LPG: Lagos State Obstructs Ease of Business

The Selai Gas Company is a downstream Nigerian gas entity which launched in April 2022 as an LPG retail company with a community empowerment focus. It is also a vehicle for manufacturing LPG cylinders as well as (ultimately) delivering gas for power. It was inspired by the national authorities’ proclamation of a decade of gas, but as it turns out, most of its two-year journey from drawing board to first retail station has been characterized bby obstacles with sub national regulatory agencies.

Africa Oil+Gas Report’s Akpelu Paul Kelechi spoke with Selai Gas CEO DAMILOLA OWOLABI on the issues, zeroing in on the company’s engagement with regulatory authorities all the way from inception of the idea to delivery of the station. She also speaks about how the processes could be improved.

You chose this particular place was because you have a history here and to bring the gas closer to the people. Are there any other reasons?

We want to be able to create a platform where we give you cylinders at an affordable rate and you spread the payment over a period of time. So, again as an earlier mentioned, Yes, we are in business to make money but also, we want to create an impact within the neighborhood.

What about the logistics in setting this place up?

There were a number of logistic challenges. We had to deal with the “area boys,” (street toughs), we had to deal with the Landlord Association, you know, it was a lot of work and convincing sessions that we had to have with them. One thing the (widespread youth protest) End SARS did for my business thinking was a mind shift. It made me see that everyone in any community where you where your business is situated in is a stakeholder, right? You’re not just coming in because you want to make money off that community; you need to bring them into your business as well. So, End SARS (the widespread youth protest) happened here and this neighborhood was a mess during End SARS. While it was happening, the head of the area boys was in touch and he was giving me updates of what was going on. By the time I came, this entire place was like the war zone because you could literally see corpses on the street. It was very tragic. But one thing I noticed was that there were two stores that were not inflicted by the End SARS and all.

 One of the shops belongs to a friend of mine who owns a grocery store down the road. And another one was the NNPC stand right opposite here. So, for him, why didn’t they touch it? When I asked the area boys why they secluded his own store from the attacks, they said, “Alhaji has been very good to us Alhaji is a man of the people, he carries us along and all that. Again, it comes back to making seeing them as some kind of stake holder in your business. For the NNPC, I think why that happened was that they got an information that product was on board as such they couldn’t throw in fire. Then, when they also tried to vandalize the place, someone came and told them that his family member works here, so they should please stay away and all.

Those two experiences helped me to build more like a strategy on how to relate with the community.

 Are there any specific regulatory hurdles that you had to scale to achieve this?

A lot, in fact they are countless. We didn’t have issues with the Nigerian Midstream and Downstream Petroleum Regulatory Authority NMDPRA (formerly Department of Petroleum Resources, DPR), because they were very professional, they knew what they wanted and we kept to it. But with the Lagos State government, my goodness! It was like a lot of agencies where just duplicating their responsibilities. I have no business with Lagos State Ministry of Energy when NMDPRA (formerly DPR) was already in the picture. The latter already told us what we needed to do and we were already in line with that so why go to the Lagos State Ministry of Energy? After NMDPRA (formerly DPR) had given us their approved Environmental Impact Assessment EIA, we still had to go to the Lagos Ministry of Environment to do another EIA. We also had to go to the Lagos State Town Planning and that was the toughest because there were lots of issues, we had to deal with them. The process is way so cumbersome; it took us roughly about it eight months to get out of there.

Imagine that your investment is tied down for eight months; your bottom line would feel it. We had to wait eight months to be get approval from Lagos State Town Planning and there were lots of hurdles, there were lots of back and forth, there were so many things that were not needed. I’m very knowledgeable about the industry so I knew at a certain time what we needed to get in place, our safety measures was top notch and our documentation processes were high quality, but these guys always just have a way of frustrating your effort. It takes a special Grace and special knowledge and strength to be able to run a business in Nigeria, particularly Lagos. I don’t know the ease of business that is being said in Lagos because there is no ease of business; it is really tough.

How do you rate the various government agencies in making this place reality?

I would score the Nigerian Midstream and Downstream Petroleum Regulatory Authority NMDPRA (formerly DPR) eight (8) out of 10 because they did very well in helping with the processes. They know what they are doing and they were very professional about it. But for the state government, they just had everybody in that space and they really didn’t even have a clue of what needs to be done. For the state government agencies. I will give them two (2) out of 10 because their processes were really stressful. We had to deal with Lagos State Government for about eight months while we worked with NMDPRA (formerly DPR) for barely two months.

If not for the Lagos State government, this plant would have been open since November 2021.

From our calculations and from what we had in the plan, it was supposed to be opened by November of 2021, but the Lagos Government didn’t make that happen. Once you get this document, another agency asks for another document; once you don’t get that another one comes and you are like, it is the same thing that I got from this other agency and they would tell you, well, you have to also get this from us because you are planted in Lagos; in a case of explosion for instance, NMDPRA (formerly DPR) is at the federal level, they won’t be the ones to come to your rescue, it is we the state government. So you need to cover all those agencies.

Some would argue that those checks that the Lagos State government had to make you go through are to ensure that you are doing the right thing.

I think there were just too many duplicated efforts; aside town planning, which is very important, I honestly think we had no business with the Lagos Safety Commission because NMDPRA (formerly DPR) already gave us a suitability approval; they came here, they saw the place and they agreed it is suitable. We also invited the town planners and they came here as well for suitability and they confirmed it, okay. If NMDPRA (formerly DPR has given the suitability report to be okay, why are we dealing with the Lagos State safety commission again? Why we dealing with Lagos State Environmental Protection Agency? We’re dealing with safety commission, LASEPA; we have to deal with Ministry of energy when DPR had already covered that and each of these agencies were asking for their own different EIAs on the same plot of land. How do you explain that? So, each agency wants you to give them a separate EIA. When I tell them, I have an EIA already that has been done, they say no, they have to get their own registered consultants to come and do the EIA. These multiple duplications cost us so much.

“Even though the Lagos State government had given us approval, we also needed the approval from the local government because they were not going to let us see the day right? So, a lot of unbudgeted expenses were there and we didn’t even see it coming”.

But the government at all levels has touted the mantra about ease of doing business …

Ease of doing business doesn’t exist in Nigeria. Particularly in Lagos. I don’t know of other places but particularly in Lagos State, the ease of doing business mantra is not working here.

You have enumerated some of the challenges that you had to face but what solutions would you proffer if you were in government?

I would say, if you want to setup a gas plant in Lagos, once you have the approval from the NMDPRA (formerly DPR), and you have the approval from town planning, the urban and regional planning, you’re fine. Let’s even say the they want their own Ministry of Energy to have a part in all this since DPR is at the federal government level, so the Ministry of Energy can come in at state level. Once these two state agencies give you the go ahead, they can share that information with other agencies. I don’t have to go to LASEPA, I don’t go to the Safety Commission, I don’t have to go to Lagos State Building Control Agency LABCA for instance. I don’t have to go to all those places, right? Once Town Planning gives you a go ahead and the Ministry of energy okays it, come on, they should share that information on the state level. So, all you need to do is, once they come to you and ask, do you have this from minister of energy, do you have this from the ministry of physical planning? Yes, and you are fine. But we had to merry-go-round six-to-seven agencies, spending money and wasting time and they had to give us different documents for the same project, it didn’t just make sense.

The government has declared this decade, the next 10 years as the decade of gas and the business you are into really fits into that profile. I mean, you are supplying LPG and you help reduce the amount of CO2 that is emitted in this community; but has the federal government in any way kind of incentivized you?

You mean financial support from the government, not at all. Everything has been equity and bank loan.

How would you get your supply?

Currently because we do not own our trucks yet, we’re not able to buy directly from NLNG. What I mean by that is, where NLNG discharges their vessels at whatever terminal in Lagos, you can buy at a cheaper rate from them. That is, cheaper than what’s the major marketers are selling. We have not been able to do that because we don’t own trucks. So, at the moment what we’re doing is third party trucks where we have to get trucks from truck owners and we load products from the major marketers. Yeah, and that really is a lot of Cost.

Also, the short term goal of Selai is actually to own our own trucks where we can lift our products from the NLNG at a more competitive rate compared to what the major marketers are doing and where we can also use those trucks to supply other gas plants because by the time you own your truck you’re able to control the number of products that come to you, you’re able to get as much as you want as against relying on someone else to supply you. And it’s another means of income for the business as well. And that also helps us to supply other plants within the neighborhood.

The major marketers can you expand on that?

The major Marketers are basically the guys are import; so, the Rain Oils of this world, the NIPCOs, 11 PLC and the rest. Yeah, we have to buy from them because we don’t own our truck yet to be able to get directly from NLNG.

What are the facilities you have right now that could bolster your business?

We have a 30 Tonne tank and we have our delivery arm as well that was what I mentioned earlier when I talked about “Uberizing” the place. We also have able and experienced staff and our customer service is top-notch.  We’ve been doing quite a number of training actually in the last six weeks for our staff because we want to open well, we don’t want to open and we don’t want to open to the public and we’re having to deal with a lot of issues. So what we’ve been doing is training on safety and customer service just to help every staff of Selai Gas perform optimally when our gates are opened to customers. I also want to mention that we have the part for accessories, what we call Selai Accessories. We sell cylinders and cylinder accessories and you could also call for a technician to come check on your burners, or check on your cylinder back at home and technician will be sent to you. One of the midterm goals for Selai is to own our cylinders because we cannot thrive in this cylinder program without owning our own cylinders. So, at the moment, we’re in partnership with a company here and we buy cylinders from them but eventually, our goal is to own our cylinders.

When you say own, do you mean you want to produce your own cylinders?

Yes, we want to produce our own cylinders.

How soon would this happen?

It’s still in the works but right now, we have secured a place on Lagos-Ibadan Express Way because we don’t want to import cylinders. I see from the market survey that there are too many regulatory issues that you’re going to be dealing with if you are importing cylinders and this is too expensive. So what we want to do with the help of the government, the NCDMB, Bank of Industry, you know, so we’re hoping that in the nearest future, we’re able to make use of that land on Lagos-Ibadan Express Way to build a cylinder production plant.

I don’t want to bring in cylinders from China because I know that I have the capacity to do it in house. So we’re appealing to the agencies of the government that are involved in helping medium scale businesses to thrive to please reach out to us and we’re happy to reach out to you as well. But there’s a lot of bureaucratic processes in getting this done. We want to be able to share our business ideas before them, share our goals before them and let them know that we’re not in this business for ourselves. We’re more in this business for the impacts on the community.

If you want to put a number to it, to set up an LPG filling station like you have done, what is the figure like?

At the time our business was a paper, a business plan, all we have projected was maybe about a hundred million naira for the kind of picture we had in mind for a standard gas plant. But at the time of implementation, well inflation caught up with us and exchange rates was something else and we had to do with all of that. So, if you have in mind to build a standard gas plant in Nigeria, particularly Lagos, I would say you should plan within 150 to 200Nillion Naira because the price change is alarming.  You sleep today at a particular price and the next morning you are calling the vendor to say okay, send your account number let me pay the money and he tells you madam, forget that invoice, I’m sending you something else because things have changed. What can we do? The truth is, there are quite a number of unforeseen expenses that you’re going to incur. in our business plan, we didn’t foresee that we’re going to spend so much with regulatory agencies particularly Lagos State. We didn’t see that coming. We also didn’t know that we were going to even pay so much to the local government. That’s another thing I forgot to mention. Even though the Lagos State government had given us approval, we also needed the approval from the local government because they were not going to let us see the day right? So, a lot of unbudgeted expenses were there and we didn’t even see it coming, but we have to just move along because we have come that far and we couldn’t just go back.








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