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Mr. Okwudili Ogbuenyi is the Managing Director of Valec Technologies Limited, a Nigeria-based power firm. He speaks about the country’s electricity challenges and alternative power sources in this interview with OKECHUKWU NNODIM
Do you think Nigeria has a commendable energy conservation or management practice?
No, we don’t. It is an area that Nigerians have yet to come to terms with but that will change very soon considering the recent increase in electricity tariff and the proposal to distribute digital meters to every home. That will instill the energy conservation culture in Nigerians. We waste virtually everything, from petroleum products to electricity. Even Internet data is wasted by telecom subscribers. The list goes on. But I think cost issues will bring the required discipline in these areas.
For you to quit your job in oil company to venture into this business gives an impression that it is very profitable. How has it been?
It has been great though not without its challenges, most of which are fundamental while some are strategic. I may have to tell you that my oil and gas exposure was limited to design, development and execution. So, in doing my own business, I was caught in the middle of business development, strategic planning and a whole lot of other factors that are somehow uniquely Nigerian and which require significant adjustments, especially for someone like me who is coming with experience totally different from the way business is done here. The fundamental part was more on the inefficiencies of the government, which we are also hoping will either get better or we find a way to overcome the apparent bottlenecks.
One would naturally expect this kind of business to thrive in this environment given the state of our power supply. What has the patronage been like?
It has been wonderful though I still feel that people have yet to know about what we do here at Valec Technologies. At Valec, we are bridging the gap between the academic deficit of Electrical/Electronic Engineering graduates and the labour market. Of course, we need to run equipment and so on. But on the flip side, I am an expert in energy conservation so I should lead by example, I can’t complain.
There are insinuations that the energy needs of Nigeria can best be met by power supply and not through alternative source like inverter or the UPS. What is the capacity, when compared?
There is nothing comparable to the state being in charge of power generation or what you may call the national grid in any part of the world. The reason is that it serves a lot of people at the same time and the liabilities are spread out so it is expected to be clean, adequate and cheap. In Nigeria, it is not exactly that way. Like you rightly said, it has never been adequate in Nigeria since the NEPA days of 1984 till date despite several reforms and baptisms to put it mildly.
The power sector got its first major boost with Obasanjo’s NIPP where about $16bn was reportedly expended in revamping power infrastructure. Nigeria within the period had more generating plants. The previous government tried to balkanise the power sector into generation, transmission and distribution which is another boost that opened the gates of privatisation and so on, but just like any other thing in this country, there is always inefficiencies in the implementation chain.
The major challenges bedeviling Nigeria’s power sector today are gas shortages for the generation companies which the government blames on sabotage; weak transmission infrastructure that undermine the amount of power to be evacuated from generating plants to sub-stations and distribution systems. The UPS and inverter and others are alternatives. I am not saying that when an individual makes a huge investment, it will not serve a comprehensive purpose. But I mean that they are basically backup systems that should hold on till public electricity supply is restored.
Nigeria generates less than 5,000MW of electricity and the existing power grid can carry just as much. I have no doubt that we have the capacity to generate more, however, even if we did, evacuating it becomes a challenge.
For the alternatives, UPS and inverters, the market is not saturated yet, so prices are not competitive. Also, the issue of quality control for imports should be emphasised here because when the market is flooded with substandard products, it undermines the real purpose of the whole investment.
It appears there is an influx of such companies into Nigeria. Apart from the ready market here, what other benefits do Nigerians stand to derive?
Nigeria is an untapped market and the government’s inefficiencies have created investment avenues for people. Anyone who can see no dearth of opportunities in the country will likely invest here.
What chance of survival does this business have should Nigeria have stable power supply?
To be clear, we are not against steady electricity supply in Nigeria. Our business goals are multifaceted. We run a programme for fresh graduates who wish to acquire the real employable skills relevant in the labour market. We train importers who mostly interface with foreign companies because you know that electrical components require some level of knowledge to make the best deals and satisfy customer quest, that is for our training section.
We implement electrical processes for companies who require our services, instrumentation, calibration, automatic power control systems, and power control panels, among others. So, it is not only in power we have interest. I must note here that even if the power situation changes, it doesn’t write off the role played by backup systems. So, I do agree that the business clime will never remain the same however, we have it all figured out with other opportunities.
Some business owners have said it is cheaper to import certain finished products than produce locally. Which is better in this line of business?
That is a tough one. Well, where do we start the manufacturing process? Is it from the batteries, solar panels, components, inverters, sensors or controllers? Even developed nations are having a hard time making these things; remember that the most efficient technologies that support these systems are under patents so to get the licence to make them here may be very difficult. Again, in line with the economic direction of this present government, we may decide to import components and assemble here, but that will be feasible when we grow in capacity and have the means to employ more people who have the skills to do the job. Realistically speaking, I think the government will benefit from the job creation aspect in the long run. In the short run, we rely on imports for now.
It is assumed that manufacturers of UPS would see companies producing or importing generators as competitors. How has the competition been? It is a misconception by some guys trying to justify the inefficiencies in the power sector or people who are too lazy to compete. The market is big enough for everyone. Once the product is a good one, it will penetrate the market and gain market share. It is competitive no doubt but not discouraging.
It has been stressed that the UPS is better than using generator due to the health implication of fumes emitted by generators. How would you assess Nigerian’s disposition to it?
The UPS is a safer alternative in the short run but in the long run, I wouldn’t call it environmentally friendly either. While the generator emits poisonous gases during operation as its own pollution agent, the UPS batteries are equally poisonous when poorly disposed of at the end of its life span. Most Nigerians don’t know this much.
People have complained about the high cost of these equipment and they have tied it to undue exploitation. Since there is a ready market, why has the price not gone down?
You know we do not directly import. We buy directly from importers and install for clients so we only patronise the importers. I think their greatest challenge at the moment is the exchange rate crisis especially if it is sourced from the black market. Make no mistakes, power components are not cheap the world over but the dollar crisis has worsened the Nigerian situation.
Are you looking at solar-powered UPS system given the abundance of sunlight in this clime?
Of course, we have implemented several solar power projects based on clientele requirements. We have the technology here. But most people are either not familiar with the benefits of solar power or are not willing to invest the relatively huge sum involved in installing the technology. That is why we also do our best at every point to advise clients on which options would best serve them.
What are the challenges you have been facing operating in the Nigerian market?
The awareness; making people understand what we do and how it makes their life better. The procurement process in electrical companies that happen mostly behind closed doors is also a big issue that militates against growth. Even to get the window to register with these companies for vendor services opportunities is quite tough.
Many trainees have emerged from different training initiatives but some of these people, mostly youths, are on the streets due to the lack of start-up capital. How much does it cost to set up a business like this?
It costs quite a lot but you must understand that our biggest investment is the knowledge and exposure we came with. That, I think, is priceless. On the other hand, the start-up cost depends on what exactly one wants to start doing. For example, to start installing only inverters for people, you don’t need more than basic tools and the skill. But to grow in any business, you first have to acquire the requisite skills needed. When you have this, you can design your business to focus around small portfolios but with eye on the big picture. The biggest companies in the world, from Cocacola, to Dell; from Apple to Google had their small beginning. I am not sure Dangote started out as a multinational. He must have begun business relatively small. But has he not grown to become one of the biggest in Africa and the world? We read him in Forbes as one of the richest in the world. He started small. But he was focused on growth. There is no way a big client will hire you out of nothing. You have to start from a certain threshold and when you get it right here, you begin to scale.
What prompted you to set up a training school for young engineers?
Like I said before now, there is a chasm when you compare what a young electrical engineer learnt in school and what is required of him in the labour market. It is bad enough that there are no longer competent technical schools and colleges that will ordinarily bring this folks up to speed on the current realities of the day. We saw the need to bridge this gap that makes engineering degrees appear like fancy certificates. We looked at this and thought of providing the needed practical skills. Valec Technologies exposes them to the required skills to remain competitive in the society and employable
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Source: Punch News