Stakeholders of Nigeria's Energy Rise
A strategic redefinition of stakeholders in the Nigerian Energy sector
Nigerians for Super Energy would like to strategically change the stakeholders in the Energy effort. I was telling a friend that if it were possible, Given the state of Energy in Nigeria and how important it is to our development, I would recommend that all Nigerians of age be drafted to walking half days at a refinery or power generating project or other associated activities that will help us achieve our goals. The goals are:
1.24 Refineries in a National/Publicly traded oil company with global reach.
2.50,000 megawatts in a well planned power grid.
But as we all know that is impossible to draft all the people to work on these projects. However I think we can mobilize the people with our campaign using similar strategies with the AIDS campaign to give every Nigerian an opportunity to contribute to the motherland.
Now that we have found a way to get all hands on deck by supporting the effort. We turn our focus to what we currently call stakeholders. Today we define stakeholders as the federal ministries and pedestals, investors and unions directly related to the energy sector. I am recommending we strategically change this group to deliver our goals. Before we do that let us recap on our recommendations for both Fuel and Electrical sector.
Fuel Plan
24 Refineries in a National/Publicly traded oil company with global reach is what we need!!!
They say imitation is a form of flattery. If so, Nigeria needs to look to Venezuelans to reform its fuel sector. Due to the policies of Venezuelan oil company, PDVSA, the Venezuelans are able to enjoy $0.19 per gallon or N6.12. The Venezuelan oil company, PDVSA, had decided that it was not the crude oil export business but in the global petroleum and chemical business. So they invested in refining and retail business in Venezuela and almost all their export markets. Today PDVSA processes 3.3m barrels per day through 24 refineries: six complexes in Venezuela, one in the Caribbean, eight in the United States and nine in Europe. The Brazilian Oil company, Petrobras is another example. This company is renowned for its leadership in development of advanced technology from deep-water and ultra-deep water oil production. With 55.7% of Petrobras' Common Shares (with vote right) is owned by the Brazilian government, however privately held portions are traded on Bovespa stock market. On April 21st of 2006, President Luiz Inácio Lula da Silva announced Brazil's self-sufficiency in petroleum. There is also Petronas Malaysian Oil company which has been described as the best-managed national oil company in Asia if not the world. Mr. President please seek counsel of the architects of PDVSA, Petronas, Mr. Putin and/or Silva to see what they are doing. We recommend three strategic steps to revolutionize our oil sector.
1. NNPC should be come a government/public firm with part of it shares allocated for Nigerians. This will provide the company with a new direction and ownership need for the global challenges.
2. NNPC should go on a buying spree with the aid of government funds to buy (outright or major) shares in refineries in Africa, China and United States. This will provide us with immediate source of refined products, opportunities to train our people and hard currency. Best of all this does not need the 18 to 24 months to build a refinery. This will also provide us a stop gag measure until we build more refineries. It is all about add value and we need to start doing that.
3. Start building 4 refineries and retail outlets to take care of the local demand as estimated for 2010. This will help put to rest the fuel challenges that we face as a Nation.
Electrical Plan
50,000 megawatts in a well planned power grid is what we need!!!
Why 50,000 Megawatts? Given our population, the goals (15,000MW, 20,000MW, and 30,000MW) currently proposed in different political and business circles does not take care of latent electrical demand. In 1999 we estimated a goal of 4,000mw and 5,600mw, we have reached those goals but still not able to survive disruptions to the power grid. South Africa with a population of 47M generates 36,000MW, Brazil population 188M generates 90,000MW and South Korea population 49M generates 43,833MW. Nigeria with a population of 140M would need to generate 67,021MW to be at par with Brazil the lowest per capita among the three countries. Based on the current estimates of 10,000mw in current or in progress, we will need 40, 000mw to complete our goal. This translates in 1,100mw per state and Abuja. Yes we know some states may not be able to generate this amount due to logistic or cost can join with other states to meet their goal. Some states like Lagos will need double or triple that amount. Using current estimates we believe that we need $29 billion for completion of the goal which about $15 billion should come from the Federal government.
1. The plan would call for part of excess revenue funds to be invested in power generation and transmission.
2. All sates, Abuja and Local governments must contribute a percentage of their net worth to the projects. Land for projects will be provided by state and local governments.
3. All banks must invest a percentage of their net worth. Corporations and individual investors will be encouraged to invest in the projects with a strong push for public stock participation.
4. All companies must provide free electricity and cooking gas to local communities.
5. Alternate sources must be encouraged, At least one coal power station in Enugu with similar capacity of Tutuka, South Africa 6x609 MW. This should be part of the sale of 13 mining titles belonging to the Nigerian Mining Corporation.
6. Gas and oil pipeline should have backup points. We must be able to ship gas or oil to Lagos; after all we ship it to the ends of the world. Our pipe line should be like a Hydra (multi-head monster) that will allow for maintenance without totally shorting down the country.
7. Implement widespread adoption of CFLs (Compact Fluorescent Lights) and other energy saving programs. CFLs save about four times more energy compare to regular lights.
8. Last but not least, industries using gas for energy will be given gas for free or token price.
New Stakeholders
Now that we recapped the recommended plans. I am recommending that all parts of the Nigeria society be at the table with funds or ideas. The groups are:
President: The leader of this emergency plan.
The Federal government and pedestals: Will provide most of the funds and direction for the plans.
The National Assembly: Make laws to easy the accomplishment of the goals and monitor the projects.
State government: Provide funds and as well as land for projects. The will also help monitor the projects.
Local governments: Same as State government, provide funds and as well as land for projects. The will also help monitor the projects. Their buy-in, support and monitor of projects can be a difference between a project completed on time and one that is very late due to community issues.
Unions: Unions would provide protection for workers as the projects are executed. As they say happy workers make excellent products.
Bankers: We provide financial support to the project. In every developed country the banks are normally called to help in financially challenging areas. In this case it is the energy sector.
Inverstors: There are two kinds of investors the shareholder and the actual management and investment team that will make the initial investment with government (Federal, State and Local) and banks to form a public/private firm that will later be trader on the stock market for shareholder to participate.
News Media: With the hopefully signing of the FOI Bill ( Freedom of Information), the news media will help in monitoring and supporting the completion of the projects.
Some of you maybe saying this is a large group. Yes it will be, but we recommend that the working team be keep small and the representatives of the subgroups be responsible for updating their groups. For example we will not want to have all the 774 local governments at the working team but have either one or two representatives from each state. However in some instances the group may have to meet to to approval important milestones. Same goes for the New Media. The shareholder can be represented by Independent Shareholders Association of Nigeria (ISAN).
The beauty of this approach is strength in number of owners. Truly when you look at the example of 50,000MW it looks large if only the federal government is going to lead, own and support this effort. But when you divide 50,000MW by 25 (Number of Banks) you get 2,000MW and when you divide 50,000MW by 37 (Number of States), you get 1,375MW. When you divide it by 774 (number of Local governments), you get 64.6MW and finally when you divide by 120,000 (number of shareholder in a a large Nigerian firm) you get 0.42MW. In short those are the numbers we can be looking at when it comes to investing in this effort. In other words each bank on the average can look to participate in financing a 2,000MW project ( whole or part investment).
I hope that this strategic approach to picking and engaging stakeholders will make every Nigerian have a stake or have ownership in what we called “The Nigerian Rise to Super Energy”
God Bless Nigeria!!!
Joseph Inyang, joe@nigeriansforsuperenergy.com