L- R: COO, Ramesh Virwani ; Managing Director, Tunji Oyebanji and Company Secretary , Olumayowa Meseko, all from 11Plc ( formerly Mobil Oil Nigeria plc ) during a media chat at the Company’s terminal tour in Apapa, Lagos.
-Felix Douglas
…Assumes the status of one of Nigeria’s thriving downstream company
…Invests over $1 million dollars for lubricants
Despite challenges in Nigeria’s downstream industry, one of its long standing operators has positive story to tell about its successes across the value chain after many decades of operations.
11 Plc, (formerly Mobil Oil) has invested millions of dollars on its operating facilities in Apapa, Lagos. Prior to its new status, it was a subsidiary of ExxonMobil, a multinational oil company in Nigeria. On April 1st, 2017, ExxonMobil sold its 60 per cent share in Mobil Oil Nigeria Limited to Nigerian Independent Petroleum Company (NIPCO Plc).
However, 11Plc having a new owner has metamorphosed into a first class oil trading company after upgrading its facilities barely six years of acquisition.
Recently, journalists were conducted on a media tour round the company to see the massive investments and state-of-the-art facilities that have been installed on it. It was a delight to behold as virtually all value chains have been improved.
Obviously, the new investor in 11Plc saw the market potentials of the company’s products being a household name with a multinational, invested and improved productivity to meet market demands.
Addressing journalists after the media tour, Managing Director of 11Plc, Adetunji Oyebanji, revealed that the company has invested millions of dollars into the company which has brought tremendous improvement in all areas of its business.
“For lubricants, a lot of the storage and plants you saw did not exist. A lot of the machinery has been upgraded and improved upon. Basically, what I can say is like the heart transplant of a 60 year old to become a young person. That’s the analogy I can give as to what has happened with the company.”
“We have achieved significant improvements in volume and performance across all our various product lines.”
He added that 11Plc still has cordial relationship with ExxonMobil and continues to trade under the name Mobil based on agreement the company reached with it before exit hence the sole distributor of ExxonMobil lubricants in Nigeria. Mobil trademark is also used for sale of fuel products.
“What happened was that if a company is no longer interested in a particular geographical area or line of business, it could decide to quit and look for a new owner.
This is what has played itself out with this transaction since a new owner is very bullish about Nigeria and has therefore invested significantly in raising the profile of the company. So, expect it to continue to perform very strongly in the years to come.”
There may be policy changes, but the company believes with the investments made, it is well positioned to take advantage of whatever changes may arise with the new government in terms of changes in the economic environment.
Production of insecticide was part of Mobil line of business in the past, but the company has divested it before acquisition in 2017 because it was not comfortable with certain elements. It wasn’t a product line that could be continued, although willing to reconsider its production to the market, but the investment is not viable and justifiable given present circumstances.
11Plc has embarked on commendable level of investments positioning towards future progress.
According to Oyebanji, it has invested over $1 million dollars for lubricants while the gas plants cost more than N5 billion naira.
He stated further that the company has made a lot of investments in its packaging. Therefore, to counter adulteration, the company has a tamper proof seal which was introduced on its plastic lubricants available in all the bottles sold. For protection purpose, once it is opened, it cannot be fixed again. In the past, what people did was to open the cap or seal and put another product, but it has been modified in such a way that it is impossible to use. There’s also a seal on top of the cover. If it is opened, it will be difficult to counterfeit.
For products on the drums, there is a seal which has unique numbers. When the cap is put on top of the drums with a small chain, only the company has the special seal with a unique number. If somebody buys a drum product from 11Plc without the seal, it can be detected as a counterfeit product.
The company works closely with Standard Organization of Nigeria (SON) to discover unscrupulous elements involving in counterfeiting its products while punitive actions are taken with law enforcement agents to bring perpetrators to book. Customers are also educated to buy products from authorized distributors of the company or Mobil filling stations across the country to get genuine ones.
Workforce
In terms of workforce, 11Plc has about 300 staff. Some are contracted by service providers solely for operations within the company. It ensures that all labour requirements in terms of entitlements, pensions and all other benefits are given by the company. As part of improving human capacity, it continues to train its staff at various levels taking advantage of whatever training facilities are available in Nigeria.
It advocates for free market in line with what is obtainable in other industry, supporting deregulation of the downstream.
There has to be free market particularly for Premium Motor Spirit (PMS), where it has only one supplier with one grade that comes into the market, customers will have choice with liberalised pricing. The country will have a new government, in terms of policy there is hope it will embark on people’s friendly policies that will favour consumers since the country has been groping on subsidy for decades, the expectation is that its direction may be different from that of its predecessors.
Subsidy/Deregulation
On the issue of subsidy, the Federal Government has made its intention known that by June, it will cease to subsidise PMS hence Nigerians are keenly watching how it will play out. Oyebanji was of the view that business operators in any environment have no choice rather than adapting to whatever policies the government puts in place. For instance, many years ago there was no regulation as far as pricing is concerned because market determines prices. It was later the government determined prices, rates and margin earned on PMS sales.
As an oil trading company, 11Plc is able to adapt to any situation. Notwithstanding, if there is going be a change, the industry and country have to prepare for it. The philosophy of 11Plc is management of change. It means when there is a significant change in the company’s operations; it brings all stakeholders to deliberate about it in terms of enlightenment and trainings including risk assessment associated with change in policy. There has to be a checklist to carry stakeholders through.
“If indeed we are going to a new environment, there need to be a management of change and all stakeholders, particularly operators, the industry, need to be carried along.”
It should not be a unilateral decision. At present, there is only one supplier of PMS to the market. If the market is to be liberalised, planning process should have been at least three months in advance to make it effective because if Nigerian National Petroleum Company Limited (NNPCL), stops importation of PMS, there will be no product to sell. Any marketer that will import PMS should have the knowledge of how importation will be done because it involves planning considering the fact that it includes foreign exchange which is another key element that should be fine-tuned before deregulation.
Operators have critical role to play in deregulation which involves thorough planning otherwise it will fail.
Returns to Shareholders
In spite of challenges being experienced in the downstream industry which has affected some operators negatively, 11Plc is waxing stronger by the day.
Oyebanji pointed out that the company had relatively good year in 2022 but there is room for improvement. It made vital investments which yielded positive fruits for it. The level of investments of the company is a testament of what the outcome will be in terms of income hence it has positioned itself for the future.
“We have taken a positive view that no matter how tough and challenging the year has been. And no doubt it’s a very challenging year. For instance in lubricants, there is stiff competition and it is tough. Purchasing power has been affected by prices and inflation. The company has been able to hold its head above water, but there is no doubt that we are looking to see how we can improve in our performance in the years ahead.”
Lubricants/Gas
11Plc endeavours to keep its costs low irrespective of extraneous circumstances. It prides itself with high level of efficiency as it lubricants are well respected within the industry for quality with loyalty of customers who believe they can always buy good products from the company.
Apart from PMS and lubricants, the downstream company has invested in other energy related products such as solar, wind and gas which has volume of activities such as Liquefied Petroleum Gas (LPG) and Compressed Natural Gas (CNG). 11Plc has LPG filling plants in 19 of its service stations across the country with expansion. It is constructing two CNG plants, one in Ibadan and the other in Lagos. Its sister company NIPCo has seven CNG stations in Benin and over 5000 taxis have been converted to the use of CNG.
It is evaluating the possibility of introducing solar in some of its retail outlets.
Already the company after upgrading the production line for lubricants with over $1 million is controlling 20 percent of the lubricant market and has upgraded its aviation fuel storage facility to 21 million liters capacity. 11Plc supplies substantial aviation fuel to the market and has large volume of reserve of the product with huge investments to serve its customers.
Although proliferation of lubricants from various countries is having adverse effect on quality products since some customers cannot differentiate them but major players make top 5 in volume of sales.
Nigeria’s downstream maybe experiencing some challenges however, 11Plc successes give hope to operators of the sector which deals directly with the public that there is light at the dark end of the tunnel.
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