even the financial strength to handle of Public Procurement are firstly; to the projects. But if you don't have these harmonize existing government policies requirements, there is nothing anyone and practices on public procurement and could do and it's bad. ensure probity, accountability and You can as well ask why people are transparency in the procurement process; Establish pricing standards and What really amazes me is when some benchmarks; to ensure the application of fair, competitive, transparent, value-for- people compare Nigeria with America, in term of physical development. They fail money standards and practices for the procurement and disposal of public assets; to understand that America had their and attain transparency, competitiveness, independence in 1776 which is about cost effectiveness and professionalism in 300 years ago and they have also over the the public sector procurement system. 30 | www.cedmagazineng.com July 2015
going to Germany for their medical services, when there are hospitals in Nigeria and other parts of the world. It is the same thing. It is all part of the development stage of the country. So Nigeria is developing slowly and with time all these challenges facing professionals in various sectors of the economy will be faced out completely. You can notice that small project like five storey-building most Nigerians are involved so to say, but when it gets bigger like 10, 12, or 15 stories, we need more equipment and more financial muscle to get involved. And that is where the challenges are; because we don't have the equipment in this country, no leasing facilities and manufacturing plants and these are the things we need to get outside the country and you will need whole lots of money to acquire such equipment. While other companies can get their equipment on lease or even borrow money at low interest rate of 2% - 4%. So, for you to operate in the Nig eria built environment, you must own the equipment because there is no leasing facility. You must also pay interest rate ranging from 2124% and so how many people even not narrowly can afford this. So, it's all part of the general development status of the country, it is not Nigeria professionals alone, it is all over. But I believe with time the issue would be addressed by the government through the review of the policies on both monetary and physical policy. The capacity building of individuals is key and also going through to the basics starting from the quality of our education and its focus, proper funding of the educational sector so that our young professionals graduate will generate jobs and be employers of labour and not looking for job that are not readily available. What really amazes me is when some people compare Nigeria with America, in term of physical development. They fail to understand that America had their independence in 1776 which is about 300 years ago and they have also over the years
industry, as it would go a long way in encouraging inflow of private sector and international investors. The downstream sector has been neglected by successive administration reforms have mostly been demonstrated, not done and policies have piled up
without proper implementation. However, times seems to be changing for good, as a lot of restructuring is happening within the oil sector these days. So many forms of advice have gone to the FG from various concerned bodies on what kinds of reforms to revive, engage
in, or totally annul. Private investors have been wooed across the world to take advantag e of the nation's liberalized trade and investment policy regime to invest i n i t s e c o n o m y. Investors in the US and its environs have been urged by President Muhammad Buhari to explore opportunities in the natural resources rich nation of Nigeria. Is this as a result of indigenous players shying away from these investment profiles, especially in the oil sector, and what forms of agenda will be friendly enough to attract our indigenous players to plunge into the nation's wealth of crude left by these divestments regardless of the seeming financial crumble from the drop in global oil price?
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A STRONG PRESENCE Krestal Laurel was incorporated in 1984, but started operations in 1990, and since then has been involved in the provision of engineering services which include supply and installation, commissioning, maintenance and repairs of elevators, escalators and overhead travelling cranes, generators, UPS, foremost welding machines and data syntax
ED Magazine: What is your perception of the elevator engineering services industry in Nigeria? Engr. Majekodunmi: Today, elevator engineering services in Nigeria has grown and is still growing. We now have so many players on board, and the technology has been improved. We now have more sensitive elevators, sophisticated technology and simpler ways of installing the elevators. CED Magazine: With the presence of strong international players of the industry in Nigeria, how has Kresta Laurel carved a niche for itself amidst indigenous and foreign competitors, and how do you engage in your after sales services?
Engr.Oludotun Majekodunmi, FNSE Procurement & Installation (DGM), Kresta Laurel Ltd.
Engr. Majekodunmi: Well, our strong presence is simply as a result of the quality of our products, the quality of our services and adherence to our core values, some of which are integrity and efficiency. Our after sales services are well grounded in that we have a policy that ensures that we reach our clients within 30 minutes of request. This we have been able to achieve by creating satellite offices around Lagos. We have divided Lagos into 5 zones namely the Mainland, Island, Apapa, Lekki and Ikoyi Zones. We also have engineers and technicians that work in these zones on a daily basis. Our policy is such that our installations are done to a near perfect so that breakdown rates can be reduced. We have also gone a step further to improve our machinery operations by backing up with UPS in case of power outages or fluctuations in electricity; and over time it has helped to minimize the frequency of breakdowns. More than that, we also carry out the routine and preventive maintenance activities on the equipments. We also have the customer service lines that monitors the level of satisfaction on services rendered. These have ensured the level of our after sales services is rated high. We also do some benchmarking by trying to match our manufacturing standards in the way we serve our clients. 20 | www.cedmagazineng.com July 2015
CED Magazine: How often do you conduct your maintenance reviews? Engr. Majekodunmi: We have in place our client service agreement which has to be signed as at the time of the contract signing. There are clients that have their lift equipments installed for residential purposes. For this categ or y, the maintenance checkup is done monthly, but in a situation whereby usage is at least average, review is done bi-monthly. In some cases where usages is very high like in a shopping mall, there has to be some kind of periodical checks in place to ensure the equipment runs properly. CED Magazine: What are the challenges facing the elevator engineering services industry in Nigeria? Engr. Majekodunmi: Well, these challenges are numerous, but the major one at present is the difficulty in the assessment of foreign exchange. Even when the request is made to the bank, it takes a longer time to get results, and we do not get at the stipulated rates. Another challenge is as regards the clearance of these machineries at the ports. A lot of times, even after paying the government dues, they still come up with revaluation. All these eat into the fabrics of the business. The greatest enemy of elevator
engineering services is power that is why we employ the use of the UPS backup, which is not cheap. The function of this UPS backup is to supply temporary power to the system whenever there is power outage. It also protects the elevator equipment from the damages of high voltage power supply. In the event of a power surge, the UPS backup stops the flow of that power, supplies the temporary one it has stored and when it normalizes, then allows it to flow freely again. CED Magazine: What brands of elevators, escalators and lift equipments doo you represent in Nigeria, and in terms of installation services, how would you describe your manpower? Engr. Majekodunmi: Kresta Laurel Limited is the sole distributor of KONE Elevators and Escalators of Finland, AEC of Italy for UPS, etc. In terms of skills, we are expert at what we do. We have well trained engineers, technicians and expatriate backups. Our engineers are trained from time to time both locally and internationally. We have a training school in our complex here in Lagos where we train at least 4 of our staff once in a week. Over the years, we have been able to sustain our standards and even improve on it. CED Magazine: Are there not challenges regarding policy issues in the sub-sector? Engr. Majekodunmi: Well, the issue of policy in the industry has gone beyond what a company can fight. The industry as a whole has to tackle it head on. I believe this is part of the functions of the Lifts and Elevators Association of Nigeria (LEAN). LEAN was formed almost two decades ago, but has somehow gone under. An attempt to rekindle its operations was made last year, but that is still struggling. LEAN set up a committee to list out the policy issues affecting the industr y, and take them to the government. Until that is done, the companies might be going on a wild goose chase. CED Magazine: What are your long term goals as a player in the elevator industry? Engr. Majekodunmi: Our long term goal is to continue to provide solutions to building transport problems. We are also bent on delivering our services at equal
technologies on the horizon which are promising to transform the construction industry include new smart, super-strong and sustainable materials, new energy technologies, GPS, BIM, virtual and augmented reality, robotics, 3D printing, wireless, ultra-mobile, wearable computers and new touchscreen APPs. " While we must clearly be aware
of the many risks of new technology (obsolescence, cost, security, integration, skills and training and so on) recent research shows that existing skill levels in the construction industry are not advancing fast enough to use this new technology, that there are problems of synergies and interoperability with existing technologies and that work
processes have been slow to change to accommodate them. " Increased urbanisation and population growth will also place greater stress on energy supply, natural and human resources and infrastructure (hospitals, roads, ports, rail, energy and water). This will be exacerbated by climate change and an increasingly educated, informed and empowered community who expected the construction industry to protect the communities and environments in which it builds. " Vast quantities of carbon emissions are generated by the construction production process, by the resources and materials used during construction and in the electricity and transport required to enable buildings to function. Prices of carbon rich materials and processes will also rise and with estimates of up to 80 per cent of a firm's carbon footprint imbedded in its supply chain, large companies are already putting pressure on their suppliers to reduce carbon footprints and emissions. Many of the challenges are clear. It's up to us to innovate to meet these challenges head-on.
activities among academia in the building profession in Nigeria and abroad. The document equally noted that avenues should be created by the Builders call for formation of consortium of experts professional and regulatory bodies for experienced professional women builders in the industry to groom the rising from the just concluded 44th younger ones, stressing that the employment Annual General Meeting and of more female builders in the ministries, Conference of the Nigerian higher institutions and agencies should be Institute of Building (NIOB) with encouraged. the theme "Constr uction Industr y The Conference which called for Development: Collaboration, Innovations patronage of professional women builders and Capacity Building" which held in Ilorin, through contract awards as contractors and the Kwara State capital, professional builders consultants by the government, said have called for the formation of a consortium professional bodies and academic of experts in the building industry in order to institutions should encourage and organize encourage and improve construction project more seminars and workshops to educate delivery. members on the necessity and benefits of The call was part of a 10-point innovations and innovative practices as well communique issued at the en d of the five-day as to foster unity among the professionals in event which had over 1,000 delegates the building industry. The communique comprising professional builders, graduate further called on the government to builders, and representatives of students promulgate a law to enforce the National from schools offering building technology Build. Tunde Lasabi, President, NIOB Building Code, while green construction and across the country. energy efficiency practices as well as training The Conference also resolved that construction should be introduced in order to sustain the environment. The professionals within the country should endeavour to participants further resolved that professionals in the building collaborate with professionals outside the country in order to industry should put social, environmental and economic internationalise construction process and output. Also sustainability of every project ahead of financial gains while envisaged is a collaboration in research and development handling building projects.
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Arc. Musa Sada, Minister of Mines & Steel
RE ENGINEERING PRACTICE 8 reasons why the global construction industry needs to innovate
usiness leaders are constantly told that innovation is 'essential' to business growth, competitiveness and productivity in a world of increasing competition and depleting natural resources. A recent McKell Institute Report declared that firms must "innovate or perish" and that executives are faced with a fundamental choice. They can either take "the 'low-road' of narrow costcutting and an unwinnable 'race to the bottom' or they can take the 'high road' of innovation to position themselves at the top of the value chain in an increasingly knowledge-based economy. These claims are backed up by evidence, which shows that innovative businesses are twice as likely to report increased productivity compared with businesses that don't innovate. And this reaffirms other research by influential organisations such as the Grattan Institute, which has identified a lack of innovation as a key area of reform needed to raise national productivity performance. In order to succeed the construction sector needs to have a much stronger sense of vision, leadership, vitality and appetite for innovation and continuous improvement. The construction industry needs to improve its innovation record, or risk being left behind. Innovation is one of the latest management buzzwords that it used by 28 | www.cedmagazineng.com July 2015
many but understood by few. In simple terms, innovation is the process of bringing new creative ideas to reality, in an attempt to take advantage of what might lie over the horizon or to create an entirely new future, which no one else had imagined. The iPad is perhaps the most vivid example of disruptive innovation in recent times and the rewards to those who can create them are enormous. Apple's share price has risen 23,639 per cent from its first trading day and made history recently by being the first company in history to reach a market capitalisation of US$710 billion, more than double that of its rival Microsoft. However, history shows us that we are constantly caught-out by the future. Predictions of the paperless office, personal jetpacks and holidays to the moon are just a few examples of many wide-eyed predictions which have been proven to be completely wrong, even by the greatest thinkers of our time. Although our attempts to predict the future often fail, it doesn't make crystal ball gazing worthless. History also tells us that businesses which attempt to anticipate, understand and organise for the future will tend to succeed, no matter how far from the truth their predictions were. Thinking about the future allows firms to capitalise on future potential opportunities, even if they may be different to those anticipated. Below are a few selected insights into
many over-the-horizon trends that may affect companies that operate in the construction industry in the future. " The International Monetary Fund (IMF) recently pointed to two profound changes taking place in global politics and economics. First, political and economic power has been moving inexorably east. Second, we are in a prolonged period of economic instability brought about by an increasingly interconnected world. " Over the next 20 years the emerging E7 countries (China, India, Brazil, Russia, Mexico, Indonesia and Turkey) are expected to grow by 50 per cent more than the current G7 countries (US, Japan, German, UK, France, Italy and Canada). Other countries with high growth potential rates into the future include South Africa, Nigeria, Philippines, Bangladesh, Saudi Arabia, Malaysia, Thailand, Pakistan and Iran. " To thrive in this new world, it is critical that businesses see themselves as regional rather than domestic players and be adaptable, flexible, resilient and creative in their thinking. New relationships, knowledge and skills will need to be developed. " The predictive capabilities of new technology coupled with the large amounts of data now available through 'the internet of things' will transform business. Not only will it allows firms to effectively manage 'big data' in a way that they could previously never do, but it will also open the way for a new generation of robots which will act like 'virtual humans' serving as customer support slaves which can engage in real conversations with customers, through analysing conversation patterns and the context and profile of the person they are interacting with. It is estimated by some that in 50 years, 30 per cent of the working population will be made up of these robots. " How this new technology will affect construction is largely unknown. However, we do know that construction has always lagged behind other industries in this area. This is despite evidence that productivity increases of between 30 to 40 per cent could be achieved by the adoption of these new technologies. Some of the more immediate
L-R: Governor Rauf Aregbesola of Osun State; NIOB President, Builder Tunde Lasabi; Governor of Oyo State, Ajimobi and Former Head of Service of the Federation Prof. Afolabi
SETTING GROWTH PATH Builders at the 45th Annual General Meeting set growth path for construction industry
embers of the Nigerian Institute of Building have c a l l e d o n t h e Fe d e r a l Government to create an enabling environment for the building and construction industry to thrive in the country and for the economy to become prosperous. At the 45th Builders' Conference and Annual General Meeting of the institute, which ended in Ibadan on Friday, the NIOB President, Mr. Tunde Lasabi, said there was a need for builders and other professionals in the built environment to embrace entrepreneurship. According to him, a lot of business opportunities are available for builders as well as Nigeria and Africa's construction professionals to tap into. "As builders, our foremost concern is that the government provides an enabling environment for business to thrive in Nigeria for us to harness the opportunity to make this nation a better one," he said. Lasabi stated that builders must be taught skills of starting up their businesses and becoming employers of labour.
"The construction of buildings should not be left in the hands of quacks; builders in Nigeria will continue to play their roles effectively as the critical link in the building production management," he stated. Business opportunities that are available in the construction sector and
Build. Tunde Lasabi, President, NIOB
how to harness them and develop the appropriate skills to meet the demand for professional services formed the basis for discussion at the conference, which had as its theme: 'Skills development and entrepreneurship in the construction industry'. The conference, tagged 'Oluyole 2015', also witnessed the conferment of distinguished professional lifetime achievement award on the first President of the institute, Otunba Fatai Osikoya, and honourary fellowship award on the Oyo State Governor, Abiola Ajimobi, and his Osun State counterpart, Rauf Aregbesola. A former Head of Service of the Federation and chairman of the occasion, Prof. Afolabi Oladapo, said the theme of the conference was one area where the country had found itself wanting and had been overtaken by neighbouring countries like Benin, Ghana and Togo. He said it was not enough for professionals to have the needed skills but that they should also be able to use such for business purposes and job creation. "The challenge in contemporary time is such that the professional body is becoming conservative. But they are looking for you everywhere; in Equatorial Guinea, Mozambique etc., where you can colonise them because you have the skills," Oladapo added. The Chairman of the Organising Committee for the conference, Mr. Kunle Awobodu, said the increasing desire of prospective homeowners to g et functional structures that meet their needs had placed an enor mous expectation on the performance of builders. He added, "Today, in Nigeria's built environment, the relevance of builders in the building production process is no longer in doubt. "But the worrisome dimension is the increasingly dwindling opportunities for the cascading of construction skills, competence and knowledge by the fast aging and depleting experienced builders down to the young and emerging builders for effective site management and successful building project delivery." Continued on page 22
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played a large role both in project financing and execution. But the government is also turning towards sovereign debt - having sold a $2bn eurobond in 2014 to help raise financing for some of its capital spending and it is in addition reforming capital market regulations to allow for real estate investment trusts (REITS).
to ensure supply grows in those segments where it is most needed ...We have a strong demand for housing, and we are nowhere near meeting this." However, meeting that demand could be difficult, particularly for private developers who target the middle and high-income segments. "The property sector has many challenges, especially in supply chain and regulation...This makes it hard to deliver homes efficiently as investors add risk premium on property prices," said Geoffrey Maina, analyst at lender Old Mutual Kenya, in a research note published in October. "Collaborative efforts between the private sector and government need to be firmly addressed so as to widen the type and number of properties that warrant a mortgage." The government is in talks with banks over the provision of cheap mortgages carrying interest rates below 10%. Mortgage financing currently attracts rates of 15% and more, putting such packages out of the reach of many Kenyans. The World Bank estimates that only 11% of Kenyans earn enough to finance a mortgage. Lower lending rates would spur demand for housing, and in turn increase business for the construction sector.
Supply deficit Real estate developments are also contributing to an uptick in construction activity, in part thanks to public sectorbacked efforts to expand residential supply in lower-income segments. The government announced in late October that work would begin in February to construct 25,000 new residential units, most of which will be in Nairobi, where slum areas will be cleared to make way for affordable housing - the biggest segment of the supply deficit. Estimates vary on the housing shortfall in Kenya, with numbers ranging between 150,000 and 200,000 residential units in urban areas and more than 300,000 in rural areas. According to housing finance agency Shelter Afrique, the shortfall will increase further in the east African nation of 43m people, as the urban population grows at an estimated rate of 4.2% a year. According to Mohamed Hassanali, the CEO and director of property firm HassConsult Real Estate, demand for residential property will remain high while the housing deficit continues. "Housing needs are estimated at 200,000 houses per year," Hassanali told OBG. "It is important
Bureaucratic hurdles to overcome While sector outlook is positive in the medium-term, bureaucratic hurdles remain a challenge. The World Bank said the processes of obtaining construction permits in Kenya had become more costly over the past year. The latest 'Ease of Doing Business' study, released at the end of October, showed that the process of dealing with permits costs an estimated 9.3% of the total value of a project, compared to a regional average of 6.2% and an OECD rate of 1.7%. The World Bank put Kenya's construction industry in 95th position out of 189 countries assessed, down from 35th the previous year, due to a raft of new fees. Kenya was still ahead of most Sub-Saharan countries, however, in terms of the number of procedures and in days required to obtain a construction permit. Nonetheless, the government has made improving the business environment a key plank of its current policy agenda, and in recent months has introduced new measures that seek to simplify and reduce constraints on private sector activity. This article is re-published with permission from our content partner Oxford Business Group.
Builders were more apt in imbibing professional technicalities to forge professional competences and interface with other building industry practitioners in joint efforts to harness resources for the Arial view of Civil Servants Houses at Ngara in Nairobi
Prof. Akin Mabagunje with the founding President of NIOB, Builder Fatai Isola Osikoya
Ajimobi noted that the conference was not only appropriate but timely, adding that there was a need for the NIOB and other professionals in the built environment to develop relevant knowledge and skills. He added that this would help check unwholesome practices in the building construction sector and help reduce the magnitude of building collapse in different parts of the country. The governor said, "Developing the skills of artisans will also put a check on the incidences of collapse buildings that are now a common feature in the construction industry. "It is imperative for your institute and other professional bodies in the
construction industry to come together to create a common platform and partner with the government at all levels as well as tertiary institutions to develop a more robust master plan for skills acquisition and development." According to him, cases of collapsed buildings in the country have become embarrassing and unimaginable for a nation blessed with great potential in its construction industry. Ajimobi also urged the institute not to focus on infrastructure development alone, but to expand into social housing development, adding that his government would continue to provide the enabling environment for the construction sector to thrive.
Builder Fatai Osikoya been welcome to the AGM by other builders
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Aregbesola, on his part, urged the institute to ensure that artisans' skills were developed locally so as to boost the country's economy. The governor also called for strict compliance with building rules and regulation to ensure a safe environment for the citizens and for construction business to thrive. While commending the NIOB for the honour bestowed on him, Aregbesola said the regeneration of the country would come from well regenerated urban centres. The Vice-Chancellor, University of Ibadan, Prof. Isaac Adewole, who also received the national merit award of the institute, said the NIOB needed to create more awareness about its activities in the construction sector. Lasabi said builders were more apt in imbibing professional technicalities to forge professional competences and interface with other building industry practitioners in joint efforts to harness resources for the future of the construction sector as well as the nation's economy. "In line with Section 13:12.4 of the National Building Code, 2006, which states that the management of the execution of building works, including the super vision of artisans and tradesmen, shall be carried out by a registered builder, the professional builder must master the science, management and technology of building practice to sufficiently create innovations and adoption of world best practices as a means of relevance and developmental progress," he said. By Temitayo Badewole with Agency and Punch
DRIVING GROWTH Housing drive puts Kenya construction on growth path
ajor investments in housing and infrastructure have set Kenya's construction industry, which accounts for 4% of GDP, on course for sizeable expansion in the near term. According to data issued by the Kenya National Bureau of Statistics (KNBS) in October, the construction sector, which recorded a quarterly increase of 18.9%, was the single biggest contributor to GDP growth during the second quarter. This compares to growth of 4.9% in the first quarter, or the 2013 year-end figure of 5.5%, indicating a strong acceleration in building activity as new investments came on stream. Infrastructure boost A major fillip for the construction industry > is expected from government programmes > to reinforce Kenya's infrastructure backbone. Increased spending planned on a variety of transport projects include the $25bn Lamu Port and South SudanEthiopia Transport corridor, a Sh327bn ($3.6bn) standard g aug e railway development, and the commencement of work on 2000 km of new roads in 2015. Infrastructure projects will be a significant force powering Kenya's economy, with an IMF report in midNovember saying such investments will underpin economic growth of 6.9% in 2015, accelerating to 7.5% the following year. Funding for a number of construction projects has come from donor states, including China, which has in recent years
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OIL AND GAS REPORT refineries. Indian state-owned refiners like Indian Oil Corp., Bharat Petroleum Corp. Limited and Hindustan Petroleum Corp. Limited, and private refiner Reliance are all key and consistent buyers of Nigerian crudes like Qua Iboe, Bonny Light, EA Blend, Erha, Usan and Agbami. In 2014, 18% of Nigerian crude exports went to India, according to data from the US Energy Information Administration. According to Platts data, more than 25% of Nigerian crude imports have been going to India for May, June and July loading. Similarly, Indian imports from Angola rose to a 14-month high of 1.19 million mt of crude oil, up 74% year-on-year, according to the shipping data. India is also a regular buyer of crude from other countries in the region, notably Gabon, Equatorial Guinea, Cameroon and the Republic of Congo. FALL IN DEMAND FOR MIDDLE EASTERN CRUDES India's interest for heavy and sour grades from the Middle East has been on the
wane, especially for May, June and July loadings, as it has looked to diversify its imports and has found crudes from other regions more price competitive. Saudi Arabia supplied 3.08 million mt of crude oil to India in May, down 5.25% year-on-year and 17.17% from April, according to Platts shipping data. Imports from Kuwait plunged 55.78% on the year to 852,958 mt, while imports from Qatar were down 62.92% at 197,157 mt, the data showed. Traders said Indian demand for Iraq's Basrah Heavy had been particularly low, meaning there was more interest for WAF grades. Even though the quality of Basrah Light and Basrah Heavy crudes are different from West African crudes, with differentials staying very weak for the latter, Indian refiners have found these crudes more attractive in the current refining environment. "The fall in Middle Eastern demand from India is linked to this," said another trader at an Indian refiner. "There is a market perception that the quality of Basrah Heavy is not good and we [India] have stayed away from it.â&#x20AC;?
GAS RESERVE POSITIVE Nigeria's has an approximately gas reserves to last 79 years - DPR
igeria's gas reserve life index stands at 79 years as of January 1, 2015, according to the latest data from the Department of Petroleum resources. > Out of this figure, some volumes are > said to stranded or not developed. The country is also said to have 188 trillion cubic feet in gas reserves as of January 1 this year. The Deputy Director, Gas Monitoring and Regulation, Department of Petroleum Resources, Mr. Antigha Ekaluo, disclosed this in a presentation at the 16th Annual General Meeting/Natural Gas Business Forum 2015 of the Nigerian Gas Association held in Lagos on Wednesday. The presentation was entitled: 'Harnessing and monetising the potential of stranded gas fields: A key enabler for economic and national growth'. The reserve life index measures the 26 | www.cedmagazineng.com July 2015
resource. The RLI is often used to measure how long a well or mine will last such as for oil, natural gas or minerals. Typically, the higher the RLI, the higher the quality of the asset. For example, an oil well with a RLI of 15 years will be a more productive asset in the long term than an oil well with a RLI of five years, assuming the production levels are the same. Ekaluo said Nigeria's gas reserves endowment might be up to 600TCF, quoting the United States Geological Survey, adding that the country ranked seventh in the world and first in Africa in gas reserves base. According to him, natural gas potential exists in inland basins like the Benue Trough, Borno and Anambra basins, but with the natural gas accumulation mainly concentrated in the Niger Delta Basin. He said substantial discoveries had been made in the deep offshore area, on
stressing that all natural gas discoveries were incidental to exploration for crude oil. The DPR official described stranded natural gas as that, which was available but not developed due to economic and physical constraints, adding that stranded gas could also be gas reserves in remote fields, which would be uneconomic for monetisation. "They could also be associated gas reserves without gas gathering systems," Ekaluo explained. According to him, capital and operating expenditures are stifling the growth of gas infrastructure, as well as immature/sub-commercial domestic market, disincentive fiscal terms (high risk, low return) and absence of robust legislative and commercial framework for gas. Nigeria, he noted, was endowed with abundant gas resources and the sector holds huge potential for unprecedented growth. The existing legal and regulatory framework, written primarily for oil, does not provide robust technical and commercial framework for gas, he argued, adding, "There is, therefore, the need to pass the Petroleum Industry Bill into law, which will underpin the ongoing sector reforms. "The gas sector policies will provide Nigeria with the opportunity to harness and get maximum value from its stranded gas resources, as effective gas sector development remained a catalyst for growth and will have a multiplier effect on the Nigerian economy." On the strategy for monetising stranded gas, the Council Chairman, Society of Petroleum Engineers, Nigeria, Mr. Emeka Ene, said there was the need for the country to identify and secure its closest markets, develop an integrated flare-out model, recognise that associated gas was not non-associated gas, determine the size the process based on average throughput, and modularise the solution. For accelerated stranded gas monetisation, he called for the fasttracking of captive power, adoption of gas-powered public transportation, Liquefied Petroleum Gas substitution programme, and the implementation of pipeline network code.
NIGERIAâ&#x20AC;&#x2122;S CONSTRUCTION INDUSTRY HALL OF FAME. MEET THE LEADERS IN THE INDUSTRY....... SEPT. 25, 2015 LAGOS NIGERIA
Mrs. Nkechi Obi, Executive Vice-Chair, Techno Oil Limited
TECHNO OIL LPG PLANT COMING Techno Oil Targets 5m LPG Cylinders Yearly from Manufacturing Plant
r s. N ke ch i O b i , a distinguished Member of the Order of the Niger (MON), is the Executive Vice-Chairman of Techno Oil Ltd, Nigeria's foremost Oil and Gas
Company. Mrs. Obi is a visionary and astute business woman, who presides over the Techno Oil Group, a diversified conglomerate with subsidiaries and interests, spanning across Oil and Gas,
India's appetite for West African crude oil grades sees big boost * WAF crudes stay attractive on strong margins * Indian WAF May imports surge * Dip in interest for Middle Eastern grades India's appetite for West African crude has surged in recent months as one of the world's biggest consumers of oil looks to shift its focus away from the Middle East. Sources said there are a host of reasons Indian demand for West African crudes has risen significantly in the past three or four months, including the narrow Brent/Dubai spread, lower ICE Brent, and weaker WAF crude differentials. "The right circumstances have aligned for Indian refineries to continue to take more West African barrels," said one trader. Indian demand for light and medium sweet grades from West Africa has also risen amid stronger gasoline and middle distillate cracks, ably supported by strong refining margins. "India is taking a lot more [WAF] than normal," the trader said. "It's very cheap -- differentials are at all-time lows, Dated [Brent] is cheap...there's domestic Indian demand for gasolinerich grades and [refinery] cracks are fantastic." State-owned Nigerian National Petroleum Corp. lowered its July official selling prices for Bonny Light to a 23-cent premium over Dated Brent, the lowest premium since January 2005. A narrowing of Brent crude prices to Dubai over the past year has made Brent-related crudes more appealing to Asian refiners, and this has incentivized Indian refiners to buy more West African crudes, which are normally traded at a differential to the Dated Brent benchmark. The Brent/Dubai exchange of futures for swaps -- which allows
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OIL AND GAS REPORT
OIL AND GAS REPORT
SAVING THE ENVIRONMENT According to the Mrs. Nkechi Obi, Executive Vice-Chair of Techno Oil, a major player in the oil and gas industry, adequate us of LPG will check environmental degradation
he Executive ViceChair, Techno Oil Limited and President of Women in LPG Group, Mrs. Nkechi Obi, has urg ed g over nment to popularise the use of Liquefied Petroleum Gas (popularly known as cooking gas) as a veritable source of domestic energy if it is truly committed to checking environmental degradation. "If a greater segment of the population embraces cooking gas, cutting of trees for firewood will be systematically be curbed and environmental degradation reasonably checked," she said Mrs. Nkechi Obi, Executive Vice-Chair of Techno Oil in a presentation made available to our correspondent on per cent adoption level. Senegal stands at 40 per cent while Brazil has 90 per cent Wednesday. adoption rate. Nigeria's standing is even According to Obi, Nigeria has the largest reserve of gas in Africa and a more laughable compared with countries population of over 170 million people, such as Togo and neighbouring Republic but has the lowest cooking gas of Benin. This does not have to be so consumption rate, compared with many with Nigeria." The huge gas reserve in Nigeria should other emerging economies around the be a factor that should compel the Federal globe. Government to put measures in place to She said, "In comparative terms, the make more Nigerian households to adoption of LPG currently stands at 10 embrace cooking gas, the Techno boss said. per cent in Nigeria while Ghana has 45
According to her, that will automatically make more people to abandon firewood and charcoal, and the environment will be better for it as well as the economy. She said, "When more households start using the LPG, the rate of cutting trees for firewood will decrease. Besides, using kerosene for cooking will also become unattractive because of the ever increasing cost of kerosene. "Government will subsequently spend less money on importing the commodity. Everybody stands to gain because the foreign exchange that hitherto was spent on importation of the commodity has to be put to other uses. "It becomes logical, therefore, to suggest that government should direct its agencies such as the National Orientation Agency, Ministry of Information and other related agencies to mount campaigns to make Nigerians to embrace the use of cooking gas." She said government should also introduce incentives to encourage investors to go into the LPG ventures. Such incentives, according to her, should include removal of multiple taxation for investors; creating the enabling environment for business and introducing measures that would make the cost of cooking gas affordable for every Nigerian household.
TECHNO OIL PLANT
Aviation, Power, Real Estate and Banking. Mrs. Obi's Techno Oil Limited has embarked on the construction of a multimillion naira Liquefied Petroleum Gas (cooking gas) cylinder manufacturing plant in Lagos, where it targets to produce 5 million units of cylinders annually. The construction of the plant valued at over N3 billion, which is expected to offer no fewer than 1,000 jobs to Nigerians has since commenced at Lekki area of Lagos. Currently, the machines fabrication and construction of the plant, are being monitored in strict compliance to regulatory standards as stipulated by Standards Organisation of Nigeria (SON), Department of Petroleum Resources (DPR), and Cotechna, among others. Speaking in Lagos when the model of the plant was unveiled for the LPG stakeholders, the Executive Director of 24
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Access Bank Plc, Mr. Roosevet Ogbonna said his bank was fully in support of not only the cylinder manufacturing project but the vision and initiatives that the promoters of Technoil have for their company and the downstream sector. He noted that it is always easy to want
to be associated with a successfully brand, adding that Techno oil has become a successful brand. "I think it is no gainsaying that Techno Oil today is a successful brand. So, it is easy to be associated with Techno Oil. As a bank, we are fully in support not only of this particular LPG project; we are in total support of the vision, initiatives and the drives that the promoters and movers behind Techno Oil have for the company, as well as the for the downstream business that they operate in. Our relationship with Techno Oil dates over five years but I can assure you that
the last five years have been a partnership that has worked. The reason it worked is because, I wish I can tell you is because of the bank, but that will be a lie. The reason it worked is because of the kind of company that Techno Oil is. It is a company that has significant credibility, deep vision, humility and excellent as a watchword for the business that they do. Who wouldn't want to be associated with such company?" Ogbonna explained. Also speaking, the Executive ViceChairman of Techno Oil, Mrs. Nkechi Obi, said the plant was being constructed in partnership with a European firm, which had built similar plants in over 15 African and Asian countries. Obi said that her company embarked on the project as part of its contribution to the drive by the federal government to deepen LPG and encourage more Nigerians to embrace the use of LPG which is clean, safe and affordable. She said that although the use of cooking gas had increased by about 36.8 per cent in Nigeria in the past three years, over 80 per cent of households still relied on kerosene, firewood and other dangerous energy sources. According to her, Nigeria has a population of over 170 million people, yet the country has less than one million cooking gas cylinders in circulation. "The huge capital expended annually on the importation of LPG cylinders is a
monumental loss to this country. With the completion of this project, Nigeria will curb this huge capital flight which is estimated at N5 billion annually and further reduce the depletion of our foreign reserve. She expressed optimism that the Techno Oil LPG manufacturing plant would assist in checking capital flight suffered by Nigeria in importing cylinders and the huge kerosene subsidy estimated at over N150 billion annually, will be saved According to her this will enable government to save the high cost expended every year to import LPG cylinders from India, China, Turkey and other Asian countries. The industrialist lamented that Nigeria still ranked lowest in sub-Saharan Africa in per capita usage of LPG, consuming 1.1kg compared with Ghana at 3.0kg; South Africa consumes 5.5kg, while Morocco consumes 44kg per capita. She argued that making more Nigerians to embrace cooking gas instead of using firewood would help in the drive to sustain the environment and preserve the fragile Eco-system. Obi listed some challenges that had been making it difficult for more
Nigerians to embrace LPG, citing inadequate public awareness on safety, limited distributive outlets such as refilling plants and high cost of LPG cylinders amongst others. "The private sector cannot do it alone. Hence, our humble submission is for government to handle the issue of awareness and also provide enabling environment, financial and infrastructural incentives. While the private sector will undertake the other projects, such as Techno oil is doing today, we submit that government should do a one-off subsidy inter vention by subsidising cylinders to households. We also commend government for the CBN SME facility. Government should use the National Orientation Agency to propagate the campaign to switch from firewood/kerosene to cooking gas. This will reduce the phobia and improve public awareness that LPG is clean, safe and affordable; and also expose the danger inherent in long use of firewood and kerosene," she explained.
INDIA.....Continued from page 23 holders of ICE Brent futures to exchange their position for a forward-month Dubai crude swap -- has been trading in a $1.30$2/barrel range from January to midJune, compared with $4-$5/b a year earlier. "The rise in Indian WAF demand has a lot to do with the Brent/Dubai differential, which has been very narrow and has been so for a long period of time," said a trader at an Indian refiner. When asked about refining margins, the trader said the first quarter of this year was "fantastic," and that "strength in gasoline" helped Indian refiners, which was in turn driving their demand for gasoline-rich crudes from Nigeria. Traders said there was significant interest for WAF grades in tenders by Indian refiners for July and August loadings; they expect this to persist for the coming weeks. "Indian refiners are looking at 11-12 million barrels into tenders -- close to alltime highs. They used to take that, but haven't in recent months. They're now coming back," said another trader. "India came in for a lot [of WAF] in June and it looks like their uptake will be similar for July and August," he added.
on-year and a near five-fold jump from April, according to shipping data obtained by CED Magaine. That was the highest since at least January 2012, when Platts began receiving the shipping data. India is the largest buyer of Nigerian crude, which is largely light and sweet, and fits the appetite of the Indian state refineries. Indian state-owned refiners like Indian Oil Corp., Bharat Petroleum Corp. Limited and Hindustan Petroleum Corp. Limited, and private refiner Reliance are all key and consistent buyers of Nigerian crudes like Qua Iboe, Bonny Light, EA Blend, Erha, Usan and Agbami. In 2014, 18% of Nigerian crude exports went to India, according to data from the US Energy Information Administration. According to Platts data, more than 25% of Nigerian crude imports have been going to India for May, June and July loading. Similarly, Indian imports from Angola rose to a 14-month high of 1.19 million mt of crude oil, up 74% year-on-year, according to the shipping data. India is also a regular buyer of crude from other countries in the region, notably Gabon, Equatorial Guinea, Cameroon and the Republic of Congo.
SURGING WAF IMPORTS India imported 2.45 million mt of crude oil in May from Nigeria, up 34.64% year-
FALL IN DEMAND FOR MIDDLE EASTERN CRUDES India's interest for heavy and sour grades
from the Middle East has been on the wane, especially for May, June and July loadings, as it has looked to diversify its imports and has found crudes from other regions more price competitive. Saudi Arabia supplied 3.08 million mt of crude oil to India in May, down 5.25% year-on-year and 17.17% from April, according to Platts shipping data. Imports from Kuwait plunged 55.78% on the year to 852,958 mt, while imports from Qatar were down 62.92% at 197,157 mt, the data showed. Traders said Indian demand for Iraq's Basrah Heavy had been particularly low, meaning there was more interest for WAF grades. Even though the quality of Basrah Light and Basrah Heavy crudes are different from West African crudes, with differentials staying very weak for the latter, Indian refiners have found these crudes more attractive in the current refining environment. "The fall in Middle Eastern demand from India is linked to this," said another trader at an Indian refiner. "There is a market perception that the quality of Basrah Heavy is not good and we [India] have stayed away from it.â&#x20AC;?
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