A diversified and regional approach in West Africa

Nigeria

Lenin Ugoji, CEO of C&I Leasing, talks to The Energy Year about the state of the Nigerian energy industry and C&I Leasing’s services and strategy. C&I Leasing is a diversified leasing and business services conglomerate providing fleet management, personnel outsourcing and marine services to companies in West Africa.

What are the main challenges in the Nigerian energy industry?
The Nigerian energy industry has some structural challenges in the areas of waterway insecurity, pipeline vandalism, crude oil theft and illegal refineries. The challenges are expected to be addressed as more investment from the government and private sector pour into the sector.
It is, however, even more important to investigate the causes of the current situational challenges in order to permanently address the underlying factors that give incentive to them. Nigeria needs to adequately address its youth unemployment problem as a significant number of the people who commit these illegal acts are without legitimate jobs and feel entitled to the resources coming from the ground in their communities.
We at C&I Leasing Plc are of the opinion that policy formulation for the oil and gas sector should be focused on how to foster private capital investments and public development works in host communities to increasingly create an environment of collaboration.
We believe there is a need to act fast because as our population grows rapidly, the widening unemployment gap will increasingly lead to more insecurity in the region. If we provide local employment, the local community will be much more obliged to protect the assets. The PIA [Petroleum Industry Act] has been long overdue, and with its enactment into law, we believe its role would be to bridge this key identified gap.

How would you evaluate Nigeria’s energy transition?
The energy transition is inevitable because the world is moving towards a greener future and we can see that the international oil companies are leading the way in this direction. However, in Nigeria, the main challenge is likely to be financial as the transition is expected to be an expensive one and may not be cost-effective for the country at this time.
We have made significant improvements in Nigeria and Africa in committing to the energy transition; however, access to green capital to assist in building the necessary infrastructure is lacking and could impact the country’s ability to transition as quickly as hoped.
The Nigerian government and capital markets have begun to explore these opportunities and in 2017 and 2019, Nigeria issued two green bonds totalling almost NGN 30 billion [USD 72 million] and became the first African country and fourth globally to raise such a debt instrument for financing environmentally sustainable projects.
Nigerian banks predominantly fund projects over the short term, but investments aimed at lowering our emissions are capital intensive and need a long-term financing structure. If we don’t solve this issue, the private sector will not be helped in its transition path. However, international banks would be able to provide such funds.

How would you introduce C&I Leasing?
C&I Leasing Plc, an indigenous company, is a leader in the provision of marine services to the most demanding clients in the oil and gas industry. We provide a broad range of services, which include marine offshore support services, passenger transportation services and security/ escort/patrol services. C&I Leasing Plc’s marine fleet comprises about 25 vessels adapted to its classification of marine services.
We are currently providing services to different IOCs and marginal field operators, including NLNG, Shell, First E&P, etc. We are also present within Nigeria and the West Africa space as we diversify our portfolio by offering cross-charter services for several international companies who require specific vessel types.

Can you give an overview of the company’s activities?
C&I Leasing’s growth lies in our founders’ abilities to adapt to market changes. The company started by supplying and leasing computers in Nigeria and gradually moved to leasing other types of equipment like motor vehicles and then to the oil and gas industry by providing specialised marine vessels on lease to the sector. The company has had stable growth since then and has also created a viable manpower outsourcing business to provide the human resources required by a vast array of business in Nigeria including banking, marine, manufacturing, information technology, etc.
C&I is quite a diversified business, and this is our main strength. Regarding vehicles, we currently lease more than 2,000 units across Nigeria and our personnel outsourcing business has grown to about 7,500 employees and provides more than 40% of our gross revenues. In 2010, we entered the marine sector by providing vessel management services to some of the IOCs, thus creating access to US dollar revenues and insulating the business partially from constant currency devaluation.

What main marine services does C&I Leasing currently provide?
We primarily provide security and patrol services as well as tug boat/line handling, and in our fleet, we have about 20 vessels. We are currently providing patrol and tug boat services to NLNG and Shell, as well as other services to various other companies such as First E&P. We also offer cross-charter services for a number of foreign companies who require specific vessel types within the Nigerian and West African space.

How important are technical partnerships for C&I Leasing?
The marine business is highly technical and C&I has always cultivated a wide array of important technical partnerships to enhance the ability of our team to deliver on our corporate mission to provide value to our clients. Maintenance, for example, requires a planned schedule and specific knowledge of the various high-calibre items of equipment purchased by the company to service its clients. Having the right skillset is absolutely necessary for a marine business because of the implication on safety of the crew and the vessels, so maintaining our level of technical competence is a paramount feature in our policies.
We recently received a terminal safety commendation award from NLNG, as well as other awards in the area of energy efficiency and it’s recognition like this that pushes us to continue to work with our technical partners in improving the competence of both our onshore and offshore personnel. It can be difficult for Nigerian companies to secure valuable international partnerships due to the sovereign risk associated with our country but C&I has consistently done so over the past decade.
C&I has an internal policy that has helped us overcome some of this negative perception and this stems from our desire to deliver, no matter the cost. For instance, during the Covid-19 pandemic, we kept on making all our international payments despite having our services suspended. Naturally, doing so came at a price, but we managed to keep our network during these difficult times. We, however, expect foreign companies to also show the same level of commitment to local companies that keep up these types of consistency.

What should Africa’s priorities be to fully benefit from the African Continental Free Trade Agreement (AfCFTA)?
I am personally of the opinion that Africa should start from its strengths, which means focusing on standardising, controlling and exporting its primary commodities. Africa has a comparative advantage in these primary commodities and should utilise them to create a surplus by correctly pricing them, which the current global trade system does not allow. Proper pricing will generate surplus capital that can be invested in education, infrastructure, research and development, which would eventually lead to a more technologically driven continent that can become more competitive on a global production scale.
The African Continental Free Trade Agreement plays a key role here because it facilitates intra-African trade. Since we have a growing population, this assures us of a sustainable consumer market that can be leveraged to create value for businesses.
However, the purchasing power of the African population is weak and therefore needs significant improvement and I personally believe this can be increased by focusing on appropriately priced trade with other continents. I believe that trading results in decent margins which over time become sizeable and lead to significant capital formation, which is required to improve the factors that would lead to the industrialisation of the continent.

How is C&I Leasing planning to take advantage of the AfCFTA?
C&I Leasing intends to take advantage of the AfCFTA by growing its regional footprint, especially along the West African coast in the immediate future. We are currently in Ghana and our franchise (Leasafric Ghana Limited) is already the largest leasing company in Ghana, and we are of the opinion that this can be replicated in countries like Côte d’Ivoire. We believe that AfCFTA will increase the velocity of goods and services across Africa, leading to the unleashing of tremendous opportunities for African companies in the areas of logistics. C&I Leasing Plc, being a logistics company, is well positioned to facilitate this increase in trade between African countries by both land and sea. We have a powerful fleet of vehicles and vessels ready to be deployed as the agreement takes hold.

What is your growth strategy?
C&I’s growth strategy is multi-pronged due to the diversity of its businesses and on the forward foot, we look to grow our vehicular fleet and infrastructure support services businesses aggressively, to be able to balance our business risk in the long term. In the marine sector, we aim to improve our cross-charter business in the short term as vessel oversupply continues globally, while looking out for high-value opportunities which currently lack local expertise within the Nigerian oil and gas sector.
We intend to solidify our market leadership as the local logistics provider of choice in Nigeria especially as the country expands its infrastructure footprint. So as marquee infrastructure projects like the Dangote Refinery in Lagos come on stream, this is expected to create a need for logistics services across the country in both vehicular and vessel assets and we look to provide our expertise in these areas.
Our goals in manpower outsourcing are to continually grow our employee base in order to create a knowledge-driven and experience-based workforce community where additional value can be derived and leveraged for other opportunities.
We plan to strengthen our relationship with our top clients, such as NLNG, for which Train 7 is expected to come on stream in the next few years and this is largely because NLNG has shown exceptional business professionalism. During the pandemic, we restructured our terms with them reasonably and fairly, while term negotiations have been complex with other partners.

Read our latest insights on:

• Ghana
• Nigeria