Deepak Khilnani
Henry Ojelu
What is the business of Clean Energy Group here in Nigeria?
When you talk about clean energy in Nigeria, we are the pioneers of the business. We first came into Nigeria in the late 90 and started to develop the Utilisation of gas. As you know, Nigeria has natural gas in abundance. Unfortunately, much of it is flared and wasted. This is not only a waste of money, but also a great damage to the environment. Back then, everybody was relying on diesel, and diesel has many disadvantages. It is a dirty fuel, expensive and mostly imported. We wondered why anyone would have so much natural resource and still be bringing in diesel from outside? So, we started to develop our business, and it has really grown over the years.
So far, we have some very good partnerships in Nigeria that has enabled us to grow our business. I must say that there is still a significant demand for connecting the dots. The gas is there, the demand is there, but how do you match both. I must emphasize the fact that the cost of power generation from gas is less than half the cost of diesel generation. You should be aware that many organizations, homes, people have diesel generators. So this actually delivers a very significant impact to the economy. When a company can have low relative cost, it can make more profit, pay more tax, employ more people and pay their salaries. Many companies have shut down because of expensive energy cost, so this is something we are focused on.
Since you came here, would you say that there has been any significant change (s) in the way businesses are conducted in Nigeria?
Nigeria is probably the most dynamic country in the continent. Dynamic in the sense that there is a lot of demand. The population has grown likewise in the energy industry, so requirement for electricity has also grown substantially. My dealings with the Nigerian people has always been very positive, (please don’t take this to heart). What I really mean is that Nigerian are smart people. This is very important, because when you interact and deal with your counterparts, it is important you deal with people that understand the benefit of what you are delivering. So to answer your question about what changes I have seen, Of course, I have seen many changes. Though not everything has improved but by and large, the country is moving forward and I am very optimistic about the direction the country is going today.
Sometimes back, it was reported that you were having issues with your local partners. What are the issues?
The issues that we have been having are of a commercial nature. They were commercial disputes that arose as a result of our business interactions. We have tried to settle them in a normal ways that companies and management settle those issues, but unfortunately, we have not succeeded in doing that. Three years ago, civil litigation was commenced and that is currently going through the Federal High Court. We are following the due process of law, and very happy to go by whatever judgment that the court might come to. As far as that is concerned, that is a civil matter, and it continues to be a civil matter. Unfortunately, some of our protagonist decided that they will try and push this matter using some of the agencies of state, specifically the police. Perhaps, part of that was to put pressure on us. But one thing I want you to be very clear of is; I am not the owner of this business. I work in this business. I may be the Chief Executive but I work in this business and I am accountable to my shareholders. It is not me that has to say, ‘I will give you this, I will give you that’.
Again they introduced the aspect of police investigation into several allegations. The police have investigated that matter, and they have confirmed that there is no criminal activity involved in our dispute. The police advised that the matter was purely a civil one and that we should resolve our issues. Unfortunately, the rest you would have read on the newspapers. I am surprised that the DIrectorate of Public Prosecution decided to initiate criminal charges on the matter. To this day, I have not received a notice to appear in the court. If I received a notice to appear in the court, I would be more than happy to do so. And the suggestions that ‘I am running away from Nigeria is untrue. I am sitting down here in front of you. I am not only here to meet you, I am here to continue to do the business that we do here in this country.
Are you confident with the Nigerian Justice system?
I have full confidence in the Nigerian Justice system because despite the allegations people can make, at the end of the day, there is a judicial system. I have full faith in the Nigeria judicial system. I say that unequivocally. And because, I have that faith, we continue to invest. Understand one thing; what you see here, this is not only in Nigeria. Government has set up the courts for the purpose of resolving disputes. Same Government has also set up the police force to investigate crime. If the police force investigates crime, and finds out that there is no criminal activity, then, they have done their job.
You talked about saving cost as a result of low energy and cooking energy. How do you ensure that Nigerians are able to access cooking gas?
Through compressed natural gas. This is something that we pioneered in Nigeria, we built the first plant. We started construction in 2007, and in 2009 we commissioned the first plant. Today, we have made more than 50,000 deliveries of gas by our tanker. The concept is very simple; natural gas is very voluminous, it is like air. You can transport it through the pipelines. The other alternative is to compress the gas, put it in the tanker and deliver it to areas which are not connected by pipeline. We have pioneered this second process very successfully. There are a number of other companies who have followed and are now doing the same thing. Nigeria now has good coverage of gas, broader than where the pipelines are reaching.
In terms of cost, how would you compare gas and diesel disparities?
In terms of cost, generally when you compare the pipeline gas to diesel generation, the cost can be half. When you have to compress the gas, and transport it, then you add some cost for the compression and transportation. In that case, the cost may be 30 percent cheaper than diesel cost. This is still a very substantial saving.
What will you say are the challenges of doing business in Nigeria as a foreigner?
My friend, challenges in business are everywhere. Specifically in Nigeria, the availability of finance is always an issue. Things are very expensive in Nigeria. The interest rates are high. So that creates a higher challenge. All our projects are very capital intensive. That means that for instance, if we did a project in Europe, maybe we will borrow 80 percent and put 20 percent of our equity. In Nigeria, the ratio is very different. We have invested a substantial amount of equity over many years that we have been working in Nigeria, and we continue to do so. That is certainly a challenge that we face. Sometimes, the traffic can be a bit of a challenge and that can sometimes be difficult. I cannot always request people to come to my office for meetings which is always better. So, by and large as I said earlier, I believe Nigeria to be a very dynamic and exciting place to do business.
Looking at Government’s effort at power generation and distribution. Do you think government is tolling the right line in terms of privatization of the transmission and Generation lines?
In a short answer, yes, absolutely. I think everything might not have gone as quickly as we would have liked it to happen, but I strongly believe that the Government is very much on the right path particularly now with the new government. They are taking things very seriously to compress the time-lines to achieve the objectives that were laid down. So I think you would see, and you are already seeing that power availability is much better. One solo does not make a summary as they say, but things are definitely getting better. I believe that the power generation will continue to rise. So in a short answer, Yes, I do believe that the present government particularly is taking very proactive steps to ensure that the privatization and the growth of generation and transmission and distribution continues in a sustainable way.
Gas flaring is a major concern in Nigeria. What do you think government is not doing right about stopping gas flaring?
The problem is not so much to be put at the door of the government. The problem is actually the technical considerations. If you are producing oil, often you would produce associated gas. What can you do with that gas when the oil comes out? You have three options: One is re-injection into the firm, that is not always technically possible. The second option is- you flare it, for safety. Otherwise if you just allow the gas to float up into the atmosphere, it is poison. The third is to use it. And what our business has been about, right from the beginning and continues to be on the basis is of the utilization of domestic, natural gas. And once that grows, you will find that the flaring will reduce substantially. All government can do, or say to all companies ‘is, “we will fine you” but, if they fine them and the flaring is still happening. Then they can shut them down. But when you shut them down, the oil production stops. So actually, I do not put the problem at the door of government. Actually, the only real sustainable solution is to have a utilization of natural gas.
What is your relationship with local partners in the energy sector?
We have lots of competition in Nigeria. When we first came, as I used the word pioneered, we were pioneers. We were the first in compressed natural gas. We were the first with the IPP model of supplying power to industries on gas. However, as I said, there is a lot of demand in Nigeria, it is a dynamic market place, and there is availability of gas. As that availability of gas has spread and people have seen the advantage, more companies have come into the field. There are more Nigerian companies and good international companies in the field now which I think also is a very positive step. Positive in the sense that, like I said earlier, the only way you can reduce flaring is by using gas, by creating demand. For me, am happy about it. The market is huge. Even today, in our wildest dreams, we have not touched half of the market share. We are not selfish people, we are not saying it should only be for us. The fact that more players had come, the better understanding and appreciation there will be, and it grows the business.
What is your group’s commitment to corporate social responsibility?
CSR is very dear to our heart as an organization, it is imbedded as part of our DNA. Both corporate wise and personally, it is very important to give back. God has blessed us. He has made us very fortunate for what we have, and we need to give back. In my own personal life, I participate on boards of large education charity. But also within the corporation, we have a significant on-going CSR program. But let me say this. This is not just about giving money. CSR is not about the company allocating a proportion of its resource. Of course, you have to give money, you have to put money for project. But if you look at it within our organization here in Nigeria, the real measure of our CSR achievement is what we call ‘Employee Engagement’ (EE). Over 60 percent of our employees actively participate. What I mean by actively participate is- they go to the orphanage, They will take the children out and they will do various things. So it is not just- ‘here is a cheque, go and do something with it’ but actually to encourage our employee, to participate. That gives them a lot of satisfaction, and it is good for the community.
Apart from the philanthropic side, CSR is very good for business because, you have to work with your communities, regardless. So cooperation and helping local communities is an important part of our business. We are very much engaged in that respect.
Why do you think many manufacturing firms are still fixated on diesel consumption, rather than switch into gas?
As I said earlier, there is a very big market place out there. And there are not many companies that can meet all the demand of all the people. This is a very capital intensive business. We have invested as a group over $220 million in Nigeria. We have a similar amount to invest in the next three years. That is a lot of resource. Maybe to reach all the customers and all the industries, it will take several million of dollars of investment. As I mentioned that other companies are coming into the field, investment will increase, and you will see more and more companies switching over to using natural gas.
What are the projects you have carried out or done in Nigeria so far
We have done a number of projects in the power sector. We have nine projects that are currently running, and we have seven under development. On the gas side, we have two projects running and we have three under construction. As far as location is concerned, there are projects in Ota , Abeokuta, Agbara and Lagos. There are a number of projects in Lagos. Then in the East, we have a project in Port-Harcourt, Aba and Port-harcourt.
What is your work force like? How many Nigerians are working for you?
A substantive part of not only our work force but our management is Nigeria. We strongly believe in that. As I said earlier, we have a very capable and smart potential work force so we made it a policy to recruit as much as we possibly can. Certain technical expertise and specialties and all that, we have to recruit from oversees. But we provide training and all that, and we develop local competence in that respect. In terms of the number, I think we are a little over 300 at the moment. But that work force is expanding very rapidly because of all the projects that are under construction. I expect within two years, that work force will rise over a thousand in terms of what we are doing. These are genuinely skilled workforce. It is not unskilled. These are engineered and technicians and all that, because we are dealing with high-tech equipment
Source: pmnewsnigeria.com
I have faith in Nigeria’s Justice System- Deepak, British Accountant
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