“There Is No Alternative To Deregulation” ……AUWALU ILU (President, LPG Association)
Alhaji Auwalu Ilu came into the maritime industry quietly; that was sometime in-between 2003/ 2004 and since then, he is gradually becoming a colossus; waxing stronger even where and when acclaimed elders are finding it difficult. He has grown his stevedoring company; Stallion to a reputable standard, so much so that it is much sought after by both terminal operators; and of course, dockworkers who commend him for his company’s adherence to welfare and industry standards. He is also a big time player in the highly capital intensive LPG business where he is the President. He spoke with our Oil and Gas correspondent, Dapo Olawuni on shipping, energy and other sundry issues.
Can we know briefly who Alhaji Auwalu Ilu is?
Auwalu is just a simple business man involved in stevedoring services, I am the managing director of Stallion Stevedoring Limited, we currently work for Grimaldi Terminal that is, the Ports and Terminal Multiservice Limited (PTML), I am also into the LPG market, I am currently the president of the Nigerian LP Gas Association and the chairman chief executive officer of Ultimate Gas Limited.
What is your assessment of port concession since 2006?
I will say it has brought a lot of investments, most of the terminals have now succeeded in controlling the access, the level of equipment availability has also improved, there is a lot of infrastructural development and the turn- around- time of vessels has improved. I think generally port concession has brought a better deal for Nigerians and it has helped in addressing most of the problems present during the NPA era.
What do you think are still the shortcomings because people still complain of high port charges and other issues?
Honestly I don’t know, because I am not into clearing, but definitely service delivery has improved seriously. Secondly, maybe the charges are meant to discourage people in a way because during the NPA era, people turn the port into a storage facility where they abandon their cargo and they are not in hurry to clear them because the charges are low, but now the terminal operators are charging fees that will make it unattractive for people to turn their terminals to a storage facility because they are only meant for transit whereby you bring in your cargo, clear them and take them to you various warehouses. From what I hear people talking, sometimes the charges are not fair in the sense that some of the problems are not with the consignee, sometimes it is the fault of the terminal operators, but they still want to charge you demurrage, a situation whereby you might have paid and you are ready for delivery, maybe for one reason or the other due to their own fault you are unable to clear and they still continue to charge you demurrage. From that point of view, I think it is not fair, but I am not in position to comment because I don’t know in terms of naira and kobo what the charges used to be and what is obtained now, but there have been a lot of improvement in the infrastructures, recently TICT received two cranes which cost a lot of money, they have caused a lot of key developments and so on.
Is it true that port concession has made many stevedoring companies lose their job?
Initially NPA was the operator of the port; both the Lagos and the Eastern ports, all over the country they are involved in operations and they are the master stevedores, so they had to engage the services of stevedoring contractors who will carryout the stevedoring services on their behalf. Under the concessioning arrangement, the terminal operators assume that responsibility of master stevedores, so a lot of them opted to handle stevedoring operations by themselves, some of them have in-house stevedoring companies while other companies also assist. Secondly the criteria for picking who does the services depend on what value you are going to add to the operations. It is not like the NPA period whereby if you have connections or you know somebody you can get it, this time around you have to prove that you are capable and that you can add value to the cargo delivery process; these are the major yardsticks, there are still a lot of stevedoring companies, but the number has reduced drastically because some of the terminal operators are handling it directly; like APM Terminal that has engaged the services of crane operators and others and it is only for customs examinations that they ask for stevedoring services, some terminal operators have also incorporated integral stevedoring companies. But there are other stevedoring companies that are still working for the terminal operators.
What has kept your company floating?
I think we are just trying to do our best to service our employers who are the terminal operators; secondly we try to motivate our dockworkers so that they can give their best. There is a kind of partnership between us, we work very closely and improve the turn- around- time of the vessels, we make sure the cargoes are secured and not vandalized, all these are what have made us to remain in business and our principals appreciate this effort.
Have there ever been any face – offs between you and your dockworkers?
There is always a disagreement between employer and employee but we have an internal mechanism whereby we are able to resolve our disagreements, but the most important thing is that we are working together as a team, they need us and we need them, so together we are giving a better service for the benefit of our port.
In spite of measures put in place since the introduction of the ISPS Code, there are still cases of stealing and vandalism in the port, why is that?
All over the world, stealing is not something that you can completely eradicate, it is human nature just like stealing outside the ports, robbery and assassinations, you can only minimize them. But, I tell you it has reduced drastically, because of the efforts that are being put in place and the issue of the ISPS code, access control; getting access to the ship and the terminal have reduced drastically, the rate of criminal activities, vandalism, thefts and so on have all reduced considerably.
What is your assessment of the usage of gas for domestic purpose in Nigeria?
Up till now, the rate of consumption of LPG is still very low; in fact we are the least in terms of per capital consumption in the whole of West Africa, the level of consumption (even though is increasing gradually) is still very low; less than 2 percent of Nigerians are using LPG, it is only the elites that use it, majority of the people particularly in the rural areas use either firewood or kerosene, even in the cities it is only people in the highbrow areas that use gas. If you go to some areas, you will find out that people are still using firewood and kerosene, we, as the Nigerian LP Gas Association are doing our best to collaborate with the Federal Government to see how we can make LPG affordable, how we can remove the bottlenecks and increase consumption to about 1million tons per annum within the next four years. There was a conference sometimes last year where the formal minister of petroleum made a policy statement that government is working towards increasing our per capital consumption from the 70,000 tons per annum at that time to about 1million tons per annum within five years, we have already done one year, we are waiting for this new minister to settle down and to see how we can collaborate with them to deepen the LPG market because LPG is safer, cleaner in terms of health and environment compared to other alternatives like kerosene and firewood.
What has your association done to enlighten Nigerians on why they should use LPG?
There are many issues, first of all we have tackled availability, until last two years LPG was not available always; today you will have, tomorrow you don’t, so we had to tackle that, even though we must tackle all the problems at the same time. But you have to get your priority right, now supply is not an issue, we are looking at affordability; yes, the elites can afford it, what is the start up cost of LPG? For you to start using LPG, you need a hose, a regulator, a burner and if you add all these together, for anybody to start using LPG, he will require about N25, 000 to N30, 000; whereas with N300 you can buy a kerosene stove and with a four litre gallon or with the 1.5 litre bottle, you can get kerosene anywhere. For firewood, you don’t even need any money, all you need is energy, you can go to the village, cut the wood and allow it to dry and you are ready to use. So, we are trying to see how we can reduce the start-up cost. Secondly the logistics makes the gas even more expensive by about 50 percent, if you can reduce the logistics of making this gas available at all nooks and crannies of this country, then you are reducing the cost, but until you do that no matter how you go and campaign to somebody about LPG and he can not afford it, there is nothing you can do. We are trying to get the government to remove duty on cylinders and other obstacles that adds to the cost, to look at the logistics along the distribution chain and eliminate these kind of double cost and handling, but until we achieve that it will be a wasteful exercise to start to campaign. If the people know all these advantages and they cannot afford it, then it’s a waste of time and resources, but I can tell you that those who know and have tested the use of LPG will never go back to the use of other products, but it also depends on ones capacity to afford the start up cost and be able to sustain the refill. Currently we are addressing the issue, you will recall that recently, we were in Abuja and we had a meeting with the former minister of finance, and the former minister of petroleum, we are making efforts to see the minister for information so that NTA can give us some air time where we can do this campaign. We are engaging the government because most of these things have to do with government policies and you can see that a lot of investments are on the line. Recently, a new gas terminal was opened along Creek Road, NIPCO has been operating for almost one year, more people are importing cylinders, a lot of people are setting up plants, existing ones are also upgrading. All these are helping the industry while we are engaging the government to see what they can do by way of fiscal policies by reducing all these tariffs and duties.
Despite repeated calls by government for oil companies to stop gas flaring, the multinationals still continue, what else can the government do?
To be honest with you the reason why people flare is because it is cheaper, the cost of re-injecting the gas back into the well is very capital intensive. The government normally use this stick and carrot approach, look at what it requires to encourage the oil companies and at the same time, using a very big stick for people to make sure that we attain this deadline for flaring. We need the gas to power our plants; we need for export in order to generate more revenue so why are we flaring it? It requires a lot of heavy investments, government need to come in, sit down with the oil companies and see the incentives they require, after giving them this, they should also introduce penalty and enforce it, they should make the penalty very expensive thereby making it more difficult for people to flare so that they can find a way of using the gas.
Is it possible to have a stable power supply in Nigeria?
It is possible; Nigeria is very rich in gas reserve. Do you know how many tons of LNG we are exporting out of this country?, it is sad that people take our gas and use it to go and power their economies but we can not do it, I think we really have to look at it as a government policy and sit down with the oil companies because some of these products are tied down to export, we have a lot of reserve but how do we make use of it, a lot of time its just talk and talks, going to seminar and conferences, but no political will to implement the resolutions. When it is easy to get away with it, everybody will want to get away with it, it’s easier to pay the penalty if it’s not heavy, but before you put penalties, give them incentives and encourage the people. Secondly, lack of safety and conducive atmosphere; thank God now the Niger Delta has become peaceful, the amnesty issue and giving communities little percentages will also help. A lot of people are willing to invest but because of the insecurity in the region, it is becoming very difficult, even when you give out the contract, nobody is willing to go and work for you or neutralize the gas or to process it for either power project or for export, people are not willing to come because of the risk involved and so on.But with the current efforts of the president, I believe we will be able to do it and I am happy that he is now in charge of the power sector and within these remaining months, I believe he will do a lot of things.
What advice would you give to the new NNPC boss in regards to LPG?
I have not met him but from what I hear people say about him, anywhere you take him to he will perform, he has done it in many other areas and his background is refinery and petrochemical,, I believe he is in a very good position , we know what he has done and we don’t need advice to know he is the right person, with support and cooperation from government; because a lot of these things has to do with government in order to achieve the set target, so I believe he is capable and one of the very best people in the system.
Do you support deregulation?
Yes. It remains the only answer to our problems, you must remove all regulations that is bringing in a lot of inefficiencies which add to the cost, maybe at the initial stage the price might shoot up, but with time it will come down, we don’t have the resources to be able to continue to subsidize. If you look at the logistics and remove the bottlenecks, we don’t need to regulate the petroleum industry, deregulation simply means allowing the market forces to attract investments, there is no investment currently because everyday it is government that gives out the contract for people to supply; which is easy, you know people will always say: “I would rather go and supply and have my cut from the government”. Also if you remove your hand completely and put some regulatory framework in place, definitely there will be solution. We have seen it in other sectors that have been deregulated, why is it only petrol, the market should determine the price.
What is the cause of LPG scarcity sometimes experienced?
It is because of the international price, gas has been deregulated since 1998 and it depends on the crude price because we are buying it at the same international price, the rate somebody buys in the USA is the same somebody in Nigeria will buy, but it is available now and you can not go to the market and not find it unlike before when with N10,000, you can not get a cylinder; that is the essence of deregulation, eliminate all the bottlenecks, allow a level plain ground, let it be free entry and free exit.
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