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Achieve Beyond Boundaries
Chartered Institute of Personnel Management of Nigeria
(CIPM) Conference
(15 OCTOBER 2014 – ABUJA, NIGERIA)
By Babs Omotowa (MD/CEO, Nigeria LNG Limited)
Babs Omotowa
Currently
• Managing Director/CEO, Nigeria LNG Limited
• Vice President of Bonny Gas Transport Limited
Protocol
Good morning distinguished ladies and gentlemen.
Thank you for the opportunity to speak at CIPM’s 46th yearly conference.
I feel honored and privileged to be part of the ceremony, in a year that the Institute
is commencing the licensing of Human Resources practitioners.
This marks the culmination of the training and development of HR practitioners,
which differentiates the professional from quacks or impostors!
I rejoice with every member of CIPM in the achievement of this milestone.
In a changing world of business enterprise, where people agenda are as important to
the CEO as the bottom line, it is indeed a critical step to provide the assurance that
organizations demand from HR.
I have had the opportunity to take a look at the CIPM website to understand the
conditions for issuance of this license. Your website is filled with outstanding
prescriptions and solutions for several of the key issues of the profession. So your
license is a permit to practice as well as an endorsement of your worthiness.
I would like to congratulate CIPM’s leadership under the President, Mr. Victor
Famuyibo for the accomplishments thus far. You have given the profession a worthy
gift. With my background as a former college teacher, I could not but be delighted
with the various training programs taking place in Abuja, Port Harcourt and Lagos,
and the national essay competition for university and polytechnic students.
Your efforts also in contributing to the ongoing dialogue on Nigeria’s potential for
economic revival as embodied in the theme of your annual conference this year
“Switch On” is also quite commendable.
You are indeed taking giant strides!
The Nigerian Promise
The choice of “Achieve beyond Boundaries” as the sub-theme of this plenary session
can never be more apt than now, at a time that it has become imperative to renew
hope in the Nigerian Promise.
Occasions such as this provides the platform for critical thinking on how to unleash
Nigeria’s locked potential for sustained and rapid socio-economic development that
will take it to its rightful place in the comity of nations.
It also provides the opportunity to dispel some of the myths that has become our
limits in realising the Nigerian dream. Some of these myths which you may be familiar
with are: Nothing works in Nigeria; we make great plans but lack the ability to
execute; Nigerians lacks self-control, discipline, foresight, the power of organisation,
apprehension and ability to visualise the future as peddled by Lord Lugard in the
early 1900s.
All of these myths, which appear as a mirage, may have become a psychological
boundary to achievements in Nigeria.
Some of the myths about Nigeria as a country can be debilitating; and the challenging
business environment is even more daunting. However, the hope of outstanding
business success in our dear country can be very inspiring when buffeted by the
promise of huge natural resources and untapped potential that the country holds.
The motivation to break off from these self-destructive myths derives from the
promise that Nigeria holds with its huge and untapped potential. There are abundant
resources in natural minerals, huge arable land for agriculture, excellent weather and
a huge population of about 170 million
The economic fundamentals are strong as evidenced by the rebased GDP that puts
Nigeria as the largest economy in Africa and the 26th in the world. Such is the
enormous promise that Nigeria holds.
In spite of the abundant potential and enormous promise that Nigeria holds, there
have been fundamental challenges preventing us from maximising this potentials and
rise like the giant phoenix.
The 2014 “Doing Business” Survey Report of the World Bank ranked Nigeria 147th
out of 189 countries assessed on its ease of doing business index. This reflects the
realities and certain boundaries that businesses would need to push through to be
successful in Nigeria.
Key among these challenges includes poor power supply, poor transport
infrastructures as well as overlapping legislations, aggressive regulators seemingly
more focused towards rent collection, etc.
Shortage of electricity is one of the biggest challenges for business in Nigeria; our
power stations generate just 4GW of electricity, which is quite meagre compared to a
national need of over 40GW. Transport bottlenecks make supply chain unstable and
erratic. Above all, the rules of the game for business can change quickly and thus have
grave uncertainties in creating an enabling environment to attract investments,
technology and people.
Also despite our population of 160 million people, with a high proportion of young
citizens and a fast growing economy, we are still widely seen as oil producing country
rather than for example a talent producing country. We are seen as a huge market of
160 million consumers unlike China that is seen as a factory of one billion producers.
We do not have enough of quality manpower for the areas of the economy where
they are most required.
So looking at all of these, I am unhappy that despite our huge potentials and being
ranked the biggest economy in Africa, our citizens are not getting the best that they
deserve.
NLNG- The Opportunity
However, there is a bright side to our story, but before I go into sharing that story,
let me first set the context in which I share our story.
This is important because we are at a period just before electioneering starts, a time
when politicians trumpet all manners of achievements in a drive to get elected to
various offices. Sadly it is a time also of propaganda and outrageous claims.
I had therefore asked myself whether this is a time to discuss achievements so one
does not get tarred with the same brush. I reflected on this and came to the
conclusion that the risk is worth taking, after all a gathering of human resources
practitioners!
And yes, there is a place for sharing stories of extraordinary accomplishments, which
is done every day to inspire people.
The United Arab Emirate a few years ago held a TED conference at Dubai titled
ReBoot. ReBoot was all about stories, small and big to inspire people to believe that
everything is achievable when driven by shared passion and love for greater good.
In 2012, a “Dream Dare Do” convention was held in India, where stories of real life
heroes and driven individuals in areas as entrepreneurship, sports, arts, etc was held,
as organizers believed that meaningful change can be brought about through the
power of dreams. This power coupled with the indomitable spirit of dare and do
leads to a change which can transform lives.
Morocco staged its own conference in 2013 titled Powers of Dreams with the
thinking that we shouldn’t shy away from inspiring ourselves and our nation with
good stories, worthy examples, so long as we understand that it is only through the
crucible of the innovation, creativity and hard work, and the sacrifice of compatriots,
that we can rebuild countries and aim for greater heights.
So here we go with our story:
I am proud to share with you, one of the inspiring examples of a Nigerian success
story – the Nigeria LNG Limited – an embodiment of achievement beyond
boundaries.
I mean beyond boundaries of the Nigerian myths, beyond the boundaries of
challenging Nigerian business environment, and beyond the limits of Nigeria’s hugely
untapped potential.
Nigeria LNG Limited (NLNG) was incorporated in 1989 to help end gas flaring and
also monetize Nigeria's vast natural gas resources. It is owned by 4 shareholders, the
Federal Government of Nigeria, through NNPC (49%); Shell (25.6%); Total (15%)
and Eni (10.4%). The company has two wholly–owned subsidiaries: Bonny Gas
Transport (BGT) Limited and NLNG Ship Management Limited (NSML).
In the 1950s, the discovery of Crude Oil in Nigeria led also to inadvertently
discovering gas, which was seen as a waste product at that time as there was no
market or infrastructure for it. It is estimated that the amount flared initially was 2.5
bcf/d, i.e. 75% of produced gas and the rest were re-injected into the wells.
NLNG has since then converted over 4.2 Tcf (trillion cubic feet) of Associated Gas
(AG) that would have been flared to LNG and NGL exports, thus helping to reduce
gas flaring by Upstream Companies to less than 25% and generating over $30billion
that would have been flared, a real outstanding achievement.
Nigeria has reaped significant benefit from NLNG in terms of its 49% dividend, 30%
CIT, Feedgas Purchases, etc. To give you a perspective, the Company’s income tax
payment this year represented about 5% of the total revenue projections of the
government for 2014.
The Race
Putting together an LNG value chain anywhere in the world is a major challenge.
From finding the gas, selling it, funding, constructing, operating the plant and
shipping to customers are no easy feats. Launching a project of this complex
dimension in a business environment like Nigeria would even be more difficult if not
near impossible and many critics initially believed that the NLNG project would not
get past the starting line; others thought that even if we passed the starting line, we
could not finish on time and within budget, or even if built, the Plant would not be
operated to international standards.
The basis of the reservations are understandable mostly when situated in the context
that it was in 1965 that the Bonny Gas Company was put in place to liquefy and
export Nigeria's gas reserves. This project remained in an idea mode for about 35
years wallowing in a wilderness of none starts, half starts, and false starts in a country
that was then a pariah to the world.
The changing political climate in the country during these periods fuelled serious
concerns about ownership structure, management control, funding and financing, and
market assurance issues that held the establishment of the Company moribund until
1989.
As we were changing our name and shareholders in a bid to address these issues,
windows of opportunity to build LNG plants to monetize the country’s huge gas
reserves came and went elsewhere as other countries, especially in Europe (i.e., North
Sea), Indonesia, Malaysia, Qatar and Algeria, got to the global market earlier than we
did.
Upon incorporation in 1989, the final investment decision (FID) for the base project
was taken in 1995 and construction commenced in 1996. By 2008, 6 LNG Trains
were constructed and put into operations with a name plate capacity of 23 million
Metric Tonnes Per Annum (MTPA) of LNG, thereby supplying 8% of global LNG
market.
This growth between 1996 and 2008 earned NLNG the record of the fastest-growing
LNG project in the world, a remarkable feat i.e., taking LNG production from zero to
23 mtpa in world record time.
This unprecedented achievement is consistent with our vision to achieve world class
performance and help to build a better Nigeria.
Performance and Broken Boundaries
Nigeria LNG Limited has de-mystified the various malignant myths about doing
business in Nigeria as it has delivered world class sterling performance within its 15
years of operation.
I crave your indulgence to highlight just a few of the results that have earned Nigeria
LNG Limited a place in the list of companies that have achieved beyond boundaries
in Nigeria.
We ended the year 2013 as the second best in the world among thirteen LNG peer
sites on overall operational efficiency index.
Today, Nigeria LNG Limited operates its six-train plant at a best-in-class reliability of
97% quite above a world-class top quartile reliability of 95%.
We have also grown from an annual cargo count of 5 per annum in 1999 to over
300 cargoes per annum, pushing the boundaries of internal capacities year on year.
On HSE, we have a strong commitment to the health and safety of all personnel in
our worksites. As complex as the operations of the LNG plant is, and through a
competence and stringent hearts and mind programme, we recently completed over
20 million man-hours of work without any lost time injuries, a record only very few
companies in the world can boast about.
We have also grown from a 4 billion dollar per annum company to one of over 10
billion dollar company in fifteen years favourably comparing with the turnover of
many companies in the 2013 FSTE 100 list.
An investment of $7.5 billion dollar has now yielded revenue of 85 billion dollars to
date and we now have a $13billion asset base, the 4th largest LNG plant in the world.
In addition, we are the single largest ship owner in Nigeria with 24 LNG carrier ships.
Importantly, we are known by our customers as a reliable plant, apart from a period
last year where we were obstructed by a regulator and the periods of bunkering in
previous years. We have transited from a second-option standby LNG supplier within
the Atlantic Basin to a reliable global supplier beyond the Atlantic basin in Europe
and Asia. Today, we are sought after by customers in South America, Asia, Europe, a
truly outstanding achievement for a Nigerian Company.
NLNG’s business has strong impact on key macroeconomic variables - NLNG’s
contribution to the GDP has consistently increased to 4% in 2008. In addition, we
currently supply over 80% of cooking gas (LPG) in Nigeria and recently increased our
dedicated volumes by 67% and are prepared to increase by 1000% to get more
Nigerians to switch to cooking gas rather than continue to use fire wood and
Kerosene, alternatives that have environmental and health disadvantages.
We are also a good tenant at Bonny, an Island with a population of 250,000. It is
one of the few town in Nigeria that enjoys 24hrs electricity supply, pipe borne water,
roads, hospitals, vocation centres, just to mention a few. An integrated partnership
approach has enabled uninterrupted operations over the years.
In the area of Nigerian Content, we are also a leader as can be seen in our recent
contract with Samsung and Hyundai in South Korea to build 6 new ships. We used
that opportunity to have 600 Nigerians trained in ship building with 200 of them in
South Korea. We also have been able to ensure Nigeria goods and services will be
used in the construction work by working with local contractors. With this initiative,
Kabelmetal has for example being able to achieve historic exports of $1m cables
exported to South Korea and more cables, paints, furniture, etc will follow soon from
other companies. I am proud of this.
The Fundamentals
So many may ask the question, why has NLNG achieved all these?
Before I answer these, permit me to first recognise the genius of the founding fathers
of the company and my predecessors who found the courage to set its compass
aright.
I mean those who recalibrated its shareholding, who wrote the comfort decree, who
provided money in escrow accounts that allowed this project to take off and who
granted it pioneer and tax exemption status. Without their courage, dedication,
industry and foresight, we perhaps would not be here today talking about a company
that has achieved beyond boundaries.
So back to the question on: Why?
The essentials of NLNG’s success are not entirely any different from that of any great
company in the world but permit me to share a few (1) Stability (2) Structure (3)
Partnership (4) Excellence (5) Financial Capability
Stability:
Uncertainty in regulatory policies is a big challenge for businesses.
The enactment of the NLNG Act in 1990 and the Assurance letters from the then
Minister of Finance, Central Bank Governor and Attorney General in 2002 provided
clear legal framework, stabilisation and incentive for the Company to finance its
construction to the tune of several billions of dollars. This initial stability in fiscals and
regulatory framework also enable smooth operation.
The company has therefore been able to operate with strong business principles on
merit, ethics, global governance and compliance standards. These have provided the
foundation on which have been built strong Code of Conduct, Anti-Bribery and
Corruption and Conflict of Interest policies, all of which are essential bedrock for
world class performance.
Structure:
The incorporation of the company as a private company and an independent joint
venture also provided the protection from excessive interferences from bureaucrats.
This has differentiated it from the upstream joint ventures and has enabled it to
perform to world class standards.
Its independent Board is empowered and takes decisions without having to go
through bureaucratic structures and as such the speed of decision making is consistent
with world class organisation.
The combination of the Nigeria shareholder and the International shareholder
representatives in the Board provides an excellent framework to achieve both
objectives of helping to build a better Nigeria and achieving world class standards.
This creates a healthy tension in the Board which has ensured robustness over the
years in the decisions at the Board.
Therefore transparency, merit based and competitiveness are what are prevailing in
every sphere of the company, which enables the best interest of the company and the
country, and not the interest of individuals.
Partnership:
At the heart of our success over the years is the long term technical partnership we
have enjoyed from our shareholders which has enabled us transfer huge knowledge.
We have leveraged on diverse global expertise and have been able to send Nigeria
staff on assignments to other plants in the world to gain experience and we have also
brought experts to the plant to help coach and train our staff.
Through a structured competence assurance and knowledge transfer mechanism
articulated in our Nigerianization strategy, we have seen the Nigerianization of our
workforce from 50% in 2007 to about 95% to date with also a 100% Management
Team.
This has been complemented with the continuous recruitment of highly competent
Nigerians graduates. We have maintained a technical agreement with the original
technical partners of the project and this remains key in maintaining the integrity and
reliability of our plants and in carrying out the regular maintenance necessary.
Excellence:
Operational Excellence for us is across our Production, Asset and Safety.
We operate, maintain and manage our assets in such a manner that we can
sustainably produce to our buyers safely, reliably and profitably.
Key to our drive for world class performance in NLNG is embedding a culture of
continuous improvement by: (1) Promoting global best practices in processes and
systems (2) Regular performance benchmarking (3) Learning from Incidents.
We also drive cost leadership through disciplined control frameworks and use of ERP
systems. A strong budget discipline and cost monitoring through appropriate tender
boards ensures that we continue to benchmark our costs globally and also leverage
on our shareholders to achieve global deals.
Financial Capacity:
Being a Company with a track record of performance and a strong balance sheet, we
are able to attract financing for our activities relatively easily and at very low cost as
was demonstrated in our recent $1.5billion financing for the construction of our 6
ships. So we have no funding constraints.
No doubt our ownership structure continues to offer us favourable access to financing
which we have leveraged on for better project economics and ultimately better value
to all our customers.
The Challenge
Having achieved beyond these boundaries, we cannot rest on our oars and so we
continue to look at the future which we currently see as laden with challenges.
As more LNG projects come on stream, new sources of gas are discovered, with our
plant starting to age and a growing complex business environment, the future
headwinds are strong.
We are therefore already looking at our strategies to achieve even beyond these
boundaries as the window of opportunities closes. There have been many much more
successful companies that have gone out of circulation and many in this room will
remember Enron, Arthur Andersen, or even locally Oceanic Bank, etc.
So we are analysing the global trends including Shale Gas competition, new Mega
LNG Plants in Australia and East Africa threats to our business. For example the
technological improvements to Shale gas extraction has doubled the world reserves in
LNG and in the US has led them from changing from an importer to a likely exporter
and Henry Hub gas prices has fallen by more than 85% from $15/mmbtu in 2005 to
less than $4.50/mmbtu today.
These global challenges are not made easy by the local challenges from the
uncertainties of policy changes, delayed passage of the Petroleum Industry Bill (PIB),
gas developments for domestic use, sustaining feed gas supply, ageing plants and
ships, and continued tension between a Nigerian culture and a World-Class culture.
So we are already looking at what we need to do differently from growing our
volumes by the addition of a 7th train so we can compete with volume in the global
market and use that to offset any reduced prices.
Train 7 will allow us add eight million metric tonnes or 40% to our current
production capacity. It will enable us attract over $12billion investments, create over
18,000 construction jobs and yield additional $2.5 billion revenues. The reality is that
having come to the end of our tax holiday period, about 70% of value generated in
NLNG today goes to the Government and people of Nigeria. So a Train 7 is a big
value to Nigeria and together with shareholders we are continuing to work on this.
With the changing business environment, we will also be making changes to our
company culture and as such we have embarked on a culture alignment journey to
drive even more organizational efficiency and continuous improvement. We will for
example be developing more leadership capabilities for us to have more true leaders
not by authority but by role modelling. We will be moving into a more integrated
company, increased empowerment, open communication, coaching and
development, etc
What is needed?
So what is required from key stakeholders to sustain the required results?
I will just share with you my thoughts on two of those stakeholders:
CEO:
In today’s global business environment, success is driven by the talent, vision and
leadership capabilities of the CEO.
Some of the critical dimensions of the essential leadership capabilities will include but
not limited to relationship management, strategic direction, delivery/excellence and
culture.
In a business environment like Nigeria, it is important that the CEO informally builds
relationships with key stakeholders through proactive and transparent interactions
that allow him or her not only to share information and gather input but also to
develop strong “professional chemistry” with all stakeholders namely, shareholders,
government, regulators, etc.
This ensures that he or she maintains a strict “no surprises” policy with all
stakeholders and that he is fully and effortlessly transparent on the implications and
risks of strategic decisions.
He or She must also lead the building of a culture in the organisation that will enable
the company remain sustainable.
He or she must also have the strength of moral character and trusted on ethics as a
role model. In Nigeria, that can be especially hard with the prevailing culture being
one where the expectation is that with such a high position, expectation is for one to
act with impunity.
This expectation is not just from officials but also from families, relatives, friends,
acquaintances, etc. This is a challenging part for us Nigerians, as though we all
espouse we want the country to be better, but we are too concerned about ourselves
and even at the detriment of integrity, it is a culture we must change.
HR:
Historically, the personnel manager was deemed to be effective if he manages well
the monetary levers of human resources i.e. compensation, benefits, and other
expenses, and if he implements discipline and maintains good industrial relations with
unions and workers.
He or She sometimes got trapped in a policing role, mediating employee grievances,
monitoring compliance with employment laws, and enforcing codes of conduct. HR
function then was seen more of helping workers overcome deficiencies that hinder
their performance.
That era is past and the time has come of extending the hand of fellowship across the
function to seek achievement beyond boundaries. World class HR functions are
transforming and becoming truly strategic where the bottom-line is important,
partnering with the business, automating a lot of traditional HR activities, ensuring
cost effective hiring of top talent, realization of productivity, etc.
With outsourcing of the management of benefits and compensation and of unskilled
and semi-skilled workforce, comes the opportunity for across board collaboration
and achievement beyond boundaries. This calls for a new HR Function and with it a
new kind of HR professional, one who deeply understands not only talentmanagement processes but also an organization’s strategy and business mode.
Forward-looking companies now have HR function as become both catalyst and
facilitator of mechanisms that foster creativity across organizational boundaries. HR
Functions must develop the capacity to hatch and harvest ideas.
Final Thoughts
Distinguished ladies and gentlemen, NLNG’s historic achievements, experience and its
Joint Venture model provides the inspirational opportunity to push the boundaries in
other sectors of the economy namely, telecoms, power, agriculture, banking, real
estate, mining and many others.
Investment in these sectors based on similar fundamentals as NLNG will benefit the
economy; create more World Class companies, wealth and attractive job
opportunities.
In this regard, NLNG is not relenting in its quest for world class top quartile
performance which will ensure it continues to generate significant value for Nigeria to
address the capital and infrastructural challenges and create wealth and job
opportunities.
I would like to conclude with the key message that without courage, dedication,
industry and foresight, it can be more challenging to achieve beyond boundaries.
As individuals, as HR professionals, etc, we need to build a critical mass of people and
organisations who will continuously achieve beyond boundaries in their ‘little space’
based on these principles and in no distant future, Nigeria will indeed be able to rise
like a giant phoenix and take its rightful place in the comity of nations as projected.
Thank you for listening!