At Rainoil, We Have Added Value to the Nigerian Economy, Says Ogbechie
GABRIEL OGBECHIE is the Managing Director of Rainoil Limited. In this encounter with our Correspondent, Theresa Igata, he tells the success story of the company, its strategy and vision to become the chief driver of the nation’s downstream economy.
Success story of Rainoil
Rainoil is playing in the downstream sector of the Nigeria oil and gas industry. We incorporated the company in 1994 but essentially we started doing business in May 1997 and for the past 17 years we’ve been able to grow the company from a very modest beginning to what it is today; we own about 33 petrol stations spread across the nation from Lagos to Abuja, Asaba, Warri, Sapele, Enugu, Makurdi and other parts of the country. We own a 50-million capacity petroleum storage depot in Oghara in Delta State. We’re one of the major importers of petrol and diesel into this country, we also just completed another 40 million capacity storage in Calabar; we own a fleet of about 80 tank trucks with which we distribute petroleum products across the country and we also own about four ships with which we import petrol into this country.
Role in the value chain
Rainoil is represented in the entire value chain in the petroleum downstream sector; from shipping for importation of products to storage through our tank farm to distribution through the tank trucks to retailing the petroleum products through the petrol stations. And we currently employ a little above 650 people nationwide. We’re essentially an oil company; we live and breathe oil and all the things that revolve around it; shipping logistics which is distribution of petroleum products, our ships bring in petroleum products and our trucks distribute it, our tank farms store the products and our petrol stations sell the products.
Like any other company that has grown from the scratch, we’ve had problems with managing growth. Building a business in this part of the world is not entirely easy; you’re building the business and putting the structures in place to support the business but with God on our side we’ve been able to come this far.
Effect of drop in export of oil to USA
It didn’t have what I’ll say direct effect on our business. US didn’t buy oil from Nigeria because of the discovery of Shale oil which is directly competing with crude oil; don’t forget that we’re a downstream company. We don’t do crude oil, meaning we don’t do upstream, so Shale oil does not impact us directly. However, the discovery of Shale oil has affected the price of crude oil which now affected the price at which we now import petroleum products.
Working towards cushioning the effect
Typically business is very dynamic and change happens and the only constant thing in life is change; so as change happens you must adapt your policies and strategies to match the changing environment. And this is exactly what we are doing at the moment.
Putting up the new complex
It took us two years to put up the structure and at any point in time we always have one construction or the other going on. As we speak we’re building a petrol station down the road in Lekki here and we’re building another one in Keffi , Nasarawa State, we have another going on in Gboko, Benue State. Rainoil is a company that is growing and very dynamic. All these are ways we create more jobs within the economy to bridge the unemployment gap.
Devaluation of the naira and its effect on your business
The devaluation of the naira took us all by surprise and I can tell you this that anyone who imports petroleum products into this country has actually lost some good money within the last couple of weeks. We do largely Letter of Credit Transactions, LCT; we do an LCT to your foreign supplier and he allows you to ship the goods and allows you to bring it into Nigeria. You sell the product holding your naira waiting to now go and buy the dollar to pay your foreign supplier and then in between the CBN devalues the naira. So, for something that you would have just bought the dollar for N160 to a dollar you now have to pay N200 to a dollar. If you have a Letter of Credit of about $10 million, you would have needed N1.6 billion to liquidate that but now you’ll have to cough out N2 billion so you’ve taken a loss of N400 million. This is how it has affected all of us.
On Petroleum Industry Bill (PIB)
PIB as we all know is bogged down before the National Assembly because of politics. It will take a miracle for that bill to be passed before May 29, 2015. I can tell you the PIB is not going to be passed. We saw that a long time ago; vested interests have bogged down PIB at the National Assembly which is very unfortunate because it is a very good piece of legislation but it’s really sad that we’ve gotten to this point.
Rainoil in the next two decades
The future for Rainoil is very bright; our short term goal is to take this company to the Nigeria Stock Exchange; lease the company and diversify the ownership. The company has done very well in the last 17 years and I’m very optimistic that the next 17/18 years will be better than the past 17/18 years.