Faluyi: Many Companies on Life Support

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Seun Faluyi

 The Chief Executive Officer, Uraga Power Solutions Limited, Seun Faluyi, in this interview speaks about the company’s environmental sustainability programmes. Ugo Aliogo brings the excerpts:

 

What has been the focus of your organisation in the area of environmental sustainability?

We are a power company, and we package power solutions. A power solution is not just power generation, but a more comprehensive approach to providing energy. In talking about power solutions, we talk about a fuel mix. When it comes to the environment, one of the big things about the environment in power generation is the kind of fuel that you use. It has a major impact on the atmosphere. Coal for example has a big carbon footprint. Gas has a lighter footprint, maybe less than half. Then the renewable sources are much lighter. As a power generation company, we are helping companies in terms of solutions to transition from the heavier carbon footprints to lighter carbon footprints, especially those that are generating with diesel. If you are able to get economies of scale, you are able to reduce the carbon footprint. If you also transit from diesel to gas and you are also able to reduce the footprint further in two ways. Because gas has higher energy content, it means you use less fuel to generate more power compared to diesel. Also, because gas is cleaner than coal on the carbon scale, it means you have less emission, so when it comes to the environment, you have less impact. As a power company, we are transitioning industries and commercial concerns from heavier fuels to lighter fuels. We are also adding solar power solutions as part of the sources we offer. We offer customers hybrid solutions of both conventional energy sources and solar, so through this way, we are migrating companies so that they can be more environment friendly in their operations.

 

What activities have you embarked on in the last few years and what have been the social impact?  

Because we are a power generation company, our activities majorly are in power generation. We have a number of customers who have switched from diesel to gas; we also have a number of customers we are providing solar power solutions for, especially with the falling prices of solar panels. So this way, we are helping to move the needle in the direction of environmental sustainability.

 

In terms of clientele base, do you have the high and low-end customers?

We have a strategy which implies that our focus is on commercial and industrial customers. The reason why we have done that is that we are a solution-oriented company. In Nigeria, there have been issues around power, and from our own experience, we have seen that there are structural and commercial issues. Therefore, what we need is to provide solutions for customers that help them run their businesses and facilities efficiently even amidst the peculiar circumstance. What we did was to leapfrog some of those challenges and just stay closer to the customer. Customers that are commercial and industrial are the ones sensitive to power quality and reliability, so these are the ones we are offering first.

There are residential customers and there are quite a number of them. But the ones we have identified and targeted are those ones whose operations are adversely affected by unreliable power supply. The more they are able to produce their own products, the more they are able to sell products to their own customers cheaply, because we provide them reliable power, and the more it is that we are all able to contribute to the development of the economy and the country as a whole. Subsequently, the benefits will trickle down to other segments of the economy.  That is why we are initially focusing on commercial and industrial customers.

Looking at the financial year 2018, in terms of purchasing power, most businesses could not break-even. How will you describe the purchasing power of your customers?  

The economic meltdown did not start in 2018; it started since 2016. Many companies have been on life support and things have been very hard. On our part, we saw it. That is why in coming up with energy solutions, we work towards packages that will be affordable. Presently, with our industrial customers, we work closely with them to initially determine their power requirements and, based on their requirements, we configure solutions that are targeted, efficient and affordable. We provide reliable power at the most efficient cost.

For how long have you been in business?

We have had over 12 years of experience. But we were incorporated as a power solutions company three years ago. Twelve years ago, we had started on a utility scale and we were able to develop adequate experience and understanding of the industry.  But three years ago, we realised that we needed to be more focused and nimble to provide customised energy solutions to industrial and commercial customers. That was when we began to provide power as a service.

There have been various activities geared towards achieving environmental sustainability in Lagos State, from LAWMA to Visionscape, now back to Lagos State Government. What can you say as an environmentalist why the State has not made significant progress in the environmental sustainability?

There are many perspectives to the issue. When it comes to environmental sustainability, those in environmental waste management know that the issue is not just about collection. There are issues that have to do with generation, collection, transportation or logistics, processing and then you can talk about disposal. For environmentalists, typically there are 3Rs- reduction, re-use and recycle. Though it is now being extended so that it is not just reduce, reuse and recycle, but also recover and then disposal. But the thing with the 3Rs approach is that you have to look at the nature of your waste, then how you treat or handle it.  You also need to have a deep understanding of what your ecosystem looks like. In Lagos, for example, the type of waste generated is both organic and inorganic waste. Organic wastes are those materials that easily decompose. While inorganic waste includes papers, plastics, metals, bottle tops, nylon and materials generated from industrial processes. Now if you have one broad approach and say waste is waste, you will be missing something there. How you collect and process waste that is generated in one place, say a residential area would be different from the way you collect and process waste from an industrial environment. So, you really need understanding. The waste collection process also requires deep understanding. Medical waste cannot be processed the same way as industrial or residential waste. You need to understand the type of waste, so that you can process correctly so that we can also recycle correctly. So all of these things require insight. For those of us who are environmentalists, we talk of disposal, but it is not only disposal that environmental sustainability is looking at. The focus is also to examine how to reuse waste in a productive way for economic gain. For those that are in to sustainability, there is an insight into what you are doing. There are ways to understand what is required. This is why the World Environment Day is a very good opportunity for us as company. It is important to make people more aware that the environment is something that we should take care of. There is need to take care of it and people should understand that what we do has impact on the environment. The hope is that technocrats will understand and promote environmental sustainability. If treated as a political issue, then it may not yield results but if we have those who are insightful, they would look at what has been done and put in a proper plan that will bring improvement.

Some of the products you have rolled out are reliable power solutions, solar energy solutions, transmission from heavy to light carbon, the industrial and commercial generation, which of these products is your major core competency?

What we do is power and it is a commodity. Power is just electrons flowing in a wire. But what we do is provide energy solutions. So we are packaging electricity so that it is a solution for those who have a problem. We don’t just see ourselves as offering a commodity but as a solutions company. We are providing solutions. So we are saying that for industrial customers who need reliable power, we will provide that solution for them. Reliable does not means that it doesn’t go off but it is predictable when it goes off and it is not disruptive when it goes off. Also, the cost is affordable to target customers. We provide efficient and reliable energy at affordable cost.

What are the opportunities you see in the power sector in Nigeria?

There are a lot of problems in the power sector. There are liquidity challenges which the Distribution Companies (Discos) are facing, while the consumers are facing supply constraints. The consumers are segmented. There are commercial and industrial customers, who need reliable power. There are challenges with pricing. Therefore, we have decided that we will leapfrog and discuss with the customers, especially the commercial and industrial customers to find out what they need in terms of power. The opportunities we see include aggregating the demands of multiple customers to take advantage of economies of scale. We also see opportunities with transitioning from diesel generated power to gas generated power, where you can use less gas to generate more power compared to diesel. For us, it is a paradigm shift. We had to retool our strategies because we have tried the on-grid utility scale approach and we saw the constraints and we said we have to try a different approach and it’s working.

How cost reflective is your tariff compared what these industrial customers get from the Discos?

We sit with the customers to find out what the appropriate pricing will be, so it is not just like a tariff. A tariff is like a table that says this is what it is and there is no negotiating. Our own approach is a partnership, a bilateral agreement. It is about a provider guaranteeing efficient service delivery to a customer. We find out from the customer how much power they need, and then we assure them that we are going to invest the money to provide the power  they need, but they will guarantee us that they will buy the power from us.

We have a capacity and energy charge that we will discuss with the customer, based on the load that they take, not the peak load, but the average load and it will be spread across over how long they use it.

So we have the commercial and industrial, so we skip that of the residential. Is it a deliberate act for scaling the market or a negotiation between you and the regulator?

It is a strategic decision. The residential customers make up about 70 percent of the market, but in terms of the actual energy that they consume, it flips. It is between 20 or 30 percent and that percent, the public utility can easily serve. What is really priority for Nigeria presently is that we make sure our industries work so that is why we have made them our priority too.

 

Do we hope to service those sectors?

For residential, the approach we are taking for now is this. When we have enough residential customers and we can aggregate enough demand in a location, we can serve them. One of the things that we believe is that the distribution companies, if we are able to take the load off them, will be able to serve more people. What you will find is that more people have light and everybody is happy for it.

 

June 5 was the world environment day. What does this mean for Uraga Power Solutions?

For Uraga Power Solutions and the Honeywell Group in general, it is a day we can stand with other people who are enthusiastic about the environment to raise awareness and consciousness. It is not only in Nigeria, but around the world people are talking about the environment. Although, some people still think environment issues are not critical for Nigeria now, but human activities have impact on the environment and we all need to be responsible.

Our climate in West Africa is considered one of the most benign because our temperatures are reasonably stable. You don’t get typhoons and other such severe storms. Typically speaking our own weather seems like it is the most favourable, because we don’t experience hurricanes and the rest. But global warming is affecting the world and it is making ocean waters rise. In Lagos for instance, there is a lot of low land. Maybe Ikeja is about 40metres above sea levels. If the sea rises by 10 or 15metres many places will be submerged. Flooding is a major issue, but not just in Lagos. About 40 percent of the world’s populations live in coastal cities. So 40 percent of global population will be greatly affected if the sea levels rise beyond what we can manage. There are even more places where floods are happening. All of these mean that everybody should be concerned and need to be aware. June 5 is an opportunity to raise awareness about what is happening in the environment. We need to take action about what is happening in the environment.

In our own way, what we are doing is making sure we provide sustainable energy in an environmentally responsible way. We are trying to make sure that in everything that we do, we are able to contribute to a sustainable future.

 

The federal government has been keying into environment by embracing green bonds for environmental projects. How well are you subscribing to that?

Because we are a power company, we have access to other kinds of financing sources. We have access to both local and international sources of finance. Investors, lenders and development partners want to finance power projects. All they need to see is that it is bankable. For us, bankability means that we have the experience, technology, the partners and the capability. The only thing that is left is just the market. So we took a view that once we sit with a customer that has a bankable business plan that gets consistent cashflows, we can package a solution that will work for them. Even Pension Funds in Nigeria are looking for power projects. A lot of people are looking for power projects. These are the ones we are leveraging on.

 

What are your achievements as CEO in the last three years?

We have the flagship project in Sagamu. It is a flagship project because we are located at the interchange section of the Lagos/Ibadan expressway, Lagos/Benin expressway. We have set up a power plant and we are ready to serve as many industries as possible. It is an achievement that we have got it off the ground and it is working. We have done the phase one; we are going to the phase two. For us, it is exciting that you can have customers or industries in that area that can have affordable, reliable and environmentally friendly power. So for us it is a big achievement.