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Interview with Osten Olorunsola, Chairman Energy Institute

Interview with Osten Olorunsola, Chairman Energy Institute

Posted by: CT Productions
Category: Interviews, News
Osten Olorunsola, Chairman Energy Institute

The Nigerian Energy sector is incredibly dynamic with the newly privatized and emerging power sector and the developing petrochemical and renewable sector. How does your organization support people interested in working in energy?

It is interesting because our focus is about capabilities and capacity development, both in terms of certifying people but also in terms of sustaining it over time. It is all about spreading good practices, professional services and ensuring that the people are competent and capable of doing their job at any point in time. That is basically what we do.

Within the country we have just above a thousand members at the Institute of which almost 90% are young people. They are either trying to find a way into the industry or to improve their competencies in various ways. Interestingly we are not just looking into the engineers, but everybody involved in energy. Whether you are a lawyer, a business developer or other related occupations. We have a wide and very diverse pool of people. What we then do is to organize very frequent training sessions for different grades of people. Some are face to face but more and more they are online. This allows people from remote locations to train at their own pace.  

Is it obligatory for a company that has energy to do that or management arranges for it?

These trainings are not compulsory or imposed on employees by their companies but what we tell people that they will improve their capabilities but also importantly you get certification. These are globally recognized certificates. This gives those who attend a differentiating advantage over their peers in the job market. What we are trying to do now is also to collaborate with various energy sectors like the power sector, oil and gas but also the renewables area. They already have formal training sessions and programs but what we bring on top of that is the Institute certification requirements. We increase the curricula a little bit to ensure that they satisfy all the certification criteria. So, at the end of the day we are offering two for the price of one in terms of training.  

The Energy Sustainability conference was a huge success, as it is a matter that concerns every citizen of the world today. Different forms of energy facilitate our everyday activities but these activities either depletes or sustains our energy future. In terms of public awareness and corporate involvement, what do you consider the priorities in terms of communication?

The biggest issue is that everybody wants to talk about energy, and they mean power or oil and gas. The gap we have filled as the energy Institute is to show that the space of energy is a lot wider than that. Nigeria must get in line with the rest of the world where they are talking about the right energy mix and how to balance all forms correctly. Nigeria is so lucky in the fact that it is present in all forms of energy. Solar, hydro, biofuels, we have it all. What we have tried to do is to spread the language and steer the discussion towards the right energy mix. That is where we need to be looking. Even in electricity generation everyone is saying these days “gas!gas!gas!” but no, that’s not it! It is not that simple. We still have coal. Globally today it is 20-30% of fuel supply for energy. So, there is no reason for Nigeria to have jettisoned coal. We are trying to spread that message back to the market. Oil and gas are great, yes, we have it, but the value chain has to be properly strung together. To do things in their proper sequence to make sure that everyone on the value chain is satisfied. It is a chain. If a part of it is cut, everything falls apart. Whether it is the supplier, the processor or the guy who has the power plant. Everyone must be content with their position in the value chain and clear what they add and what they make.

Our message has been firstly that we need to consider energy in its broader form. We need to follow it through. It is interesting that renewables are gaining quite a lot of traction, especially in villages and now it is beginning to make it on a wider scale looking at opportunities in the 10-20MegaWatt range. I sit on the board of some of these companies because more and more we have got to be careful. There are some financial organizations today which will not invest in your business unless you have a renewable energy company in your portfolio. For example, banks that call themselves “green banks” that won’t give you money, no matter how good your project is, unless you have a renewable component. So, we are pushing this aspect into the mainstream energy discussion. Luckily because of technological advances, especially solar energy is becoming more and more affordable and more and more effective. It is just about your initial cost. There is no maintenance. Unlike gas or other energy sources solar just gives back with zero cost after. There are no moving parts. Of course, gas and oil still take up a large part of our time because it is our bread and butter.

Energy plays a critical role in the industrial, technological, economic and social development of Nigeria. So ethical, safety and environmental issues are of paramount importance. How do you help in this respect?

Safety and Environmental issues are of paramount importance. All it takes is one accident to end a company. So, we always tell companies that they must have zero tolerance for anything that might provide a safety risk. There is nothing else to think about before it.

The technical work undertaken by the Energy Institute is defined by industry through the Scientific and Technical Advisory Committee and coordinated by a number of sub-committees supported by your staff. How do you set priorities in terms of this technical work and how does it help the industry and society?

There are quite a few indicators we look for. Of course, the first is value. When you have a broad portfolio of things to do, value is the first thing on the table. The next thing is impact. Is it just to push an engine or will it affect a whole community or even a whole generation? But the third and most important that we always look for is sustainability. If it something that there will be one of or is it a transgenerational technology? Currently in Nigeria we are still looking a lot at short term projects. I wish we could take a more long-term approach, a transgenerational way to do more sustainable projects. If you look for example to oil and gas which is completely extracted, being extracted means that it can finish one day. So, it is not sufficiently well thought out for the Nigerians of tomorrow, the generations to come. And the way extracting industries work, they are for people living today. But we are taking everything today and that is not right. We are not thinking long term with everything we do. If we do that, we stand a better chance of planning properly and developing the right strategy in managing those resources.

Your work is political in the sense that it aims to increase collaboration, agenda setting and understanding. It is also non-political however as you are focused on technical issues and best practices. How do you successfully navigate this dynamic?

Navigating the political aspects of our work is a very difficult thing to do in Africa, but even beyond that. We cannot take the energy discussion very far without government. This is true everywhere around the world. Because the first thing you require is a government policy for energy in general or specifically for gas, oil or renewables. Whatever it is, there is nobody else other than government to create policy. So, you will always have to have some kind of collaboration or discussion or engagement with the government. The second aspect is that whatever you really need to do will be within a regulatory framework. Again, it’s only governments that make the laws. So, if those two things, policy and regulation, are not in place, this is the issue. You must have clear, enabling policies and regulation. Especially because most things in the energy sector cost a lot. It takes a long gestation period of large investments before you start making money. You need clarity and certainty of laws and continuity in policies. Not policy somersaults. If they are changing every year then you cannot invest in the country for business. In the energy business there has to be continuous engagement with government in order to pull energy in the right direction.

There are countries, especially in Europe and in the States, that the policies are there and at the same time the private sector is strong and aren’t waiting every 4 years for a new government to provide policy that suits them. Do you see Nigeria getting there?

In Nigeria we have wasted a lot of time. We are approaching a wall where we don’t have any choice. We have to do what we avoided for a very long time. There are three big components affecting the economy today. Extreme poverty, millions of people. On top of that is a big turnout of graduates, over a million, every year added to the unemployed. And of course, 20 thousand new babies in Nigeria every day. When you string these three things together you see there is no choice. The kind of growth that we require is double digit growth. The productive capacity of this country has to increase, the country has to feed itself. I don’t think we have a choice.

To the readers, how do you see the energy sector in the next couple of years and what do you think investors should know? What would you tell Nigerians

The good news are that globally energy demands are still growing. The second bit of good news for Nigeria is that oil and gas is still a major component of satisfying those global energy demands. That will remain so for the next 30-40 years. But that is not a very long when planning ahead. Therefore, my message to Nigeria is “make the best use of your oil and gas today”. That will involve policies to wet investors’ appetites, it includes the right regulatory framework in fiscal terms to attract them. We also need to look at the overall competitive scene. 25 years ago only a few sub-Saharan countries were producing oil. Today at least 37 African countries are extracting hydrocarbons, and everyone is racing towards production. So what Nigeria thought was a differentiating advantage is no longer.  We don’t have any time to waste. We have to do the right thing and move forward.

Nigeria is still the right place to be. There are a few things to fix but we are well endowed in terms of natural resources. Oil and gas, plenty coal, a lot of sunshine…whatever area an investor is looking into to, Nigeria is the right place to come to. The other factor is our long history in energy. It is a mature environment with a lot of very competent and knowledgeable people. You don’t need for example to bring in petroleum engineers from anywhere. They are all here, geologists and every other necessary specialization. Unlike other African countries which are new to oil and don’t have the capabilities, Nigeria is well equipped. In terms of value for money, which is very important to investors, the direct cost base is still low. However, there are a lot of small costs, what I call “silly costs” that the country has to work on getting rid of. For example, the cost of security or infrastructure. These costs should not exist. If these are fixed, Nigeria will be one of the lowest cost places to do energy business. You have the population, the market is there, the workforce is ready, and the resources are there. And the people are good! Every Nigerian is an entrepreneur!

Energy Institute date of interview: March 25th, 2017