Jagal, a Nigerian conglomerate that operates energy businesses and manages a diverse portfolio of investments, is confident about the long-term prospects of the energy sector.
The Africa Report: You a regular partner for companies looking for local content support. To what extent has the 2010 local content act been key?
Maher Jarmakani: It was very important, but actually the local content bill in the energy sector was a natural progression of the way companies like ourselves have been investing over the past 15 years. Nigeria is capable of adding significant value internally. The Nigeria content bill was started off with 24 directives coming out of the Nigerian National Petroleum Corporation.
Rack Centre’s client list proves there are real opportunities in Africa in the data sector
They saw the value that it was adding, giving confidence to Nigerian companies and small and medium-sized enterprises aspiring to grow their industrial base. The bill becoming law is definitely something that added sustenance, but for Jagal – with or without the bill – we have built our businesses based on substance and performance.
Will the incoming administration push the Petroleum Industry Bill (PIB) through?
The indecision on the PIB has definitely affected investment because of a lack of clarity. It has been something on the horizon, and investment requires transparency and consistency of policy. Certainly, the lack of decisions and questions about what form that bill was going to take have affected the oil and gas industry. Some of the international oil companies (IOCs) have not waited for it – and that’s been shown by the likes of Shell and Total recently. With or without the PIB, we are still confident in the Nigerian oil and gas sector.
To what extent has the $50-barrel environment affected things?
Although affected by it in the short term, the energy sector as well as the government take long-term views. Of course, it is felt in the economy as key capex projects are postponed.
Why partner with international companies rather than go it alone?
Jagal operates a number of its own successful businesses. However, we have a long history of great partnerships where we have combined the synergies of Jagal and other operators to offer customers the best services for a particular industry. For example, Jagal and Subsea 7 came together to form Nigerstar 7, a world-class engineering, procurement, construction and installation (EPCI) joint venture focused on services for the oil and gas industry. In the supply of international oil and gas services, the major IOCs want to procure the same product and service they get in Nigeria as they do around the world. Under this relationship, we are able to offer customers in Nigeria the same service to the same world-class standards.
What about the ecosystem of companies who you subcontract to? Are you helping them gain skills?
In our business, having very strong contractors is key for delivering projects safely. We mentor them in areas where we see there are gaps. We find the long-term relationship in which we help them to improve on their safety standards and deliver with quality. That is actually an added benefit to us. We see that having a pool of professional contractors and service providers is key for Jagal.
Why the move into the data centre sector?
Our core business is in the energy sector, however Jagal has a number of strategic non-oil and gas investments focused on specific areas of opportunity where Jagal invests in value creation. Today, these include the technology, real estate, construction and health sectors.
The technology industry in Nigeria has had tremendous growth over the past 10 years and currently contributes over 8% to the gross domestic product of the country. Jagal has been looking at the technology sector for a number of years, and we believe this recent investment in data centre infrastructure is highly strategic for us. With Rack Centre, we are taking advantage of being a first-mover.
Our data centre business was commissioned in 2013. It was the first Tier III-certified data centre in West Africa, with an overall development capacity of over 8,000kW being phased over five years. Some of our clients include the major telcos, African banks, technology companies as well as leading corporates. It is proof that there are significant opportunities in technology in Africa and an investment we are very proud of.