INTERVIEW: Why borderless economies are best for Africa — Sahara Group CEO

Tonye Cole, CEO, Sahara Energy
Tonye Cole, CEO, Sahara Energy

During the sixth annual conference and exhibition of the African Petroleum Producers’ Association, APPA, in Abuja, Tonye Cole, the Chief Executive Officer of Sahara Group, one of the sponsors, spoke with Business Editor, BASSEY UDO, on what African needs to do to survive the pressures caused by declining global crude oil prices on the continent’s economy.

Excerpts:

PT: At the opening session of the APPA conference, Sahara Group was rallying members to partner towards finding an African solution to the challenge posed by declining global crude oil prices. What informed your perspective?

COLE: Crude oil prices have been going up and down, constantly moving. But, the last thing we saw as oil prices were hitting the hundreds was that different companies and different stakeholders in the business were positioning their own views about what should happen. Everybody was talking, but nobody was listening.

However, one thing we see when oil prices started coming down to the level it is today is that people are worried enough to agree to sit down, and for the first time begin to ask how we can get out of this crisis.

It takes for the different heads, from different areas, to come together to look at the problem from a common view point, which is what is happening now with the coming together of members of the African Petroleum Producers Association, APPA.

That common view point is that everybody needs to survive in this difficult period. Governments, oil companies, various stakeholders, even local communities agitating that oil is their resources, need to survive. That survival means that everybody should be able to come and put heads together to say: how do we do solve this problem?

Again, even if we survive now, there has to be enough, in terms of sustainability. This is the time that people can listen to long term plans, and that’s what the meeting is all about and the perspective of our Group.

PT: Oil crisis is neither Nigerian nor African, but global. How would the coming together of African producers influence the situation at the international crude oil market?

COLE: There are solutions that are Africa-centric. There are things that work for us as a people. So far, what we do a lot is to import things – from technology to ideas, etc. that have been developed to work for the foreigners, and have been working for them before they are exported to us.

What we have to do is to reverse that trend. Look at our peculiar situation and create the solutions that can work for us. Then, we can export what we can create to other areas. There are many African countries that are just discovering their own oil. They are going through the processes Nigeria has been through these past decades.Nigeria is at the forefront of developing solutions that work within our environment, which can be used in any developing society. That is what we need to start thinking about.

PT: What is the role of Sahara Group in all these?

COLE: Sahara Group has a lot of experience in oil trading business. Some of the things we have found are cross border solutions that can work for our peculiar situation as Africans. Ghana, for example, requires power for their industries. Nigeria has started off by developing power using the private public partnership model, which allows private Nigerian companies to use it and realise what international companies promised they would do and it never happened.

We have to now develop a framework, policy and all that works within this society. One of the things Sahara Group did was to sit down with the Ghanaian government on power and tell them the lessons we learnt in Nigeria and the solutions we need to put forward there. Those kinds of things are working out beautifully, rather than sitting down and exporting things one knows as solutions being provided for here in Nigeria, so that we do not make the same mistakes at the time. That’s one solution out of many.

PT: What are these Afro-centric solutions you proffer for the oil and gas sector? Do we have that capacity to development them?

COLE: Absolutely! We do! Like here, when we started about 20 years back, there were three things we saw at the time.One, all international trading was handled by foreign companies. Two, all financing for trading was handled by foreign companies. Three, there was no indigenous people that knew how to trade crude oil, petroleum products, the futures, etc. That capacity did not exist.

Today, one of the things Sahara Group has done is to train very young people; bring them into that area; take them abroad to sit on commodities trading desks we have in Geneva, Dubai, Singapore, and Ghana, and taking what is good about Nigeria to the world.

One good thing one can always find about Nigeria is that we are aggressive and enterprising when it comes to our entrepreneurial mind-set. We believe in ourselves. All what one has to do is give the Nigerian that opportunity to express himself.

We have seen that in Nigerians in the last 20 years. We have driven in the forefront. Many people did not know we have the ability to finance crude and petroleum products. But, Nigerian banks are able to do that effortlessly and start opening Letters of Credits, LCs for Nigerian companies.

Two, there are people in Sahara Group who can sit down with the best in the world to trade any product anywhere. These are all Nigerians who have come through the system. It just tells me that we know what to do given the right opportunities.

PT: What about the technology required in the oil and gas industry, which are still in the hands of the foreigners?

COLE: One of the things we have to look at is inwards solutions; those things we know we are really good at. Once you know what you are good at, you begin to develop what you are extremely good at.

One of the things that Nigerians always do is to think local. A Nigerian will take any technology in his hands and adapt it and use it in a way that can function where other people would have thrown away.

It is one of the simple skills that we have that we don’t do much about. At a particularly level, people want to buy the best things for their use. But, 99 per cent of the rest of Nigerians take that same new thing that has been discarded by somebody else and keep re-engineering it.

It is one of our skills – to be able to capture that skill of re-engineering. They go abroad and buy everything that has been discarded and bring them in, re-package and sell them. But, we don’t always understand that in that technology, there is a place for re-engineering. There is so much. But, we have to give people the belief in themselves.

Such things are not bad. There are countries that sit down and work on their capabilities. That is how China developed. They picked out things; looked at them and re-engineered them. They learnt how to do it and began to do it. We can do the same, because we have the same brain sets.

PT: At the end of this conference, what kind of resolutions are we expecting to come out of it?

COLE:
I hope that at the end of the day, one of the things we would see would be that all the 18 oil producing countries in Africa gathering in Abuja would create borderless thinking about our common challenges. This is very important.

As we have walked through Africa, one of the things we had to break down right at the beginning was the issue of borders. People build borders against themselves. They see themselves as citizens of Niger, Ivory Coast, Ghana, Nigeria and other, and because of that they refuse to communicate and share information on issues of development.

Today, we have found out that after 18 years of pushing that aspect of borderless control, we found out that it is much easier to operate in West African countries. Today, Sahara Group is operating all over the place, because we have broken those borders.

Today, the low oil price has opened up Africa to other African countries, because they know we are here and we know the problems.

Today, Sahara Group can operate out of Tanzania and anywhere. We have bought storage facilities in Tanzania. We have been shipping products into Rwanda, Kenya and Uganda and building the whole East African hub.

My hope is that borderless discussions would come out of here; where solutions that work in Nigeria can be exported into Ghana, and those that work in Ivory Coast can be taken to Tanzania, or what has worked in Gabon can be moved into Cameroun.

This way, we will not be thinking of borders against the people, but regional solutions to our common problems. If we can achieve that during the meeting, we would have gone a long way to finding lasting solutions to our problems.

PT: Nigeria’s challenges in the downstream sector of the petroleum industry could be what most other African countries are facing. How would this meeting help address these issues?

COLE: One thing we have talked about for a long time in the downstream sector of our petroleum industry has to do with subsidies and subsidy removal and the measure and control of the volume of products as they are moved from one place to another.

Many things in Nigeria, by virtue of our vastness and the independent retail operators already in the industry, we have a lot of lessons to learn from.

Other countries coming into the industry should sit down and take a look at these problems and identify the mistakes that have been made by agencies like the PPPRA (Petroleum Products Pricing Regulatory Agency), PEF (Petroleum Equalization Fund) and the efforts to restructure and create solutions to the problems of these institutions.

What can we gain from opening up the entire market to independent marketers who now own about 60 per cent of the market? What are the mistakes and gains from such policies as domestic refining? What do they gain from buying a broken down refining system? Or what can we gain by restructuring the oil industry? There are so many real life case studies in Nigeria that many African countries can learn from.

One of the things I am always asked each time I speak in different countries is: don’t look at Nigeria in the way that one can say that there is nothing to learn from it. There are a lot that have been done that could be learnt from. We learnt it the hard way. We have the real answers. No African country coming into the oil industry now should make the same mistakes Nigeria made.

My advice is for African countries to come, sit down and engage the various stakeholders, by asking questions about what they have done right and their mistakes. How can we improve our industry?Frankly, if one goes to MIT (Massachusetts Institute of Technology) looking for solutions about African issues, one is not likely to find. But, if you come to Nigeria, where we have learnt it the hard way, you are sure to get what works for Africans.

Nigeria will be able to tell you where mistakes were made. We will show you where the landmines are. We will be able to tell you what you are likely to get if you add one and one together.

I hope that at the end of the conversation, we will be able to learn from each other’s peculiar ways of solving African problems our own way.

PT: Talking about the problem of power supply and the synergy between gas supply and power generation. Sahara Group is also involved in all these. How do we strike the right balance to guarantee adequate power supply to the people?

COLE:
The principle around the oil sector that is being discussed is exactly the same as the principle we have to think about when talking about power. It’s all about stakeholder engagement. Everybody has an interest to protect.

In power, the interest of the consumer at the end of the day is: let there be light. For the producer, the only interest he has at the end of the day is: let him be able to supply light to the consumers.

So, above the economics, the principal thing is that everyone should have one goal, to bring power. Once that is put as a central call, and with all the stakeholders around the table agreeing that they will make this happen, we have to listen.

What has made all the difference in the last couple of months is that all stakeholders in the sector are sitting together and listening to what the distribution and generation companies as well as the regulating authorities are saying about all the problems and how to bring the solution.

All parties would also listen to what the gas suppliers are saying about the situation. Without adequate supply of gas, the generation companies would not be able to generate electricity. And without electricity, the distribution companies would have what to distribute to the people. So, it’s a delicate chain.

But, everyone would have to realise that everyone is looking for the same thing, and that each one of them have issues peculiar to them that must be addressed. It is addressing these issues and finding the right balance that is the key.

Having an umpire that is able to see all of these and address everything about solutions before setting out a road-map or time-frame that would get it there. It’s a delicate call.

If one tries to rush all of these with the expectation that it must happen tomorrow, it will fail, and everyone would sit down and watch, because it would not happen.

One must take steps that everyone understands could take everyone there. The key thing to all of that is communication. Everyone has to communicate effectively and clearly what those steps are and what is being done; how long it will take. If these things are tied up, I think Nigerians would understand.


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