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INTERVIEW: Our biggest challenge was monopoly — but Buhari broke it, says Jadesimi
Oluwatoyin Bayagbon in BusinessTheCable SpecialTop Stories


Amy Jadesimi, managing director of Lagos Deep Offshore Logistic Base (LADOL) explains to TheCable why Nigeria is fast becoming the fabrication hub in Africa, why Nigeria is now more than ever an attractive investment destination, women’s role in leadership and the impact of increased local content to the Nigeria economy.

TheCable: What is the economic impact of the successful arrival of Egina FPSO in Nigeria?

Amy Jadesimi: The arrival of the Egina FPSO (floating production storage and offloading unit) is a sea change — no pun intended — because it shows that we can now carry out the most challenging industrial project in the world, in Nigeria. This is not just about the arrival of the vessel, it is about the building of the yard and the operation of the yard. The Nigerians who worked in the yard operated above the average global standard and the results speak for themselves.

The fact that the FPSO was sent here was primarily because we achieved everything that we needed to achieve in the yard. The six modules were built, we were ready to receive the vessel ahead of time. And in every way the arrival of the vessel and the way the project has been conducted in Nigeria exceeded expectations. The collaboration and the proof that ease of doing business is working, is also an important mile stone. We couldn’t have achieved this without the support of the Nigeria Port Authority (NPA). The NPA went the extra mile – they set up a committee, they coordinated all the stakeholders (both private and public sector) they made sure that the shipping channel was upgraded, brought in extra equipment, and brought in extra tugs.

At the same time, the Nigeria Export Processing Zone Authority (NEPZA) worked literally 24/7 coordinating government agencies in the zone. So, it really took a village to make this happen and the success is a mile stone that shows that more and more projects like this can be done not just in Lagos but across the country.

With this remarkable achievement in Q1, what will the outlook be for the rest of 2018?

For the project itself, we are now looking to get the work done and for sail-away from LADOL to happen as soon as possible. The other activities in the free zone involves us supporting a wider range of industries. We are diversifying by focusing more on agriculture processing, we are also focusing and completing our upskilling academy, which is about human capital development and the company is going to capture some of the staff that have worked on the FPSO so as to keep them continually employed. Another big focus for us is collaboration. People have often heard us say that on the back of the development of the shipyard in LADOL free zone, we think we can generate up to 50,000 new jobs in Nigeria – directly or indirectly. Most of those jobs will be indirect. There is a ten times multiplier effect on job creation meaning that for every one job created in LADOL, 10 jobs will be created outside. For those 10 jobs to be created, we need more indigenous investment, we need the development of more capacity across the country. And to achieve improved capacity, we need indigenous Nigerians in the private sector to collaborate, we need the banks to make long terms loans available, and we government to continue with its ease of doing business policies.

During the Nigeria International Petroleum Summit, the minister of state for petroleum resources said FG is bringing ‘Project 100’ in April to assist private investors. How can this be achieved?

The first thing you need for any scheme like that to be successful is demand. For us to increase the level of demand that we have for services to be done in-country, we need more shipyards like LADOL. When you have a shipyard like this and everybody knows that the major work, the critical work, the high value work both in terms of fabrication and engineering can be done in Nigeria, that means the locus of the project will be Nigeria and there will be more demand for other aspects, other services to be provided in-country.

For example, the demand for local fabrication we think will increase by a factor of at least four because it is now economically attractive to fabricate in Nigeria and ship the fabricated pieces to LADOL for full integration. I think the ‘Project 100’ is a good scheme, and I will encourage the government to go ahead with it but for the scheme to be sustainable and therefore successful, we actually need more local market demand. We need major projects to be approved, we need more indigenous investment and we need our banks to provide the type of long term low cost financing that these long-term investments require.

When will the integration of the Egina FPSO be completed?

The project schedule that Total is working with is six months, so that’s what we’re working with.

What has been the drawback during the lifetime of the Egina FPSO project so far?

There have been many challenges not just for the project but for LADOL. We have moved from a time where private sector development from LADOL was literally forced out of the market. The biggest challenge we faced is definitely the monopoly that was prevalent in the sector until it was outlawed by President Muhammadu Buhari in April 2017. When you have a monopoly in the sector, particularly when that monopoly is collecting billions of dollars in unaudited revenues from the government, it makes it impossible for other transparent private sector companies to compete. Even worse, the modus operandi of these monopolies was to actively exclude other companies from the market. So, not only did they have this huge advantage, they were also excluding other companies.

Despite all these efforts, LADOL and a small number of other companies manage to succeed. Why? Because we were adding so much value and the market was so desperate for an alternative that despite these huddles, by continuing to invest and providing high quality services and staying faithful to our mission and vision, we were able to get through the challenges and get to a point where under this government, with the position the government has taken, monopoly was no longer tolerated and was now recognised as an economic sabotage.

This government has brought its ease of doing business policies and other policies that allow other private companies like LADOL to flourish. We would not have been able to bring the FPSO into LADOL directly if this monopoly was still dominating the market. And that just isn’t a loss to LADOL but to the whole country because when you keep the market small, you make sure that the vast majority of Nigerians will never benefit. This is not just about one private company, this is about the hundreds of thousands of companies which will now be able to grow and flourish, successful and profitable because of the environment the government has created.

What is the relationship between LADOL and Samsung regarding the fabrication yard?

Samsung is the engineering procurement construction (EPC) contractor hired by Total to build the FPSO. As has been stated by Total, one of the things that Total included in that EPC contract was the construction of the shipyard in LADOL. One of the reasons I think LADOL was chosen as the facility as the location and one of the reasons we have developed such a close relationship with Total is that they knew based on our track record that we would deliver and do everything necessary to ensure that the facility was built.

Total obviously provided a lot of help through the contract and Samsung provided lots of technical assistance based on the scope of work given by Total. Like I said it definitely takes a village. Total is now going to benefit from the assistance they gave us in building the shipyard in many ways. Future projects will be cheaper, they will help create jobs and help increase the capacity for yards across the country. This will create more wealth and prosperity in Nigeria which will translate into Nigerians contributing into the global economy.

So, there will be a direct benefit for Total shareholders in terms of higher returns from their investment in Nigeria and there will be a benefit for the French people in terms of Nigerians and Nigeria as a country contributing to the global economy.

What are the unique features of LADOL’s ship yard?

There are many unique things about the ship yard. First and foremost it is the largest fabrication and integration ship yard in West Africa. It has the largest crane capacity in the whole of Africa. What that means is that it instantly makes Nigeria the hub for fabrication and integration not just for West Africa but for the whole of Africa. There is a similar facility in America in a place called Corpus Christi (Texas) where they also have massive crane capacity and people come from all over the world just to be able to use those cranes because there some operations that can only be done when you have this kind of crane capacity.

Developing this kind of crane capacity requires massive infrastructural investment but you also have to have a location which is reachable by the largest vessels and the largest modules in the world. So, it is a combination of having the ideal location and then building the infrastructure in that location. The LADOL facility has already given Nigerian a platform on which we can become a hub for fabrication and engineering.

What we want to do is to make that a reality by working with other indigenous companies in the maritime sector, in the oil and gas sector, in the industrial sector to actually build additional capacity across the country so that people could come to Nigeria and get a complete solution.

LADOL is not the complete solution. What we’ve done is open the door and make it feasible for these massive project to be completed locally. But for most of the fabrication to be done we need other places where that fabrication has been done.

That is a similar model to the one we see in South Korea, models you see in Europe where you usually have one strategic location where you carry out the integration and the aggregation but the work that goes into the vessel, that goes into an airplane, the work that goes into building train infrastructure and equipment is done all over the country.

What percentage of participation has LADOL had in local content implementation?

It is impossible to say the exact percentage that we are responsible for. There are 18 modules on the FPSO and six of them were built in-country but the modules on the FPSO are only a part of the over all. That’s a small part of the Total Egina project. I will prefer to look at it in terms of: what has our contribution been in terms of changing the potential, the real potential for local content to be increased to 70% for future projects?

I will say that we’ve been instrumental in that. By having a shipyard in LADOL it is now feasible that within the next five years we can reach the levels of local content that we see in Brazil which is a radical improvement in the level of local content and it is something of which we are very proud.

But for that 70% to be reached – I can’t emphasise this enough – we need a lot more capacity, we need collaboration amongst Nigerians, we need people working all over the country, we need 100,000 Nigerian engineers, we need welders, and we need fabricators. There is a lot that still has to be done but the difference between the situation we were three years ago before the shipyard was built in LADOL and where we are at now is that there is a huge economic incentive to build that capacity in Nigeria.

Previously, if you fabricated anything of any significant size in Nigeria, you have to put it on a vessel and send it to the other side of the world to be made part of something else. As you can imagine, the cost of doing that made it uneconomical to actually develop widespread capacity and that is why we had this phenomena where Nigeria was spending hundreds and billions of dollars on projects and very little value, and few jobs were permanently created locally. Instead jobs were created using Nigerian money, in Nigerian projects across the world.

Now that we have this facility, everything you fabricate here can be integrated here. So, all those jobs that were previously exported can now be domesticated and that is critically important and even more important is the fact that if you are an indigenous investor and you have a fabrication yard and you are looking for financing, and you are trying to build a business plan; it wouldn’t have been very difficult for you to build a business plan before this shipyard was built in LADOL because there is no way you could justify to the bank that you could take on very large project. Now that this shipyard is here, you can use other countries as examples. Nigeria is now a far more attractive investment destination.

Holistically, can you say we are on the path to increasing the local content component in Nigeria’s oil and gas industry?

I think that’s the essence of what we’ve done. Simbi Wabote, the executive secretary of Nigerian Content Development and Monitoring Board (NCDMB), confirmed that when he visited LADOL and toured the FPSO a couple of weeks ago. The reason we’re so sure of that is again if you look at what happened in Norway, if you look at what happened in the UK, if you look at what happened in America, what we are predicting would be the outcome from the existence of this ship yard is something that has happened in every single country that has built similar facilities.

So we’re sure that this is going to happen. The only question is how quickly will it happen? And that really depends on how quickly other private indigenous investors come together, and we start to look at this market holistically, and start to collaborate. At the same time we need the government to maintain the ease of doing business platform and to expand it, and that expansion should tackle the fact that our local banks are not giving us the kinds of loans we need In order to develop the capacity that is needed to create these jobs.

What impact has federal government’s ‘ease of doing business’ policy had on the economy?

What I will say is that we haven’t seen significant change in the level of foreign investment, but I think the indigenous private sector does feel the benefit. It’s very hard. There is no way in which doing business in any country in the world, especially with trying to develop and make the kinds of changes our private sector is trying to make. Before we had ease of doing business it was almost impossible for businesses to thrive but now it is now possible, and people just have to recognize that there are no short cuts. It is going to be hard, it is going to take a long time and that is why we keep emphasising the need for collaboration and the need to maintain the ease of doing business platform. This is something we need to maintain for the next 10 – 20 years in order to get to where we want to get to.

In terms of regulatory frame work, what could government do to make things easier?

The next focus needs to be on the financing side. It is simply not possible to build capacity unless you have long term low cost loans. It should be about getting a leverage for private investors who want to make medium and long term investment and that money is simply not getting into the right hands. Most of the banking transactions that happened in Nigeria are still between banks and the government and that is just wrong. We need to get to a point where it is attractive for banks to make medium and long term loans and there should be penalties for banks who do not make a significant number of medium and long term loan. That is what the economic needs. There is no way can get to the G20, there is no way we can create the 200 million jobs we need to create as our population increases to 300 million unless we sort out our financial system.



https://www.thecable.ng/nigeria-fast-becoming-hub-fabrication-africa-amy-jadesimi/amp

can someone summarize this epistle

...

Ok

somebody should summerize....i dont want to get an headache....

There have been many challenges not just for the project but for LADOL. We have moved from a time where private sector development from LADOL was literally forced out of the market. The biggest challenge we faced is definitely the monopoly that was prevalent in the sector until it was outlawed by President Muhammadu Buhari in April 2017. When you have a monopoly in the sector, particularly when that monopoly is collecting billions of dollars in unaudited revenues from the government, it makes it impossible for other transparent private sector companies to compete. Even worse, the modus operandi of these monopolies was to actively exclude other companies from the market. So, not only did they have this huge advantage, they were also excluding other companies.

I reckon this a shade thrown at corrupt Atiku and corrupt Intels.

Only ignorant lazy dolts who sit at home all day with their hearts full of hate and selective blindness can't see the work the man Buhari has been doing.

God bless Nigeria.