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Mainstream Energy; Powering Nigeria Through Kainji And Jebba Dams

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True Nigerian Experience Interview with Engr. Lamu Audu

1. During the 2013 Power Sector Privatisation, Mainstream Energy Solutions Limited (MESL) acquired Kainji and Jebba Hydro Power Plants. 6 years down the line, how well have you fared on this project?

It has been a very interesting journey for us since we took over the operation and management of the Kainji and Jebba Hydropower Plants (“HPPs”) through a concession agreement with the Federal Government of Nigeria (“FGN”) in

November 2013.

It was incredibly challenging at the initial stages, especially at Kainji where the available capacity was at zero (0) megawatts (MW). None of the eight (8) generating units with a total installed capacity of 760 MW, was operational in November 2013. However, in the case at the Jebba HPP which has total installed capacity of 578.4 MW, five (5) of the six (6) generating units were in operation, with a total available capacity of 460 MW.

Today, we are proud to have increased the total available capacity of both plants to 922 MW, with Kainji being the major success story as it now has four (4) operating units at an available capacity of 440MW while Jebba contributes 482MW to the National Grid. This has translated to a remarkable improvement in MESL’s power generation from 2,715 gigawatt hours (GWh) in 2013 to 5,277 GWh in 2018, accounting for an average of 25% of Nigeria’s power generation.

I would say that we have done very well in optimising power generation in Nigeria and delivering on the mandate of the FGN following the decision to privatise the Nigerian Electricity Supply Industry (“NESI”), six (6) years ago. What we have achieved so far is vivid proof that privatisation works as it has created an avenue for private sector investments into the industry, for the benefit of the economy.

2. In 2018 financial year, MESL generated about 60 Billion Naira in revenue up from 3.7 Billion in 2013 financial year. How did you achieve this?

A whole lot of factors have contributed to the company’s growth over the last six (6) years. With a visionary and astute board of directors and committed and diligent management team, the company has put in place several programmes focused on technical and human resource capacity development to galvanise the operation and management of both power plants.

In the area of technical capacity building, MESL has a robust Capacity Recovery and Expansion Programme which we have pursued vigorously by focusing on restoring the capacity at Kainji to guarantee year-round power generation of at least 750 MW on average. The company also invested heavily in technology and state-of-the-art equipment to optimise operation and maintenance at both plants, such as the satellite-based technology, called the Inflow Forecasting System and Operational Tool Software (IFS/OPT). This aids flood management and projections of the flow of water into the Kainji reservoir and guides our operations to maximise power generation at the plants.

As you are aware, no company can thrive without the help of skilled and committed personnel, as such, we deemed it our utmost priority to focus on building a strong culture within the organisation. In the words of the renowned Peter Drucker “Culture eats strategy for breakfast”, so it was important that we paid close attention to the development of the “MESL Culture”.

The Board of Directors, therefore, made a strategic decision to consolidate the management of both plants, which were under two (2) managements prior to the concession. Management, under my leadership was also given the mandate to institutionalise a strong work ethic amongst staff, establish a competitive staff welfare package, robust performance management framework and most importantly, conduct a Change Management Programme for the employees that had previously been engaged by the erstwhile Power Holding Company of Nigeria (“PHCN”).

We needed the employees, myself included, to start thinking of power generation from a profit-driven perspective. I must confess that this took some time, but we are proud of our achievements thus far in turning the plants around significantly and positioning for greater successes in the future.

Our focus on staff welfare has been integral to the growth of this company as employees now have a sense of ownership. Indeed, MESL has put in place a share trust scheme where every employee becomes a beneficial owner of the company upon assumption of duty.

I would therefore say that the effectiveness of these programmes has driven productivity amongst staff and aided the growth of the business to where it is today.

3.Your profitability also took an upward trend from a 1 Billion Naira loss position in 2013 to 26.3 Billion profit after tax in 2018. Again, how did you do this?       

A major turning point was the total repayment of the company’s acquisition loan of $170 million which enabled the company to optimise its profitability as a business.

The growth of the business from 2013 has been phenomenal, but this has not been without its challenges. We know that we could perform even better if key issues across the value chain of the NESI are addressed. For example, we have major challenges with the collection of receivables, as we are presently being paid a meagre 18-20% of our invoices, due to collection losses at the distribution end of the value chain.

“In the words of Peter Drucker, Culture eats strategy for breakfast, so it was important that we paid close attention to the development of the “MESL Culture”.

This means that as at September 2019, the company is being owed over 100 billion Naira in receivables. We are also inundated by ramp down requests due to grid instability, which also leads to revenue losses. We have lost about 17 billion Naira from 2016 till date because of this.

MESL has been able to position itself as a performance leader within the industry by proffering innovative and practical solutions to boost its capacity for the benefit of the country. It is our hope that appropriate policies are put in place by the relevant authorities to provide an enabling environment for the NESI to sustain itself through inflow of investments to finance the industry’s infrastructure requirements; coupled with a cost-reflective tariff on electricity, we believe these losses could be significantly reduced, and eliminated over time.

4. Having successfully turned around Kainji and Jebba Hydro Power Plants, are there aspirations to venture into Distribution or consolidation of your competitors?  

Our primary priority as the largest hydropower generation company is to support the stability of the National Grid, increase capacity and contribute to national development by generating power in a safe and reliable manner.

In the short- to medium-term, our focus is on the recovery and expansion of capacity at both Kainji and Jebba. We have indeed commenced the rehabilitation of Unit 1G7 at Kainji which will add 80 MW to the National Grid in 2020 and we are at the closing stages of negotiations for the rehabilitation of Unit 2G6 at Jebba which upon completion will add 96.4 MW to the Grid. In line with the expansion programme, MESL will also install additional generation units with a combined 200 MW at Kainji HPP, to expand the installed capacity of Kainji to 960 MW. 

As a member of the West African Power Pool (WAPP) under the auspices of the Economic Community of West African States (ECOWAS), MESL is also strategically positioned to support the West African regional electricity market, hence, the need to focus squarely on the expansion of capacity to achieve our mission and vision.

We are also looking to extend our coverage beyond Nigeria through strategic investments in hydro and other renewable power generation projects (brownfield and greenfield) in West Africa. Investments in solar power generation would help complement the management of our HPPs and provide off-grid solutions to support the growth and development of the Nigerian economy.

In collaboration with the Niger State Government, MESL has also committed capital towards the establishment of the Amfani Industrial Park and Free Trade Zone, strategically located at the east of the Kainji Lake and adjacent to Kainji HPP, to attract investments into the country. This development will provide an avenue for local and international companies to set up their businesses and have access to power, water, transportation networks and other ancillary utilities.

Of course, MESL seeks to make strategic Investments to support the value chain of the NESI and has recently invested in certain distribution assets, as we aim to contribute to the growth and development of Nigeria’s economy by aiding the supply of stable and safe electricity for Nigerians to power their homes and businesses.

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How Inverroche Is Pioneering South Africa’s Craft Gin

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Inverroche is a progressive craft distillery that pioneered craft gin in South Africa, creating uniquely South African spirits using rare hand-harvested wild African Fynbos botanicals. A true proudly South African product, Inverroche is built on family and prides itself in creating a niche product which looks as good as it tastes.

Lorna Scott

Founded by Lorna Scott and her family in Still Bay, this petite distillery has grown from a small home industry to a pioneering craft distillery and leader in the world of craft Gins. Inverroche is located in Still Bay in the Cape Floristic region which hosts one of the highest known concentration of plant species known as Fynbos. Famous for its large and diverse variety of botanical species – the South African heritage is intertwined beautifully into the Inverroche brand.

Fynbos has long been used by indigenous people for medicinal and culinary purposes but is now under threat due to agricultural development and invasive alien plants. Lorna felt that one way of preserving fynbos would be to find a commercial use for it and to create a global brand telling the story of these historically significant plants which contributed to the emergence and survival of modern humans. BY doing this she created an abundance of jobs for the local community and this is portrayed by the in excess of 70% local female workforce employed by the distillery.

The Inverroche distillery lies at the confluence of the Goukou River and the Indian Ocean near the coastal resort of Still bay in the Western Cape. Vineyards, olive groves and Fynbos surround the distillery itself, with ancient Milkwood trees marking the boundaries of the estate. The name Inverroche was an amalgamation of French and Celtic words, combined to celebrate the unique geography surrounding the distillery (‘Inver’ refers to the confluence of waters, ‘Roche’ is the French translation of the word rock).

The distillery’s three gins were launched on 16th December 2011, which incidentally, is also the first time that they opened their doors to the public. From selling a few bottles on that first day to now being the leading South African Luxury Gin in both South Africa and abroad.

Each variant of Inverroche (Classic / Verdant & Amber) is carefully created with fynbos from the various areas (Limestone rich lowlands / mountainous terrain / coastal region ) which make them truly unique spirits.

Try the below Gin & Tonic serve with the Inverroche Amber Recipe

Drink Serve Recipe

NAME: AMBER G&T

50ML INVERROCHE AMBER

200ML INDIAN TONIC WATER

3 DASH BITTERS

GARNISH WITH FIG JAM AND SESEAME SEEDS

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Charmaine Mabuza Honoured With FORBES WOMAN AFRICA Social Impact Award

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Brand Voice by Zamani Holdings and ITHUBA

Group CEO of Zamani Holdings, Charmaine Mabuza was honoured with the Social Impact Award at the 2020 FORBES WOMAN AFRICA Leading Women Summit held in Durban ICC recently.

This award recognizes Mabuza for her measurable philanthropy that has positively impacted the lives of many South Africans for the past 21 years. 

At the top of her philanthropical projects is the Eric and Charmaine Mabuza Scholarship Foundation which she founded with her husband, Advocate Eric Mabuza in 1999. The Scholarship Foundation started in Mpumalanga, where the Mabuza’s business hub is centered. Speaking to Ukhozi FM in an interview, Charmaine Mabuza said that together with her husband, they funded this foundation straight from their pockets. “Both my husband and I come from humble beginnings and we know what it’s like to not have means to study further, especially when you believe that education is your way out of poverty. So when we started making good profits from our small businesses at the time, we decided to dedicate a portion of our personal income to funding tertiary education fees of previously disadvantaged children”, said Mabuza.

Powered by Zamani Holdings, the Scholarship Foundation later expanded its reach to the rest of South Africa, supporting over 160 students countrywide, many of which have qualified as Doctors, Chartered Accountants, Engineers, Quantity Surveyors and many more. The 2020 Scholarship Foundation programme launched on 13 January, with an intake of 21 students.

Zamani holdings has empowered the rest its group of companies to roll out CSI initiatives that truly transform the lives of ordinary South Africans. At the forefront of these initiatives is ITHUBA, the South African National Lottery Operator and Zamani’s flagship company.

In July 2017, ITHUBA launched the ITHUBA Female Retailer Development programme, specially designed to empower women who own spaza shops and informal supermarkets, who currently sell National Lottery products, from all around the country. This included women from previously marginalized communities in the rural outskirts.

In collaboration with reputable institutions such as Regenesys and the University of Johannesburg, this programme has upskilled over 100 women in retail business. The latest group of 14 women graduated in October 2019 at the University of Johannesburg’s Kingsway campus, each being awarded a qualification in Advanced Entrepreneurship and Social Innovation.

Zamani’s Social Responsibility initiatives include:

  • ITHUBA Graduate Programme: An annual skills development programme for graduates within the Marketing, Finance, IT, PR, HR and Logistics fields, with intake of 13 students in 2020.
  • Youth Enterprise Development:  Eradicating youth unemployment through developing upcoming entrepreneurs and helping them build sustainable, profit making business. 
  • Housing project: A project that builds houses for employees in the lower income brackets, who have been in the employment of the company for 10 years and more.
  • A media campaign to condemn femicide and violence against women.

“I firmly believe that education is key to eradicating poverty and injustice. This is why all of our initiatives are based on imparting knowledge and skills. Through education we empower, through education we liberate” said Mabuza.

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FOCUS ON NIGERIA: The Next Level For Africa

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“Foreign companies, especially oil prospects and development companies, have been in Nigeria for about two generations – 40 years and above and so on. So, they know the environment. They stayed that long. They continue to invest because they know the potential Nigeria has in oil and gas and the capacity of the people to learn and work hard.” H.E. Muhammadu Buhari, President of Nigeria

With the recent re-election of President Muhammadu Buhari, Nigeria has secured an additional four years with an administration that is dedicated to the nation in its efforts to continue its path toward bringing Africa to the next level. With the largest population on the continent, domestic demand in Nigeria continues to rise while resources and favourable demographics are attracting the strong flow of FDI. As one of the leading markets in the continent, investment possibilities in the country cannot be overlooked. Improved macroeconomics, which are supported by recovering oil prices and production, has ensured that Nigeria maintains the title of the largest economy in Africa. This title is largely aided by Nigeria’s powerhouse of GDP generation: oil and gas.

Nigeria has seen strong and steady growth in the oil and gas sector over the past sixty years when petroleum was officially discovered. To bring the reality of the oil and gas industry into perspective, the first quarter of 2018 reported that sales of crude oil made up 76.3% of Nigeria’s export earnings, bringing in about US$11.7 billion. In the same time span, processed oil products (e.g. condensates and lubricants) earned an additional US$1.75 billion, which accounted for an additional 11.4% of the total export earnings. In regard to contributing to the immense success of the industry, Segun Adebutu, CEO of Petrolex says, “As integrated energy conglomerate with strategic investments across the energy value chain, we are committed to building communities, transforming lives and driving economic growth and development in Nigeria.”

Driving economic growth and development is ultimately the central goal of His Excellency President Buhari’s administration. H.E. President Buhari says, “The administration is committed to responsibly managing our oil wealth endowments.” The administration’s commitment is further brought to life through a focus on infrastructure development. Nigeria currently has several on-going and upcoming gas projects in the works for the rapid development of the country’s energy sector. One such project is the 614km Ajaokuta-Kaduna-Kano (AKK) pipeline. The AKK pipeline is a continuation of infrastructure built for the domestic gas market. “The AKK pipeline is part of the Gas Master Plan,” says Emeka Okwuosa, CEO of Oilserv. “It is going to move 1.5 billion scf of gas a day and provide resources for power generation and other energy requirements. It is not only a development of the north; it is such for the entire country. So, this single project can transform the whole of Nigeria in terms of industrial capacity.”

The implementation of the AKK pipeline will only further Nigeria’s potential in the industry, specifically by monetising the incredible opportunity in the gas market. Focus on this type of infrastructure is testament to how the current administration is embracing the Gas Master Plan, which is poised to help Nigeria become the gas hub of West Africa while improving the socio-economic development of the nation. Recently, State Minister of Petroleum Resources, Hon. Chief Timipre Marlin Sylva has declared 2020 as “the Year of Gas”, and this proves to be true as the country makes moves to capitalise on gas and improve its local energy distribution. With an extensive roadmap in place, the gas revolution is on the right track to usher in Buhari’s vision for a next-level Nigeria.

Reflecting this dedication to the next level of the sector, Chief Tunde J. Afolabi, Chairman & CEO of Amni, speaks of the potential of gas in the country: “Given that Nigeria has three to four times more gas than oil, companies such as ours should focus more on gas; in our discovery of gas reserves we should look to harness and monetise the gas as we go along. The government is making a requirement that when looking for oil, companies must find a solution for the gas before they are allowed to produce oil.” This mentality will inevitably evolve the prosperous sector toward new avenues and make even greater use of the natural resource. 

While the oil and gas industry continues to sustain further growth in forthcoming years, FDI remains crucial for the sector and new investments keep being launched to make sure it continues sustained growth and development. Tein T.S. Jack-Rich, Founder and President of Belemaoil, says “Nigeria has been pretty predominant in the oil business. Nigeria has great potential. We have the demographics to decide the right economic framework.”  Investment opportunities range from upstream oil and gas production, such as deposits or drill wells, or in downstream production that focuses on the post-production of crude oil and natural gas activities, such as seen in refineries plant production, or sales. Within any level of exploration, extraction or production, the partnering opportunities are immense.

Under the guidance of H.E. President Buhari’s administration and the Gas Master Plan, the oil and gas sector is destined to spur economic growth and drive industrialisation with linkages to other key sectors such as construction, ICT, power, railways and agriculture. H.E. President Buhari is confident in the future of Nigeria, saying, “We have laid the foundations for a strong, stable and prosperous country for the majority of our people.” As such, the upcoming years are sure to prove that the “Year of Gas” is, in reality, a new era for the industry, which will further signal a new age for Nigerians by creating jobs, facilitating investment, and offering greater access to electricity. While it is known that oil is a constant, Nigeria is showing that gas will continue to play an increasingly important role to ensure that the nation progresses forward towards the next level.

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