By Adewale Sanyaolu
The increasing hostilities in the oil rich Niger Delta region has created an opportunity for investments in pipe production. Prior to now, pipelines were considered to be part of their host communities’ assets, and as such, were highly catered for and protected.
But the situation has taken a turn for the worse as such assets are now subjected to constant attacks by Niger Delta agitators, who consistently blow up oil and gas pipelines in a bid to get attention from government.
At the end of such activities the International Oil Companies (IOCs) bear the brunt most as their pipelines used in transporting crude oil from oil and gas field to export terminals remain constant targets of attack.
Shell Petroleum Development Corporation (SPDC) in its 2017 briefing notes lamented that crude oil theft from its pipeline network resulted in a loss of about 5,660 barrels of oil a day (bbl/d) in 2016, which is less than the 25,000 bbl/d in 2015 while the number of sabotage-related spills declined to 45 from 93 in 2015.
These thefts and destruction to oil and gas assets create investment opportunities because while some pipes are to be repaired, others would have to be replaced due to ageing factor.
The Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, said at the Offshore Technology Conference (OTC) in Houston, Texas, USA, investment roundtable with US officials that the Trans-Nigeria pipeline project, the Industrial Park at Ogidigben Free Trade Zone, would cost $14-17 billion while the revamp of LPG and building of new Compressed Natural Gas (CNG) plants across the country alongside pipeline and storage tank construction would cost $3.9 billion.
Investors in pipe mill plants could also key into the Nigerian Content Development and Monitoring Board (NCDMB) pipe mill scheme in Polaku, Bayelsa State.
As part of its human capital development mandate under the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, the NCDMB in 2015, sponsored 22 young Nigerians to China for training in Steel Pipe Mill Manufacturing Training.
The training was in advance preparation by the board to ensure that there are Nigerians with requisite skills to operate a steel pipe mill company currently under construction at Polaku community near Yenagoa, Bayelsa State, by Mainland Pipe Nigeria Limited in collaboration with the board.
These are certainly quick wins for indigenous businesses that can take the lead and latch onto the investment opportunities abounding in pipe milling before foreign investors take the lead of course China and many other foreign investors are watching from the wings to take up such opportunities.
The advent of Polyvinyl Chloride (PVC) pipes have relegated the use of metal pipes when it comes to conveying crude oil, finished petroleum products, water, sewer as well as for protecting underground cables.
PVC pipes are known to be highly durable, safer and perhaps difficult to damage and can last for a very long time because of their composition; they are made from the combination of plastic and vinyl materials. With PVC pipes, one wouldn’t have to bother about rust and bacteria formation inside the pipes.
Starting a PVC pipe manufacturing company would open one up to opportunities in the construction industry, because there is hardly any construction job that is done without the use of PVC pipes. No doubt, establishing a PVC pipe manufacturing company may require huge capital but the truth is that it is highly profitable, especially if you know how to position yourself in the market place.
PVC pipe manufacturing company is not just any kind of company that you can start without due preparation. The fact that huge capital is required to establish a PVC pipe manufacturing company means that one should do a proper feasibility study before venturing into this capital intensive business in order to protect the investment.
You are not expected to start your own PVC pipe manufacturing company without having in place a comprehensive business plan that can serve as a blue print for your business. It is good to get your business plan handy and review it over and over again before you start the process of building your PVC pipe manufacturing company.
Even if you have started running your PVC pipe manufacturing company, you would still need to continue to review your business plan. That is the reason you must make your business plan flexible so that you will be able to make adjustments when the need arise.
Raise your capital
If you have done your feasibility study and have pooled the required capital to build your PVC pipes manufacturing company, then good for you. On the other hand, if you don’t have the required capital, then you should explore all the available means to raise the required capital. You may consider getting a loan from the bank or you can sell your business idea to investors, and you can as well raise capital from your friends and family members. Your business plan is one major tool you would need when you are trying to convince people to invest in your business; if your business plan is well crafted, then the process of raising funds will be easier.
The minimum startup capital, depending on the size and type of PVC products to be produced, would be around N100 million because the machines are expensive and have to be imported.
If you have undertaken your research project and feasibility study, written your business plan and have the capital required to start your own PVC pipe manufacturing company, then your next port of call would be that you approach the relevant authorities to register your business and obtain the required license and permission. Furthermore, the authority regulating the industry would have to inspect your factory before you can be issued a license and permission to start your own PVC pipe manufacturing company.
In this instance, certifications and licensing would be procured from the Department of Petroleum Resources (DPR), Nigerian Content Development and Monitoring Board (NCDMB) and Standards Organisation of Nigeria (SON).
The location you choose to build your PVC pipe manufacturing company doesn’t really matter, so you shouldn’t spend fortunes trying to get an expensive facility or location. You can establish your PVC pipe manufacturing company in the outskirt of town since it is cheaper to do so. The only drawback with establishing your PVC pipe manufacturing factory in the outskirt of town is the cost of transporting your goods and raw materials.
Safety and quality
People that work in PVC pipe manufacturing factories are always exposed to risks. That is the reason you must make it a point of duty to enforce best practices when it comes to safety measures. It is a fact that if the necessary safety measures are not put in place, you may run the risk of having your factory shut down by local authorities.
Another important factor that is sure to guarantee your PVC pipes manufacturing company becomes relevant is when you are committed to producing only high quality PVC pipes. If the PVC pipes you manufacture are known to get damaged easily under little pressure, people may likely not patronise you. High quality PVC pipes are known to withstand pressure caused by earth tremors and even earthquakes.
If you are confident about the quality of PVC pipes your factory churns out, then you would be bold and confident in the market place. The market for the PVC pipes is massive and the profit you stand to make is huge as well. Your target market should be those that are involved in all forms of construction and plumbing jobs, and those who are into laying underground wires and cables. So endeavour to go to their offices, sites or any place where you can meet them so that you can market your products to them.
In marketing your PVC pipes, you might enter a deal where you would have to design and produce PVC pipes based on your clients’ specification. Another factor that will give you edge in the market place is when you choose to deliver the purchased PVC pipes free of charge to your client rather than allowing them to transport it on their own.
And to get industry support, the young firm is advised to belong to a professional body; in this instance, the Pipeline Professionals’ Association of Nigeria (PPAN) will be most ideal.
According to its Chairman, Geoff Onuoha, the body seeks to promote knowledge, professionalism and efficiency in the management of pipelines in the country.
He said the annual conference of the association holding later in the year would enable stakeholders and investors to benefit from the rich knowledge base of experts on modern techniques and latest trends in the production and management of pipelines compared to what is obtainable in other parts of the globe.