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The Challenges In The Energy Sector Are Keeping The Country Down – Lateef Adewole

Engr Lateef Adewole is the CEO of Zobot Resources Limited. He is a prolific thinker and an entrepreneur with vast experience in the energy sector. He has the rare privilege of combining engineering and journalism in fulfilling his desire to solving the challenges of society which remain the focus of his energies professionally.

Engineers’ Forum interacted with this great mind as he shares his thoughts on some national issues.

You have cut your work experience in the energy sector having worked in the downstream Oil and Gas and also ply your trade in the renewable energy business, what has it been like?

Let me first thank the organisers and members of this noble media group; Engineers’ Forum, for the opportunity given to me for this interview. I appreciate it. I feel honoured. God bless you all.

As mentioned in the introduction, I have worked and have been involved in the energy sector for a few decades now. The journey has been tasking, challenging, as well as exciting.

It is tasking and challenging because it is a sector with unending challenges. And it remains the most crucial and critical to the life of any economy, country and it’s citizens. This sector encompasses the Oil and Gas, and the Power industries. You will agree with me that these twin sectors hold the keys to the progress of any nation, and especially in Nigeria.

Nigeria depends nearly wholly on the petroleum sector from which over 90% of its export earnings come from the sales of crude oil and it is responsible for 70% of its revenues. The challenges in the power sector have kept the country down.

So, we, who are involved, are always on our toes because of the dynamism in the energy sector.

It is exciting because of the enormous opportunities and prospects therein. It’s the sector that will always remain relevant. Energy is life!

The nation has just experienced hikes in two social commodities; fuel price and electricity tariffs, looking at the reasons offered by the government, will you say it’s justifiable?

 To summarise the government’s reasons for the hikes in petrol price and electricity tariffs as the unsustainability of such practice due to paucity of funds and lack of economic sense in continuing to do so at this time. This is a bitter truth. It is a sour pill that we need to swallow. I have supported deregulation since 2012 and my position has not changed even now. And I have my reasons.

The only thing I am against concerning it now is the timing, given the economic state of the citizens which has been worsened by the coronavirus pandemic. Nigerians are having difficult times. And to hike the two most essential social commodities concurrently is taking that too far. It amounts to insensitivity on the part of the government to the plight of Nigerians. I am not comfortable with that.

However, I have supported the deregulation for years because it is simply a waste of scarce funds. It is a looting pool for the “connected” in Nigeria. There are usually many fictitious claims. The people truly do not benefit proportionally from the subsidies reportedly being paid. How can we be said to be consuming about 55 to 65 million litres per day at a very high price of 145 per litre for some years now? The subsidy is an incentive for such manipulation in consumption figures.

A large chunk of the subsidised products is also smuggled across the borders to neighbouring countries due to price differentials. Petrol price is comparatively cheaper in Nigeria than all neighbouring countries due to the subsidy. Trillions of naira that could have been used for infrastructural developments have been wasted on petrol subsidy over time. It makes no sense.

For the hike in power tariffs, the current one is “service reflective”. It is better than the existing “cost-reflective tariffs”. Which means, only areas where the services are good will be paying more. Areas with poor services are expected to remain unchanged. This will force the Discos to improve their services to the people which will be a plus at the end.

Also, this will encourage investments in that sector due to competitive pricing.

Why are the refineries not working? The modular refineries seem to have taken long to come on stream. What do you think is causing this delay and what future do you foresee in the sector?

 The refineries have become albatrosses on our neck as a country. Not because of any strange reason but simply mismanagement. Successive governments have not been sincere in their handling of it. People have turned them to “cash cow”, a cesspool of corruption.

Despite not functioning, even at minimal capacity and producing zero products most of the time, billions of naira are allocated for Turn Around Maintenance (TAM). What for? They run at losses. The truth is that our refineries are not the oldest in the world. They are still far newer than many functional refineries in Europe, America and other parts of the world. Refineries are like aircraft. Their age is not the problem but consistent and appropriate maintenance.

What I think the government should do is to adopt Public-Private Partnership (PPP) or Joint Venture (JV) as the case may be, in managing it and not necessarily an outright sales as been canvassed in many quarters. The most efficiently managed energy company in Nigeria with government involvement (interest) is the Nigeria LNG. The ownership structure used there can be adopted to manage our refineries. Stakes should be given to private investors while the Nigerian government retains a percentage without involvement in their management. Let them be driven by business people. I believe they can be revived and become functional through this arrangement.

By that, we would not have ceded our key national assets to private individuals or outsiders to control and we can begin to reap benefits from more efficient operations. This will require strong will-power from the country’s political leadership and the people’s supports. We will all be better for it.

Modular Refining is a stepwise solution to the huge problems in the mid-stream of our oil and gas sector. It will address the challenges of petroleum products available in the downstream.

As highlighted above, our four conventional refineries have performed below expectations. Involvement of the private sector through setting up modular refineries will help in addressing these challenges. Since the capital involved in setting up conventional refineries is huge, running into billions of dollars, the less capital intensive, easier to assemble and run modular refineries can come to our rescue.

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Despite many licences that were granted for the modular refineries over the years, they seem to take eternity because of some factors, though, they are coming on board now. In a few months, about two or three will commenced operation. A modular refinery, Nigeria Delta Petroleum Refining Company in Port Harcourt, has been in operation for many years. It is also being upgraded to produce more diesel from 1000 to 6000 barrel per day.

It took this long because, at the earlier stage before now, the required license fee of one million dollars was a hindrance. That was too huge. But now, it has been reduced to 150,000 dollars. This is encouraging.

Also, the insecurity in the Niger Delta region was a problem. It posed a high risk to lives and investments. This discouraged investors.

The monopolised price control by the government through the subsidy regime was also a problem. Businesses strife better in the free market, or at least, a “managed” free market.

Also, many banks in Nigeria will not finance such project given the uncertainties that usually surround the sector and the twin of low return on investment in the short term and payback period which takes few years, ceteris paribus. Many financial houses prefer quick or instant returns on their investments.

Availability of technical capacity and modular refinery parts which often require importation. The challenges of forex is always a concern and hamper progress. These are a few of many factors.

The situation is getting better now or should I say, investors are getting around the challenges, reason why the few are coming up. More are in the pipeline.

Many people believe that the FG-Siemens deal remains the final solution to the challenges in the Nigerian Electricity Supply Industry. Do you agree to this?

The FG- Siemens deal is a goal if properly managed and seen to fruition. Imagine increasing the available power for distribution to customers from 5000MW to 25,000MW in 3 phases within the next 6 years (2020-2025). That is a bomb! (literally speaking). It will revolutionalise the Nigerian Electricity Supply Industry (NESI). And a lot of commendations should be given to President Buhari on this. He is personally involved, ensuring the deal is at the government to government level (Nigeria-Germany), without the involvement of middlemen who often put clogs in the wheel of any such drastic progress for their wickedly selfish and greedy reasons. Remember the ongoing P&ID scam!

The package is fully loaded. It includes:

– reducing technical and commercial losses by improving the efficiency of the system along the power value chain of distribution, transmission, metering, simulation.

– training to develop indigenous capacity to manage the system thereafter.

– 85% foreign direct investment with only 15% counterpart funding from the Nigerian government.

– 2 to a 3-year moratorium.

– 10 to 12-year repayment at a concessionary interest rate.

And many more.

So, I support the move, like any other that will solve the problem of power in Nigeria. I am not saying it is a magic wand that will make these problems disappear overnight but it is a great step in the right direction if seen through. Kudos to the federal government. 

Why is the deployment of solar system slow in the country despite enormous opportunities and what do you think should be done to hasten the process?

 Deployment of the solar system in Nigeria is still very slow because of its high initial capital cost. The solar system has evolved to be one of the many ways we are solving power problems in Nigeria now. The quality parts like batteries, solar panels, inverters, are still very expensive when juxtaposed with the per capita income of the citizens. And the main reason is that almost all are imported, hence, they are continuously affected by the exchange rates, the import duties, and other statutory dollar-dependent costs. This is very unfortunate and remains a pain in my heart as it hinders the wide-spread deployment of it. The opportunities are enormous and we are blessed immensely with more than adequate sunlight in Nigeria, both in the north and south.

The remedies to this include:

– government needs to encourage and attract manufacturers of parts to come and set up factories in Nigeria to produce here. This will help lower the final cost of production since transportation and import duties will be eliminated, resulting in cheaper parts. Some companies are coming up already.

– there is need for the government to avail financial supports to the practitioners in the field through grants and bank loans at a concessionary interest rate. This will enable us to extend the same credit to clients, especially individuals who are salary earners and small business owners, by installing the systems to power their homes and facilities, and they can pay on an instalment basis over some time at a minimal additional cost.

As a company, we have been doing this for some time but there is a limit to what we could do, particularly with no bank facility as of now. We are hoping to get such financial supports, and or financial investors/ partners. This will help us cover a wider gap in the power shortage.

With a population of 200 million people struggling with 5000 Megawatt at its peak and average access to power at about 56.5% (though, maybe at low quality), the opportunity in the sector is humongous. And sunlight is free.

Government has been deploying solar systems to power many markets, schools, hospitals and so on. The Vice President, Professor Yemi Osinbajo recently said the FG is targeting 5 million connections. That’s great news.

You earned a first-class in electrical engineering from FUTA and graduated as the overall second best student that year. Why didn’t you go into teaching as many would have done?

 This question will never leave me (laughs). Well, in all my years in schools from the elementary to the university, I have always done well in my academics. Either as the best or among the top three. So, after graduation, I wanted to see how well I could do outside of the academic environment. I wanted to have a different experience. I wanted to have real-life experience and I have had a lot since I left university.

Also, I have a lot of concerns about our educational system. I believe many things we study in the school are irrelevant, outdated or inadequate. As a student Engineer at the time, I wanted more real practical experience beyond the theories that we were thought largely.

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Like now, my company is involved in consultancy and training. We plan to expand this and make it a standalone Training Institute in future where many Engineering professions will be taught on a hands-on basis, in addition to the enormous theoretical aspects as taught in the universities and polytechnics. It will be a sort of melting pot for the academics, researchers and industry practitioners.

We have a pool of top-quality brilliant professionals in all these segments. By my position, I have many of these people as friends. Many of them are professors and doctors in various fields of Engineering and management. Likewise, I have numerous experienced colleagues and friends in the industry. These are assets to our organisation.

In the interim, we regularly organise training programmes in different fields, especially in the solar system. We plan to extend this to our higher institutions and NYSC soon, to help them prepare for after school/service life. The training includes life coaching, personal finance, sales, financial management, entrepreneurship, and others. Not just about technical know-how.

So, I am still involved in the business of imparting knowledge to younger generations only not within the four walls of the university.

Some may see you more as a journalist than an engineer because of your weekly commentaries on National dailies on national issues. How did you evolve this passion?

 My weekly articles about everything and anything that concerns humanity, especially in Nigeria, is a life calling for me. I am passionate about solving problems, seeing people happy and making our society and world a better place for all of us and future generations. This informed the opinion piece. Even when I was on the hospital bed, I always find a way to deliver unfailingly so far (laughs).

It just happened that I began to make them public for some years now after I became “independent” from being an employee. I have always had opinions about issues of national concerns which I only expressed privately over the years. I love writing and I want better humanity.

Besides, I wanted to prove that being an Engineer doesn’t preclude one from being a great communicator or writer. That’s why I never flaunted my core profession for many years. Let people judge me based on what I write and not from the lens of being an Engineer. I tried to represent the Engineering profession as well as I could (lol). I want to be a good “ambassador” of Engineering.

 Many have kicked against the recent NBC code on hate speech seeing it as a curtailment of freedom of speech. What is your take on this?

I have always believed that those who live in glass house should not throw stones. I will never support any attempt from any quarter to stiffen peoples’ free speech. So, I condemn in totality any such act, including the part that tried to do so in the new NBC codes. Freedom of speech is a fundamental human right and a critical part of a democracy.

However, I will never be a party to any recklessness in speech. Peddling fake news, inciting speeches, inflammatory statements that could set the country on fire must be avoided by the people at all cost. That’s responsible citizenship. Nigeria belongs to all of us and if anything goes wrong, we will all suffer for it.

Rule of law and due process should be followed whenever the government suspects such infractions by any person and not resort to self-help as often seen done by governments and their agencies.

Many Nigerians believe that once the nation can fix her energy sector all other things especially the economy will full into place. Do you share this sentiment?

I share the sentiment that the challenges in the energy sector are keeping the country down. Like raised earlier, the life-wire of our economy and country is Oil and Gas. The biggest corruption channel through which our resources are frittered away is also oil and gas. So, a proper fix in it will go a long way to transform this country. Passing the Petroleum Industry Bill is very key to that as well.

For the power sector, it is the heart of our development. Almost everything that involves production, manufacturing and services depends on power. The high unemployment resulted from companies which closed down over the years. And poor power supply was a major factor among others. Every other sector of the economy depends largely on power; education, health, entertainment, hospitality, communication, service industry, manufacturing, oil and gas, businesses, and all.

Therefore, a successful fixing of the power sector will change the fortune of the country. Life will be better. The energy sector deserves all the attention it can get.

As the nation clocks 60, what is the hope for the good people of this great nation?

Nigeria celebrates its diamond jubilee independent anniversary on October 1st, 2020. The prevailing opinion would be that of lamentation from the citizens, which are well justified when the state of affairs of the country is considered. Things have gone so bad. Nigerians now prefer to be “slaves” in another man’s country to be “kings and queens” in their fatherland.

I once heard a joke that prisons in many European countries, Canada and America are better than freedom in Nigeria. Can anyone beat that? My heart bleeds whenever I recall such a statement. It is heart-rendering.

However, it is not all gloomy. Being able to survive till date is something to be celebrated. I know that many people who prefer that the country breaks up will disagree with me. It is due to the mismanagement of our plurality and diversity, which is supposed to be our strength but have turned to be our nightmare.

Our political leaders drive more wedges through the cracks rather than mend them, just for their selfish parochial, nepotistic, jingoistic and tribalistic interests. The truth is, everyone is suffering from it. The masses in the north are suffering as those in the south. Hence, all the citizens across the country need to unite to rescue their country from “cannibals”.

It is time to wake the giant in us as a country. It is not enough that our political leaders boast of how Nigerians are doing exceptionally well across the globe while their home country is in shambles. But we cannot give up hope. We should continue to be hopeful and contribute our quotas as citizens. The task to build the country is a collective one and should not be for leaders alone.

Congratulations to all Nigerians.

Happy 60th Independent Day Anniversary.

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