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Warehousing and logistics: Key to the success of deregulation in Nigeria

PPP is required to ensure policies that will drive investments are implemented.

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Warehousing and logistics- Key to the success of deregulation in Nigeria

With over 400 years of history, VOPAK is the leading independent warehousing and logistics company in the world. Imagine how the Oil and Gas industry would be without the services of VOPAK to the many sectors of the industry.

In my last editorial on Nairametrics, which focused on the current trend of deregulation in the Downstream stream sector of the Oil and Gas industry of Nigeria, it was emphasized that players within the industry should start looking into creating the needed partnerships towards building the right synergies in order to attract the needed investments for infrastructure development.

Looking at the VOPAK model, I believe that the key to a successful deregulation of the Nigerian downstream oil & gas sector is hinged on the investments brought into the sector by the warehousing and logistics players such as those under the umbrella body DAPPMAN.

This is true because over the last two decades, their investments have been very instrumental to the expansion of the sector as they have played a major role in ensuring the adequate holding and distribution of products across the country.

(READ MORE:How to access CBN’s N250 billion intervention fund for gas sector)

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Their investments in this sector has helped in supporting the supply of products across the country, as their facilities have provided the needed warehousing infrastructure for the increased usage of products over the period, thereby ensuring security and transparency in the movement and distribution of products for the major providers of the product e.g. NNPC.

As more warehousing and logistics partnerships are beginning to take shape, more players are starting to better understand the need for increased efficiency within the value chain, thereby improving reliability and sustainability of the sector.

By so doing, they have started to plug many of the inefficiencies within the value chain by creating a Supply Chain Management System needed for an efficient value chain system from marketing through retailing to the final end users.

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As one who spent over a decade in the Oil & Gas Industry, I have seen the immense value add of the warehousing and logistics companies to the overall growth of the industry and like VOPAK are the most crucial and essential aspects of the industry, be it upstream, midstream and/or downstream.

The same would go for our country where the players – Public and Private – must work together to ensure that the policies that will drive the required investments in the warehousing and logistics arm of the value chain are carefully articulated so as to allow current and future players in this arm of the oil and gas industry attract the right and required financing that would drive the efficiency of the industry.

(READ MORE:Petroleum Industry Bill set to go to President Buhari)

It is quite pertinent to note that sectors of the oil and gas industry such production, trading, refining, marketing, and distribution would be grossly inefficient without key investments in warehousing and logistics – Tank Farm Storage and Pipeline Networks.

Warehousing and logistics- Key to the success of deregulation in Nigeria

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The evidence is noticeably clear even in the regulated dispensation that warehousing and logistics companies have been extremely instrumental to the ability of Government to reach many parts of the nations considering the huge increase in the use of oil and gas products in the last three decades. This also include the major strategic infrastructure development and investments made by warehousing and logistics players.

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It is without thinking too much and seeing too far that I can confidently say that for a successful deregulation process in Nigeria, players in the warehousing and logistics arm of the sector must have a crucial and strategic seat on the table.

This is because their investments in providing their services to the entire value chain is so essential across the country through storage and pipeline network facilities in order to ensure that products move freely and efficiently across the nation as well as for exports once we are able to optimize and actualize the potentials of the industry.

(READ MORE:Has petroleum product deregulation finally come to roost?)

In conclusion, looking at the huge strides and footprints of VOPAK – (5,107,541cbm¹ in the Americas, 15,543,595cbm in Asia & Middle East, 2,832,556 in China & North Asia, 10,934,973 in Europe & Africa) – A total 34,418,665cbm and sixty-six terminal of warehousing and logistics facilities, like the saying goes “IT IS NOT ROCKET SCIENCE” neither would it be far fetched to say that the key to a successful deregulation in Nigeria would rest on the shoulders of warehousing and logistics players current (SUCH AS DAPPMAN) and potential in the industry across the entire value chain – Upstream to Downstream.

Like the title of my last article “Has petroleum product deregulation finally come to roost?”, well in my opinion the key to its successful roosting would be significantly impacted by the seat offered on the table to players in the warehousing and logistics arm like DAPMAN.

¹ – cbm – Cubic Meters

Article written by Uade Ahimie. Uade is a chartered accountant and corporate governance implementation expert, with almost 3 decades of working experience in oil and gas downstream and upstream, banking and consulting.

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He is also a member of the Nairametrics Editorial Board.

 

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Opinions

The game is changing, as entrepreneurs are thinking globally for their small businesses.

To be successful, entrepreneurs must see their companies from a global perspective.

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African american business woman by the window, Things to accomplish during COVID-19 lockdown

In today’s globally competitive environment, any business – large or small, that is not thinking and acting strategically is extremely vulnerable. Every business is exposed to the forces of a rapidly changing competitive environment, and in the future, small business executives can expect even greater change and uncertainty.

From sweeping political changes around the planet, rapid technological advances to more intense competition, and newly emerging global markets, the business environment has become more turbulent and challenging to business owners. Although this market turbulence creates many challenges for small businesses, it also creates opportunities for those companies that have in place strategies to capitalize on them.

To remain competitive, small businesses must assume a global posture. Global effectiveness requires entrepreneurs to be able to leverage workers’ skills and company resources and know-how across borders and cultures across the world. They also must concentrate on maintaining competitive cost structures, and a focus on the core of every business – the customer! Although there are no surefire rules for going global, small businesses that want to become successful international competitors should observe the following;

  1. Develop new products for the world market. Make sure your products and services measure up to world-class quality standards.
  2. Recruit and retain multicultural workers, who can give your company meaningful insights into the intricacies of global markets.
  3. Train employees to think globally, send them on international trips, and equip them with state-of-the-art communication gadgets.
  4. Hire local managers to staff foreign offices and branches.
  5. If you have never conducted international business, consider hiring a trade intermediary or finding a local partner to help you.
  6. Take time to learn about doing business globally, before jumping in. Avoiding mistakes is easier and less expensive than cleaning up the results of a mistake.
  7. Make yourself at home in all of the world’s key markets: North America, Europe, Africa, and Asia. This triad of regions is forgoing a new world order in a trade that will dominate global markets for years to come.
  8. Appeal to the similarities within the various regions in which you operate, but recognize the differences in their specific cultures. Although, the European Union is a single trading bloc composed of 26 countries, smart entrepreneurs know that each country has its own cultural uniqueness, and do not treat almost half-billion people in them as a unified market.
  9. Familiarize yourself with foreign customs and languages; constantly scan, clip, and build a file on other cultures: their lifestyles, values, customs, and business practices.
  10. “Globalize”. Make global decisions about products, markets, and management, but allow local employees to make tactical decisions about packaging, advertising, and service. Always remember that in business, you can’t have it all, and you can’t know it all. Engaging the strength and opinion of others for your businesses will go a long way in building a cutting-edge organization.
  11. Learn to understand your customers from the perspective of their culture, not your own. Bridge cultural gaps by adapting your business practices to suit their preferences and customs.
  12. Consider using partners and joint ventures to break into foreign markets you cannot penetrate on your own.

Companies lacking clear strategies may achieve some success in the short run, but as soon as competitive conditions stiffen or an unanticipated threat arises, they usually “hit the wall” and fold. Without a basis of differentiating itself from a pack of similar competitors, the best a company can hope for is mediocrity in the market. The goal of developing a strategic plan is to create for the small company a competitive advantage – the aggregation of factors that sets a small business apart from its competitors, and gives it a unique position in the market that is superior to its competitors.

To be successful, entrepreneurs can no longer do things in the way they’ve always done them.

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Becoming a global entrepreneur requires a different mindset. To be successful, entrepreneurs must see their companies from a global perspective and must instill a global culture throughout their companies, that permeates everything the business does. To these entrepreneurs and their companies, national boundaries are irrelevant; they see the world as a market opportunity. Learning to think globally may be the first, and most challenging obstacle an entrepreneur must overcome, on the way to creating a truly global business. The ability to appreciate, understand and respect the different beliefs, values, behavior, and business practices of companies and people in different cultures and countries, is known as Global thinking. Entrepreneurs are expected to “do their homework” in order to learn about the people, places, business techniques, potential customers, and culture of the countries in which they tend to do business.

Going global can be a frightening experience. Most entrepreneurs who have already made the jump, however, have found that the benefits outweigh the risks and that their companies are much stronger because of this decision.


Chukwuma Aguwa is a Lawyer

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Local refining; A panacea for Nigeria’s reliance on imported refined products

The start up of refineries will attract , enhance employment opportunities and conserve the foreign exchange earnings of the country.

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Analysis: NNPC and its refining losses 

News reports earlier this week say the Vice President, Prof. Yemi Osinbajo, speaking at a virtual meeting noted that the problems associated with Nigeria’s refineries will persist if the Federal Government continues to own and run them. According to him, the government should have no business running refineries as they should be in the hands of the private sector. He further noted that the government’s focus currently is to assist the private sector develop modular refineries. He listed a few private refineries coming on stream which include a 100,000-barrel capacity refinery located near Portharcourt, the Niger Delta Petroleum refinery in Delta state and six modular refineries that should come on stream soon.

Explore the Nairametrics Research Website for Economic and Financial Data

About 90% of the refined petroleum products consumed in Nigeria are imported. The nation’s refineries located in Kaduna, Warri, and Port Harcourt with a combined nameplate capacity of 445,000 bpd have long operated at low levels due to many years of underinvestment and poor maintenance. Despite continuous talk of revamping the
refineries, in 2019, combined capacity utilization of Nigerian refineries fell to 2.5%, an all-time low annual activity level since 1998 when NNPC started providing the data. Last year, Pipelines & Product Marketing Company (PPMC) reported that it imported 9,158,528mt of refined products (PMS, HHK, AGO & ATK) while it evacuated only 963,302mt of refined products from Nigerian refineries, implying local production was just at 10.5% of total refined products available for distribution. Going by the historical performance of these refineries, it is safe to agree with the Vice President that the Nigerian government has no business running refineries.

READ: Hotels in Nigeria are on the verge of collapse

Asides the modular refineries mentioned by the Vice President expected to come on stream soon, the country is also patiently awaiting Dangote’s 650,000 barrels perday capacity refinery. The BUA group also recently announced plans to commence a 200,000 barrels per day refinery and petrochemical plant in Nigeria to be located in Akwa Ibom State. Although it is widely believed that the local refining operations will reduce the nation’s reliance on
imported refined products, the question in the minds of many Nigerians is how local refining of petrol will impact the pump price. In this regard, the Minister of Finance, Budget and National Planning, Zainab Ahmed, stated that refining petrol locally will not significantly reduce the price of petrol since the refineries will sell at the international price, noting that the only expected savings will be freight or shipping.

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READ: DPR reveals 4 major areas of focus for downstream operations of oil and gas sector

That said, Nigeria as a country has a lot to benefit from being a net exporter of refined petroleum products. Nigeria is the second largest producer of oil in Africa. The combination of rising shale production in the US, continued oversupply in the export market and weak demand, means the market for Nigerian crude is quite uncertain and a shift from export of crude to refined products bodes well for the country. The start up of these refineries will also
attract investment in warehousing and storage facilities, enhance employment opportunities and conserve the foreign exchange earnings of the country

READ: Six Modular Refineries billed to commence operation, FG says 

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CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.

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Key ‘side-hustles’ Nigerian Bankers supplement their income with

The need to meet up with their financial obligations has forced some bankers to adopt side hustles.

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bankers, How much banks pay, Key 'side-hustles' Nigerian Bankers supplement their income with

The headline above seems a little inappropriate given the earnings of Bankers, vis-à-vis statistics on salaries and wages in the Nation.

The average Nigerian Banker earns at least four times the poorly implemented National minimum wage of N18,000; gets his pay promptly without being owed arrears, and enjoys other employment benefits, such as healthcare, without hassles.

Why then would these privileged few, whose wage bill cost the 13 NSE listed banks, a whopping N178b in the first three months of 2020, lockdown notwithstanding, need to supplement their already impressive income?

READ: 3 major ways COVID-19 will affect Banks’ 2020 profits

Simple, because they need to meet up with their financial obligations.

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The expectations are high for anyone with a decent job in a country where the unemployment rate is currently 27.1%, and where 28.6% of its population are underemployed.

The expectations are even higher for those whose work is in the banking sector, of whom it is erroneously believed, have access to unlimited funds, and an endless flow of credit facility, because they facilitate the consummation of volumes of such transactions daily.

(READ MORE: Naira expected to be under pressure until backlogs for FX payments are cleared )

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The peculiarity of HR policies in Nigerian banks does not allow for ‘helping’ of relatives into the same system, as is obtainable in the Nigerian Civil service. Hence, the basic assistance which Bankers can offer their ever-expanding network of dependants is direct financial aid, forcing them to engage in moonlighting activities to meet up the ‘hype’.

The activities below are from close observation and interactions with Nigerian Bankers.

Forex dealings

The existence of different exchange rates, coupled with the scarcity of FX for most sectors of the economy has given rise to opportunities for arbitrage and round-tripping. Most bankers, who by virtue of their jobs have become privy to their customers’ FX needs, are able to broker deals; matching the demand of FX with supply, and earning handsome margins in the process. Gratitude, loyalty, and referrals from their customers are an added bonus for flouting their Bank’s internal policies on staff participation in FX dealings.

Such dealings have in recent times expanded to include transactions in cryptocurrencies.

Personal professional practice

Nigerian Banking industry is a melting pot of various first degrees, with some using their bank jobs as a stop-gap for their employment problems, as they seek to improve on their chosen professions. Hence, it is not uncommon to see bankers start and run their startups in other fields, while still in paid employment of their banks.

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Although, the Banks are likely to frown on not getting 100% commitment from their employees; they continue to provide a rich base of potential clients for these startups and have been their customers too.

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Sports betting and Mobile Money agencies

Sports betting in Nigeria has opened up a new world of investment possibilities for sports enthusiasts and shrewd businessmen. Since 2009, when the first online sports betting site launched in Nigeria, over twenty more have joined to compete for the market in Africa’s most populous black nation, and they all seem to be thriving, as each sports competition sees the unveiling of another sports betting site in Nigeria.

(READ MORE: Bank like a hero with the Stanbic IBTC Super App “Voice Banking” feature)

Bankers, with their knowledge of the industry figures, have had a first mover’s advantage in being agents of these sport betting firms.

The same holds true for Mobile Money agencies, where Bankers have been known to use the influence of their office to expedite mobile money agent approvals and secure POS terminals, which have consequently become inaccessible to the common man.

READ: Analysis: UACN, is the dividend worth it?

Other activities

As with most business endeavours, Bankers generally indulge in businesses, in which they have a comparative advantage. Bankers in big cities use their cars to run shifts under popular cab-hailing services; some moonlight as real estate agents, because they can match customers with their real estate needs. A few others have become millionaires, by investing in their customers’ businesses. The possibilities are endless, as Bankers seek to make ends meet through their ingenuity, while staying relevant in their careers.

Explore the Nairametrics Research Website for Economic and Financial Data

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Cyprian Ekwensi in his classic novel ‘Chike and the River’, made popular the phrase of a man who lives by the bank of the Niger, washing his hands with spittle. Sadly, this has become the lot of most Nigerian Bankers, as they live from paycheck to paycheck, exploring one loan option to pay off a previous loan, even as they condescend to their customers in volunteering financial advice, that they are better off implementing in their personal finances.

No one is immune to the economic squeeze our double-digit inflation has brought on fixed income earners, especially not our beloved bankers.

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