Izomor: Why Oil Industry Must Jettison Lowest Bidder Concept

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Mr Godwin Izomor is the Managing Director of MG Vowgas group, an operator in the oil and gas sector. In this interview, he speaks about challenges facing indigenous companies in the sector. Emmanuel Addeh brings the excerpts:

You have a huge facility here. What is the investment profile like?

The Ncdmb under-quoted our company at about $125 million, but this facility is over $175m.

How did this whole journey start?

The journey started in 2009, on May 11 precisely in my parlor in Woji here in Port Harcourt. I recruited two other staff, Victor and Aliu. Victor was earning N35,000 while Aliu was earning N25,000. On my own, I had no salary. But I told them that God was taking us somewhere. The journey has not been easy. Today we have over 230 staff but that’s a journey that started with three people in 2009. The only thing that has kept us strong is God. It is not just our combined effort, but also our dedicated staff, the technical guys, even those that have been faithful even when there was no money.

What challenges have you faced and how do you think these challenges can be surpassed?

The Nigerian Content Development and Monitoring Board (NCDMB) has to work harder to categorise the companies because you cannot merge us with a company without office or facility and then ask us to quote for a job. They will underquote and then blow us out because we have a huge overhead to pay. Another problem is that the industry should lay more emphasis on capacity rather than those with the lowest quotes for jobs or contracts. There are jobs that were given to portfolio contractors that they have not been able deliver that even Mobil had to cancel those contracts. This is because they don’t have capacity or facilities. They are just portfolio contractors in NAIPEM and they send tender bid and cannot deliver services.

The industry should jettison the lowest bidder concept because it will kill the industry, especially those who have invested to build facilities. What we need to do is encourage those who are qualified and have the capacity to deliver on these projects. That is the first thing that the International Oil Companies (IOCs) should consider. The second is security. We spend a lot on security. Even just going to location we spend heavily. For instance, in our work with Agip, we have two standby gunboats and 15 security personnel. In Chevron, we have another two gunboats and 15 security personnel. So, constantly you are spending and these things are not cheap. You spend huge amount on security. The salary here every month is in the range of N53 million monthly. My expenses on security is almost N50 million monthly.

As an indigenous concern, has the investment you have made so far been commensurate with the jobs or contracts available?

Like I said we have spent close to $175 million in this place. One of the key things is that the IOCs look at your qualifications in terms of quality, ISO 2015 based on quality of fabrication. We have achieved the best quality here in Nigeria. The only company that has also achieved that recently is LADOL in Lagos. Only LADOL that has achieved the ISO 2015 mark of quality management system that we have. Outside that, nobody else.

Where do you see MG Vowgas in 10 years?

The first thing we are going to do next year is to concentrate on building the first modular refinery in the country. Secondly, we will invest heavily in ship-building. We have Brass and Bonny. Our partners are looking at whether Bonny has the landmass for that investment. Brass has a lot of land. We must reduce capital flight from Nigeria. We import almost everything.

Another challenge is that we are a steel company. We take everything from steel. Every ounce of steel we use today is imported either from China or Ukraine or Germany. We cannot continue like that as a country. We are losing huge amounts of money. The money we spend importing steel, is enough to set up another steel country in Nigeria. We must encourage the federal government to ensure that in the next two to three years, we get Ajaokuta steel company working and provide heavy sheet plates in Nigeria.

What else can the government do to help?

The NCDMB is doing a lot already. They need to extend the local content law into other sectors of the economy. The government must leave business for businessmen and focus on providing an enabling environment.

The government must provide power. When we toured the facility, I showed you our six megawatts we are using to power this place. This costs a lot of money. If we had a standard power supply in the country, the money I am spending would have been ploughed into more investment in other facilities and thereby create more jobs. We are spending too much on security and power. So, government can reduce the challenges by investing in power generation. We are collaborating with Schneider to provide in-house power.

But what the government needs to do is to encourage the private sector to invest in providing power in this country. Power generation is cheaper when it is localised. The government should remove the power sector from the exclusive list and allow the private sector to come in. When that is done, investors will take over. Nigeria is a huge country and businessmen are willing to invest. The Nigerian government must unlock the power sector for us to invest. If that wasn’t done in NITEL, nobody will have GSM till today. Businessmen must come in. That’s the only way we can make progress. If we are waiting for contracts for transmission lines and generation in Nigeria, Nigeria will not have light in the next 20 years.

Can you shed more light on your collaboration with the military?

Presently, we are working with the defense research department of the Nigerian military to build the first Nigerian airboat which has the capacity for 100 kilometres per hour. And the airboat will use a propeller like the normal airplanes. Between now and January we will be expecting the president or the chief of defense staff to come and commission the first ever ballistic airboat to be built in Nigeria. Now as to how the NCDMB is helping, without them this company would not have the opportunity to get the kind of contracts to build facilities.

The local content law is the enabler that has propelled us to where we are today.
And we have proved our capacity in the industry. There is no project that we haven’t delivered, not even one. We have not failed in one. That is one of the key areas of strength we have, that we deliver on time and within budget and best standard possible.