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FG Lacks Political Will To Implement PIA – Rainoil Boss

The Chief Executive Officer, Rainoil Limited, Gabriel Ogbechie, speaks on various challenges facing the oil and gas sector.

Many oil and gas companies are switching to biofuels. What is Rainoil’s future in this area?

Rainoil has come this far in the last 25 years and our future is to be a dominant downstream oil and gas company. First and foremost, we want to make sure the company is sustainable. Having said that, the industry will keep evolving. We have seen the evolution from LPFO to other petroleum products and kerosene to LPG, and we are also going to see an evolution from gasoline to electric vehicles. So, in the next 25 years, the mainstay of the company will be determined by the technological trends. In the next 25 years, we will ask, is gasoline going to be our main product? In the next 25 years, we will see other energy companies evolving. The only thing I can tell you is that in the next 25 years, we will still be in the energy space, but what that energy will be, will be determined by what the market has shifted to. You don’t need to fight change, just adapt to it. I was reading a book recently called ‘Disruptive Innovation’. Innovations will come that will be disruptive, but one phrase going around now is energy transition. We are also joining that transition as it comes.

The Federal Government has been talking about total deregulation of the downstream sector. What’s your view about deregulation?

It’s pretty obvious that Nigeria is over-ripe for deregulation. We should have deregulated a long time ago. Spending today more than N3trn to subsidise one product called petrol does not make economic sense from where I sit. But again, we live in a society where interest is more than economics. The issue of deregulation has become more of a political matter than economic. When you look at the financial state of the country now,  does it make sense to spend such susidising petrol? But again, it is an election year, petrol has become a political issue, and politics has become economics. But if you ask me, the government should deregulate. As a matter of fact, the Petroleum Industry Act, PIA, provided for deregulation. And then, we said with the passage of the PIA, deregulation would come as a matter of force. However, when the rubber hit the road, we realised that there was no political will to implement it. We were expecting the PIA to take its course, but suddenly, there was a pullback. We are hoping that at the end of the election cycle, the government will be able to implement the Act.

Are there any loopholes in the Act?

There are no loopholes. The Act was passed to correct the anomalies we have all seen in the sector, and one of them is lack of deregulation of the sector. The Federal Government can channel money used for subsidies to solve other problems. When you look at the society, I doubt if anybody’s child is attending any public school. Ideally, education should be qualitative and free for children of the rich and the children of the poor. Whether you are the head of state or bus driver, your child should have access to qualitative education. I attended public schools right from primary to university. Now, if you deregulate, channel that money to qualitative education. Let our children go to school for free. So, what are we paying now for school fees? if the money is channeled to buying petrol at a deregulated price, that school fees is more than what we would have paid for subsidy. So, we think that we are saving money and helping the poor, but the truth is that we are actually destroying the society. There are better  ways of channeling that money that plays better value for everyone at the end of the day, but again, these are political issues.

The unfortunate thing, whether we like it or not, is that our fuel is the cheapest in West Africa. If you look at Nigeria and other countries surrounding Nigeria, Nigeria’s fuel price is less than half of the price in neighbouring countries. So, what is happening is that our fuel feeds all the countries surrounding us, and we are paying the price for it.

What are your views about the Federal Government’s plan to have cars run on CNG instead of petrol?

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The Minister of State for Petroleum Resources is aggressively driving that policy, and we are keying into it as well. It’s some medium- to long-term plan because the existing cars have to invest in converting their engines from being able to run on petrol to CNG.

The immediate challenge which we are finding ways of addressing is, if you are going from here to Onitsha and you are driving, if you fill your car in Lagos, you have no fear that when you get to Benin you will get a petrol station to buy petrol

But for CNG, because of the very limited rollout for now, if you are driving your car with CNG in Lagos, and you get to Ore and your tank is empty, what are your chances of getting a CNG station? So, you are likely going to get stranded.

So, there have to be very serious investments across those value chains before the idea can work. And also there should be investments in getting people to convert their cars from running on gasoline to CNG. All that will have to come together to build the critical mass that will drive the investments into CNG. I was in the US a week ago, and petrol sold for $4 a gallon. At $4 a gallon, it is like N450 per litre, but we get it here for N165 per litre. So, we need to move from being able to run our cars on gas.

Is Rainoil thinking of investing in the upstream?

Yes, we have assets upstream.

How did the Rainoil business start?

The company started in 2010 when we built our first petroleum product depot in Ogara, Delta State. It was a 50 million-litre-storage capacity depot to store petrol, kerosene and diesel. In 2015, we built another 50-million- storage depot in Calabar, Cross River State. And in 2019, we built our third 50-million- litre – storage depot in Ijegun, Lagos. At Ijegun, we do petrol, diesel, kerosene and aviation fuel. In 2020, we built another 8, 000-metric-ton liquefied petroleum gas facility.

Rainoil today is a very dominant oil and gas company. We are strategic when it comes to petroleum distribution in the country. We also have a fleet of about 200 trucks with which we distribute products across the country. So, we play in the entire value chain of storage, distribution, retailing, and we have staff strength of about 2000 Nigerians. To have come this far over a period of 25 years, we felt it was important we rolled out the drums and celebrated our anniversary.

What are the challenges the company has been able to surmount to get to this stage?

Whenever I go down the memory lane, one thing I say is that the only thing that is constant in life is change. Business keeps evolving. The way we ran business in 1999 is not the same in 2000, 2010, and 2020. Change will come, but it’s how to have responsibility to do business as things are, and not to try to create your own alternative. I remember in 1998; the mainstay of this company was a product called Low Pour Fuel Oil, LPFO. We were supplying black oil to five industrial customers. Then one day, I was driving at Oba Akran when I saw a lot of pipes drawn out of trenches. I called one of my staff and asked what the pipes were being used for. He said they were piping gas to an industry planning to switch their boilers from LPFO to gas. Then, I called my staff and told him that LPFO was an endangered specie, that  time had come to move into retail. LPFO that in 1998-2000 accounted for like 70 per cent of our business, in the last 10 years we haven’t sold one litre of it, even though the business has grown multiple folds. So, you just need to keep adapting to change. Prior to 2015, one of the mainstays in the industry had been kerosene. Kerosene was more like the bread and butter of the business, but 2015 till now, kerosene has disappeared from the equation, and as a matter of fact, most petrol stations no longer sell kerosene, and the market has moved from kerosene to LPG. The moment we saw the shift, Rainoil also started investing in the current products. As of 2011, 2016, we had already identified that the market was moving to LPG. We had also started investing in it and in 2017, we started the construction of our 8, 000-metric-ton LPG facility. By 2020, we commissioned the facility, and today, we are a major player in the LPG space.

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Challenges will come but if you want to sustain your business for a long time, your responsibility is to find ways to respond to them rather than sit and complain.

Are your company’s operations environmentally-friendly and in line with the SDG goal of protecting the environment?

Well, we are environmentally-friendly. Don’t forget that we operate in a regulated environment. In the industry, we have regulatory bodies like the NMDPRA who ensure that companies in the downstream sector keep in line with the requirements, and we won’t be an exception. Currently, we are carrying out our ISO 2000 certification. So, we are environmentally-friendly in our operations.

What about your corporate social responsibility programme?

We take CSR very seriously, and as a matter of fact, we have a structured a way of giving back to society. We give back to the society in which we operate. In the last couple of years, we built a classroom block for Ugheli Primary School in Ogara, Delta state. We have also carried out health outreaches in Kaduna and Oshodi, where we gave out many eye glasses and did eye tests. We also gave out school bags and exercise books. We also support a couple of orphanage homes. So, in terms of giving back to the society, we also did a  two- kilometer road in one of the communities in Delta State. If the society and God bless you so much, it’s only fair that you also give back in a structured manner. We also support tennis, which is a sport we are very passionate about. We also organise the Annual Rainoil Tennis Tournament, which is in its 10th year now.

In celebration of RainOil’s 25th anniversary, what are the highpoints of the lineup of events?

We are going to have a gala night in June, where we will bring in everyone. It’s going to be like the grand finale, but there will be a run- up to the gala night, which will be a lot of giving back to the society. There will be football match and medical outreaches. We will then crown it all with the gala night in June.

Source: Punch

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