Uche Usim, Abuja
Mrs. Funmi Ogbue is a business woman, publisher, and an organisational change management expert.
She is the Founder and Chief Executive Officer of Nigeria’s leading organisational support company, Jake Riley; oil and gas services and procurement firm, Zigma Limited and President, Women in Energy Network (WIEN) as well as founder Support Our Troops, a foundation she established to promote citizen support for members of the military and their families.
Though she is a prominent player in the Nigerian oil and gas sector, the daring woman is never reluctant to break into new frontiers.
As the novel coronavirus wrecks the economy of many nations, Ogbue has urged the government to support various local firms to minimise personnel layoffs.
In this interview, she speaks more about her firms, the oil and gas sector and the survival strategies that could keep most companies beyond COVID-19 pandemic
COVID-19 and Nigerian economy
For manufacturers and allied businesses, the disruption in the supply chain as a result of the coronavirus pandemic is already taking its toll on raw materials needed for production. But the impact of the spread of the virus on the global oil sector has been particularly severe.
Nigeria, a major exporter of crude oil, has been unfortunately caught in the web of its unfolding consequences.
So, the country has every cause to be concerned as the continuous drop in the price of crude oil would take a heavy toll on the nation’s economy because oil and gas account for over 90 per cent of Nigeria’s foreign exchange earnings and more than 60 per cent of its revenue.
India, Spain, Netherlands, France and many Asian countries including China who are major trade partners and buyers of Nigeria’s oil have recorded cases of the coronavirus and the disease has impacted negatively on their economies. Nigeria would lose billions from crude oil sales as prices continue to fall.
So, what should the government be doing at this time? I think it’s time to focus on domestic use of our crude. We need to use the crude to provide electricity, gas for factories, cooking, cars, this will significantly boost our production capabilities and enable manufacturing. I think the government should also deregulate the downstream sector and relax the terms for deepwater development. We need to open up our economy to allow it grow and meet the demands of its growing population. Investors should truly be welcome, and the government can focus on providing essential social services such as security, healthcare and let the private sector do what it does best.
Targeted tax incentives and social transfers at this time is critical to help people transition from a government driven economy to a private sector driven economy and to minimise the impact of COVID-19 on the most vulnerable businesses and citizens. I would like to encourage the government to support businesses at this time so they can minimise personnel lay off.
The kind of government we operate in Nigeria is one of the most expensive. So, I expect political office holders across the three arms of government to lead by example by taking some pay cuts and doing away with expensive lifestyles.
Similarly, reducing the misuse of public finances through commitment to transparency, opening up budgets, and strengthening anti-corruption institutions should be a priority during and post COVID-19.
Crude fading away
The world is said to be moving in the direction of alternative and clean energy and there are already predictions that with current trends in technology and environmental concerns, over the next 20 to 30 years, there will be significant energy transition from fossil fuels. Though I do think Africa should be given a “holiday” to allow us to develop our economies as the renewables are difficult to scale and commercialise to the kinds of quantities we require.
But make no mistake about it, despite the ravaging effects of the coronavirus and attendant impact on oil prices, the search for oil is still ongoing even though it has been slowed down by the twin impact of the virus and drop in price. The virus has forced companies to slow or halt physical operations, but this challenge has not stopped drilling activities. Companies are however re-negotiating rates of service companies.
If you have noticed, the trend in oil discovery continued into the year 2020, after 2019 proved to be a banner year for hydrocarbon discoveries.
Nigeria recently announced discovery of one billion barrels of crude oil in the northeast region after a year of intense drilling.
Elsewhere in Africa and Europe discoveries were made. Recent finds were announced also in Latin America where newcomer Guyana has already announced a series of finds totalling some 1.8 billion barrels of crude.
With global oil discoveries at some 1.73 trillion barrels, according to BP’s Statistical Review of World Energy and annual oil production running at 94.7 million barrels per day, the world has enough oil for at least another half century.
However, there have been several predictions that Nigeria’s future in the post-oil world looks rather bleak and its inability to innovate as the world heads towards the post-oil economy could spell doom for the country.
Therefore, for Nigeria to avoid this impending doom, government’s economic diversifications roadmap must become realistic now.
Reduction in PMS price
I share the sentiments of others who have said the Federal Government’s decision to reduce the pump price of petrol from N145 to N123.50 per litre is a welcome development and should be commended.
What the government has done is in line with current trends in the global oil and gas industry as most countries are beginning to reduce pump prices of gasoline.
However, I think this development has presented the government an excellent opportunity to end the petrol subsidy regime which costs the country billions of naira yearly.
The question on my mind is what happens when we are out of the coronavirus problem and oil prices begin to appreciate. Are we going to increase the price of petrol again?
If the government can stop fixing prices and remove the subsidy on PMS now that oil prices are low, Nigerians won’t even feel anything as they will adjust when crude prices go up. But if you do it when the price is high, the impact will be obvious on Nigerians and they will not buy the idea.
So, let the government seize the opportunity this crash in crude oil presents to do the needful.
Challenges
There are two main challenges we as a business face. The first one is the low level of activity. Over the last four years, there has been a very low level of activity in the oil and gas industry in Nigeria because there are no major projects going on due to a combination of factors. The outlook was beginning to look up as NLNG T7 took FID and we were expecting Bonga SW to take FID however with the current oil price everything has slowed down again.
The second major challenge we face is the length of time it takes to run the procurement process in the sector. If you do complete the tender and you win it, It can take up to years to complete the delivery cycle and then you are paid at which point the cost of funds has eaten up all your margin.
We can’t survive very long with this situation and with the high level of investment required in the sector it’s a major disaster waiting to happen. We really hope government will look into providing some sort of relief so our businesses can survive. Many small indigenous oil, gas and service companies are already overburdened with many taxes.
Background
I grew up in a military family with my family moving from one military barracks to the other all over Nigeria (Makurdi, Enugu, Kaduna, Zaria, Lagos and Ado-Ekiti) and in Alabama US and Aldershot UK, whilst my military police father was serving in the Nigerian Army. I am the second child and first daughter of Rtd. Colonel Olusegun and the Late Alhaja Ajibade Oladeinde. I have four siblings: two brothers and two sisters.
I was educated by all arms of the military, I attended Army Children School, Airforce Primary school and Navy Secondary Schools. However after my secondary education I came into civilian life and the University of Lagos where I obtained a Bachelor of Science degree in Sociology between 1988 and1992.
Thereafter, I attended the University of Manchester for a Master of Science (M.Sc.) degree in Organisational Change and Development in 2005.
I have worked in the local and international landscape garnering experience largely in FMCG, International Development, Consulting, oil & gas and power industries.
Starting out in banking as a youth Corps member in Grindlays Merchant Bank, to a sales role in Waxtall Logo Mats, to my first job in the Oil Industry in Abacan Resources, a Canadian oil company, then on to Nexen (formerly known as Canadian Occidental Petroleum), to Shell Nigerian E&P, British American Tobacco Ghana and Nigeria, and Mercer Consulting in the UK. I started my entrepreneurial journey as Managing Partner of Ancorapoint then to Jake Riley. We have done projects for UNDP in Liberia, NPHCDA, Abuja Investments, Abuja Transport, Abuja Markets, NNPC, OGFZA, NCDMB, SON, SEC, Ministry of Petroleum Resources, Ministry of Tourism, Ministry of Industry Trade and Investment and so on and so forth.
Foray into the oil and gas industry
As I mentioned earlier, my first job in the sector was with Abacan and we were the technical partner to Alfred James Petroleum, Amni Petroleum, Yinka Folawiyo Petroleum (YFP) and we made discoveries in commercial quantities and worked with these Nigerian companies to bring their assets into production. Those were good times in the sector. I started off as the PA to the MD Wade Cherwayko, a geologist and MD of Abacan, a genius at what he does and who I call till today the oracle of indigenous participation in the upstream sector; but I also reported to Tunde Folawiyo the MD of one YFP Petroleum who really was the one that brought the administrative and financial discipline required to grow a company.
It was a wonderful combination. Wade was one of the early believers and worked very well to bring those blocks on stream. My self and an engineer were Abacan’s first employee’s in Nigeria and supported Wade and Tunde Folawiyo and really did everything that needed to be done to build Abacan by the time I left Abacan in 1998 for Nexen we were producing 50,000 bbls of oil per day.
In Nexen I started off as a human resources analyst, then a budget and planning coordinator, and finally a new ventures analyst. Nexen was a much bigger Canadian company and I spent a lot of time in their UK and Canadian Operations.