Guardian

Says Country Is Strategic To GE’s Global Operations

On the second day of the just-concluded 18th Nigeria Economic Summit (NES), President/CEO of General Electric Nigeria, Mr. Lazarus Angbazo, told MARCEL MBAMALU at the Transcorp Hilton, Abuja venue of the event that GE would support the development of 10,000 megawatts of incremental power through the provision of equity financing and development of expertise. Excerpts:

What does the NES mean to GE?

THE Nigeria Economic Summit Group is a very important institution in Nigeria that is focused on helping the government develop policies, develop roadmap for implementing those policies and working with similar global institutions like General Electric to provide the capacity, to provide the global experience that will help achieve the development goals that the country have set in general.

So, for us to participate with the NESG is an opportunity for us to demonstrate further commitment that we have in the country, which, as you know, is long-standing for decades.

In recent years, we have also re-emphasized and doubled our commitment in several different areas; in the power area, in healthcare, transportation and in building local capacity — local capacity, in terms of people, in terms of the supply chain, and in terms to the institutions — in Nigeria. So, partnering with the NESG is consistent with that long-term commitment that we have.

Some Nigerians are worried that some of the useful deliberations at the plenary and break-out sessions could be lost at the implementation stage since the NESG can only function as an independent advisory body; how far do you really think these decisions can go?

The country has been moving forward, it has made tremendous strides in economic growth; but there is still a long way to go. And whenever you have an institution, such as GE, partnering with the NESG, it is really an indication of the potential progress that we can achieve and drive even faster because we bring the know-how, we bring the experience and we bring the muscle and the wherewithal.

The NESG is now an influential organisation in Nigeria; so, to the extent that we are in alignment with the priorities and the capabilities, I think we help the country move forward even faster.  The idea though is to make sure that the growth is sustainable across cycles and is sustainable across different sectors of the economy. Support

Somehow, you have your footprints (contractually) in the country’s NIPP, the power sector. What major constraints do you really see in the project?

GE has a very large footprint in Nigeria’s power sector, and we have continued to build on that footprint, which goes beyond the installed base, the equipment; we are now building additional capacity in terms of services, in terms of human capital, in terms of training. So, we are committed to continuing to develop that sector.

On top of that, as I indicated to you, we will continue to support additional/incremental capacity.

Apart from providing the development expertise, we are also providing the funding for IPP developers where necessary, including funding and technical support to winners of the privatised sectors. That unshakable commitment and continues to grow strong.

With respect to the NIPP, I have to commend the government for sustaining that project and moving it forward. You have to remember that, at one point, that project was the biggest single power project development around the world with about 10 power plants at one time.

So, it was a major undertaking; and, over the few years, I have seen the NIPP leadership team work extremely hard.

I am very supportive of what they have done; I think they have done an excellent job in terms of overcoming the hurdles.

When you are thinking about a complex project like that, you’ve got to give them the benefit of the doubt. They have made tremendous progress; a number of those power plants are completed, in terms of building the power plant itself.

I think the challenge a number of them face is connection to the gas pipeline as well as connection to the transmission and evacuation grid.

The position of GE from the point of view of technology and the point of view of service, we are there to support the NIPP all the way and we will continue to partner with them as much as possible.

The project, I mean the IPPs, were seen to be progressing until the sudden halt by a successor regime, which felt that the process was not transparent enough, only to return to the programme after substantial tempo had been lost. Do you think the country could have done better on the project if there was continuity?

Well, let me put it this way: I think the project has moved forward since then; what is history is history. I really have no insight as to what the policy of the government of that day was all about.

But I can tell you that same government subsequently reversed course and fully funded the NIPP project and the project has moved forward and the government of his Excellency, President Jonathan, has sustained the efforts in completion of those projects and I commend the leadership of NIPP for driving that as far and as hard as they have been able to do.

A number of those power turbines are installed; and, as I said, if gas were available, if the transmission grid were available, you would have a lot of those already delivering megawatts to the grid.

But, even in the gas pipeline issue, just yesterday (on Monday), a presentation was made about the tremendous progress that the gas aggregation supply company is making in laying out the additional pipeline needed to deliver that gas for power against other competing requirement of industries, cement factories who also need the same supply of gas.

So, the demand for gas in Nigeria is growing at such an exponential rate that the supply from source is still not able to meet that demand.

Even though Nigeria is one of the top five, top six gas countries in the world, the issue is the physical infrastructure to transport the gas after collecting and processing it and transmitting it to the end user (end user being the plant, a manufacturing plant, a cement plant or some other application).

Is the country doing enough to develop the required gas infrastructure to fully utilise this huge gas potential?

Well, for a developing country as we are, it will never be enough. We are a very big country, about 170 million people. Even, with the six percent GDP growth, there is still a lot of Nigerians that are unemployed and if the power was available, a lot of the factories that are shut down right now, would have been operational. And if those factories are operational, it means jobs for the over 40 million Nigerians that are without jobs.

So, while I want to commend the government for sustaining efforts in building and laying out the infrastructure for both the gas and the power, there is still a lot to be done, and they (government) will be the first ones to admit to it.

What are your thoughts on power targets?

Well, the need of the country, as articulated by the government, is 40, 000 megawatts in the next 10 to 20 years. Today, the amount of power that is connected to the grid is about 10, 000 megawatts.

What is reliably available is about 4, 000 megawatts and, even within the 4, 000 megawatts, there is significant periods of outages.

So, the answer to your question is very simple, yes, more could be done faster and I think that the commitment that the president has shown, in terms of declaring power as his number one agenda, speak for itself. I think the President has been quoted as saying, “as far as the economy is concerned, no power, no future.” So, it is central to his economic development.

What major (future) role for GE in, not just the power sector but also in the reform process, including the privatization efforts of government; how more visible are you likely going to be?

I think GE is playing a tremendously huge positive role in the power sector, it may not be visible some people; but, in terms of the backbone of the installed base of the power generating aspect in Nigeria, it is 70 percent GE. And for us to even keep those things running, it requires GE service, GE engineers to maintain them.

Of the 40, 000 additional power that the government said they need, what GE has done in terms of the MOU that we signed (never in any other country or in no other country in Africa or for that matter, in any country of the world) was a commitment by GE that we would support the development of 10, 000 incremental power; and we would do it by providing equity financing for   some of the projects that are eligible, and we would also do it with development of expertise. So, two things: development of expertise, financial support towards the development of the human capital needed to truly sustain the completion of the project.

So, I can’t think of another organisation in the power business or in the infrastructure business that has such a strong installed base of commitment but also the commitment that we have made in terms of continuing to develop the sector.

With the kind of support you are talking about, are you going to work directly with the new managers of the privatized generation and distribution plants; could you just give the picture of how this partnership will work?

Under the terms of the MOU, licensee for the Greenfield projects, the IPP projects that are eligible, we would work with them to provide that support that I talked about directly.

Would they be under an obligation to work with you?

They are not under any obligation; that’s why I said eligible and mutually acceptable. The project has to be eligible to us and our partnership model has to be acceptable to them. So, that is our commitment; and within that commitment, because we are creating additional capacity to the system, the government said that we would support that commitment by putting our own skin in the game. If GE puts equity, government will also put equity, with most of the equity coming from the private owner.

The private owner, being the unbundled company?

No. I’m talking about the Greenfield projects. Now, for the unbundled companies, those that have been totally sold to private owners; these are existing assets, and their priority is to make sure that these assets are operating at higher capacity and where those assets are GE equipment, we will work with the new owners to provide the capacity to actually service those equipment, restore them to the levels of performance and where there is also the capacity to expand production, we will support them as well, one-on-one directly on a private commercial basis.

And again to the point of your earlier question, there is no obligation either on our side or on their side; it is purely on the commercial viability of the project.

We haven’t actually looked into the Nigerian market with the GE?

It is the most strategic country in Africa for us. I can give you evidence of that; we have a country-to-company agreement with the government of Nigeria, which is an agreement that enables us to collaborate very actively, not just to sell a piece of equipment and walk away but to work from conception all the way to commissioning and service and maintenance. We have only four of those agreements all over the world; one in Africa, and that is Nigeria.

Number two, we are making a commitment, when GE is making a commitment to help develop/generate 10,000 megawatts of power in Nigeria, no other country – that speaks of the strategic nature of this market. We are hiring a lot of Nigerians right now.

This year alone, we hired an additional 100 people; we are using Nigeria as a regional hub for service and training and skills transfer.

We are using Nigerian engineers for export purposes to other countries; so, we support GE businesses in other countries in Africa using Nigerian engineers.  So, Nigeria is strategic to GE in a lot of ways, and we have made it abundantly clear; our chairman has been here; our senior leadership has invested a lot of their personal time in cultivating those relationships, and we will continue to do that.

What’s your take on the debate over the PIB?

One, our thought is that we understand the aspiration of the government of Nigeria for the people of Nigeria. We share those aspirations, the high aspirations of Nigerians; as it is with every other sector; we are very supportive of it for the Nigerian aspirations.

There may be elements of the PIB that we don’t necessary agree with, as is the case with many other people; but our commitment is that we are here and we are going to work with Nigerians.

We are going to work with our partners and support them in the oil and gas industry, to make sure that however the PIB comes out, we will be there to support that industry.

As you know, GE is not primarily an oil and gas company, but it is an energy servicing company in terms of providing the support and services and every other thing.

We do encourage the government of Nigeria to complete the reform of the petroleum industry in a way that encourages investment in the country, because the more there are investments in Nigeria, the more there is job creation, the more that we are able to do more in this country.

So, we understand the aspiration; we also understand the concerns that IOCs and oil companies have; our commitment with both sides is that we are here to work with all and to make sure that, in the end, it is a win-win situation for everybody.

Your corporate social responsibility…

GE believes in the future of this country; we share in the aspirations of this country and we are continuing to increase our investment. There is no going back, in terms of the long-term agenda. And we look at Nigeria as the platform for going into the sub-Saharan Africa in a much bigger way. We deeply appreciate the support that we receive from the government across board — from the government of President Goodluck Jonathan to the state government and private sector partners that we have.

We have got over 100 customers in both the public and private sectors; when you have 100 business-to-business customers in a country like Nigeria, you know you are doing something really good.