The Managing Director of Genesis Worldwide Shipping, Captain Emmanuel Iheanacho, tells about the impact of the modular refinery, a local ship building yard and the industrial island the firm is building on the Nigerian economy
They are ongoing. I have been on the projects for three years. It has lasted so long because the planning itself takes that length of time. With the refinery, we have to do a market study, which will take three months and we have to do a proposal, front-end engineering. We did the front-end and detailed engineering more than a year ago. We need a lot of steel to build ships.
With the collapse of most of the steel mills in Nigeria, where do you get steel from?
We can buy them for the time being. The ideal situation would have been local sourcing of raw materials, because shipping has multiplier benefits. But if we don’t have them, nothing stops us from importing the steel for the time being. But once that demand is established that they are building ships in Nigeria and they require steel, that will spur investment in the existing steel mills.
Have you received finance from the Federal Government?
I have not received finance because I was busy putting things together. Financing has to come after certain things have been put in place, because you don’t want to go to somebody for finance and the person will ask, what about the feasibility studies, the approvals? Everything has to be ready and then you go and get a consultant who will package everything.
The financier will want to know if the project is feasible to start with and if the environmental impact assessment has been done. We did it for one whole year. All the stakeholders were involved.
Local operators in the maritime sector complain of funding and being at a disadvantage when compared to foreign operators, what stops the local operators from pulling resources together and establishing one shipping line?
I don’t know this thing that you people keep on talking about pulling resources together. Pulling resources for what? If you are a shipping person, you must understand the business to a point where you know where you are going to get the money from. You can’t conceive an idea then you go to another man to ask him to bring his money and join with yours to execute that idea. The man might not understand what you are talking about.
So, if you know your business, you must understand where the money is going to come from. The only thing that one will like to see is where the government recognises the critical nature of some of the things you are trying to do and provides a kind of guarantee that can get you the funding you need. When the government stands as a surety, then the financial institutions will have confidence to lend money to the investor.
In our own case, the Americans stepped in and gave us a grant of $1m when they saw the work we had done. So, people have to do their own part and that will convince investors to part with their money. Eventually we are talking about developing our economy, so we don’t have to wait for people to come and do it for us.
The airlines are going to the capital market to raise funds, but in the maritime sector, you hardly have companies that are big enough to call brokers to come and see what they are doing. Why are you not looking at getting long-term finance from the capital market to execute these projects?
We are doing that but not everybody has the same excuse and the same experience. You cannot say to somebody who does not have the same development plans in that particular industry to go and find the money, no; he has to have some basic understanding, the training and experience.
Take for example what we are doing; if we didn’t have the experience behind us in developing terminals and operating them, we cannot go forward and start articulating the plans. We know where to find the consultants, project managers, the civil engineers who are going to do the base for the tank farms, and we know where to find the mechanical engineers who are going to install the tanks.
The key thing is if you don’t know it, you must know a man who can do it and how much it will cost you. Then you can go to the banks and tell them stories and make sure they are listening. The banks will send their risk people to ask you questions and based on your answers, they will say, he knows what he is doing. You have to give him the money.
In other African nations like Benin Republic, the port and shipping system is very well developed, what is it that they are doing different from Nigeria?
It depends on what you are alluding to. There cannot be a general sense that they are better developed. Do they build ships there? Do they have refineries there? Do they have strategic storage there? I know that some Nigerians have tanks over there.
They have a much smaller economy and the economy is not as complex as ours; so, it is easy to see those things working. If you put it in relation to the size of our economy of 197 million people and you are talking about a place that is less than the population of Lagos, it is easy to look at it and say that you are not functioning as well as they are doing.
You have been part of those who have championed the establishment of the national carrier in the past. Some say Nigerian ship owners have not come forward to ask for permission to be granted the status and that is why no Nigerian ship owner has been granted it. Why is this so?
I did not know that that is the truth. You know that I am still the Managing Director of Genesis Worldwide Shipping, which was a national carrier. At the time, the rule was that if you own a 5,000-tonne vessel, then you could become a national carrier. But we owned more than that. We owned a fleet of about seven ships and we were the largest private ship owners at one time.
Even now that we are not really operating a large fleet, we still have the skills in-house to operate ships internationally. We operate ships regularly to India. Not everybody can do that because you must be in a position to project resources if the ship is going to India; project resources to the Island and be able to monitor the ship on a daily basis; take into account the different time zones; and when they talk to you, you understand what is going on.
We moved on from running ships to trading in oil. It was viable, you cannot do everything at the same time and there is limitation in resources so you have to choose.
What stage are you on now concerning the dry dock?
I have not made any move on the dry dock yet. I have been concentrating on the oil refinery and industrial zone.We are working on the strategic storage, which is something Nigeria has always wanted, to be able to have storage for about say 14 days. For instance, the last time we had shortage of fuel. If there is a strategic storage, Nigeria can fall back on it and get supplies for 14 days.
How much are you looking at investing in the project?
The sum of the different projects – the refinery, the strategic storage and the island– will be about $450m in total.
How much will it cost to build the 15,000-tonne craft?
I cannot tell you how much it will cost me now because I have not even built the slipway. But In my experience, when I specified it and I wanted to go and build it in China, it would have cost me about $10m to $12m.It is a big barge, a short, fat self-propelled ship. That is one of the types of vessels that we will build here but not necessarily the only one. We should be able to build vessels up to 10,000 tonnes, offshore vessels, tanker vessels and others. But at least, what it will do is to bring Nigeria into the league of ship building nations.
Have you considered the shallowness of Nigerian waters in your decision to build a flat bottom ship?
That is what I am saying, when you see a ship that can carry up to 15,000 tonnes at a draft of 6.4, it is super shallow.
Why did you think of going to China in the first place?
It is the cheapest place to build a ship.
If you consider the cost of building it there and building it here, will there be a difference?
There is bound to be a difference because we will be a new ship building nation and we will not have the same efficiency as those people.
What are the by-products that will come from the refinery that you are building and how much are we going to see from it?
We are building a 20,000-barrel per day refinery. It could be a refinery that produces Premium Motor Spirit in addition to other products. But we are going to do it in a step-by-step process so that we build what is called a topping plant, which is a refinery that may not produce PMS in the beginning.
There are two reasons why we want to do that. One is the cost, because we looked at the location factors and the logistics of moving crude around. It could cost us about $116m to build the topping plant that does not produce PMS.
But if we decided to include a platformer, a reformer and other things that will now allow us to produce PMS, two things will happen, the price will double, and the project will now be deliverable at around $240m; then again, the project time will extend.
For us to complete it, we will then be looking at three years or a little bit more than three years. Whereas if stopped with the topping plant, we will be able to do it in two or three months; so, that is why we decided to do the topping plant first.
It is called a modular refinery. That means you can add modules to it and take them out when you want. If we do it like that and everything is going fine, at some point, we will top it and add a module that will allow us to start producing PMS. I think in terms of the risk, it reduces the risk elements that is inherent in the business. Culled from The Punch