HomeSocial EngineeringInterviewsSmall oil firms overburdened with taxes – Funmi Ogbue, CEO Zigma Ltd

Small oil firms overburdened with taxes – Funmi Ogbue, CEO Zigma Ltd


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Mrs Funmi Ogbue is best described as a ball juggler. She is a businesswoman, publisher, and an organizational change management expert. She is the Founder and Chief Executive Officer of Nigeria’s leading organizational support company, Jake Riley Oil and Gas services and procurement firm, Zigma Limited and President, Women in Energy Network (WIEN) as well as founder Support Our Troops, a foundation she established to promote citizen support for members of the military and their families.

Though she is a household name in the Nigerian oil and gas sector, the daring woman is never reluctant to break into new frontiers.

As the novel Coronavirus wrecks the economy of many nations, Ogbue has urged the government to support various local firms to minimize personnel layoffs.

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She has also called for strategic measures to ensure that small but thriving oil and gas companies currently groaning under heavy taxes are rescued and made to contribute to the development of the Nigerian economy.

Ogbue also said the time has come for the government to fully diversify the economy to insulate it from global crude oil volatilities.

In this interview, she speaks more about her firms and the oil and gas sector.

COVID-19 and the Nigerian economy
For manufacturers and other allied businesses, the disruption in the supply chain as a result of the coronavirus pandemic is already taking a toll on raw materials needed for production. But the impact of the spread of the virus on the global oil sector has been particularly severe.

Nigeria, a major exporter of crude oil, has been unfortunately caught in the midst of the unfolding consequences of COVID-19.

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So, the country has every cause to be concerned as the continuous drop in the price of crude oil would take a heavy toll on the nation’s economy because oil and gas account for over 90 per cent of Nigeria’s foreign exchange earnings and more than 60 per cent of its revenue.

India, Spain, Netherlands, France and many Asian countries including China who are major trade partners and buyers of Nigeria’s oil have recorded cases of the coronavirus and the disease has impacted negatively on their economies. Nigeria would lose billions from crude oil sales as prices continue to fall.

So, what should the government be doing at this time? I think it’s time to focus on the domestic use of our crude. We need to use the crude to provide electricity, gas for factories, cooking, cars, this will significantly boost our production capabilities and enable manufacturing. I think the government should also deregulate the downstream sector and relax the terms for deepwater development. We need to open up our economy to allow it to grow and meet the demands of its growing population. Investors should truly be welcome, and the government can focus on providing essential social services such as security, healthcare and let the private sector do what it does best.

Targeted tax incentives and social transfers at this time is critical to help people transition from a government-driven economy to a private sector-driven economy and to minimize the impact of COVID-19 on the most vulnerable businesses and citizens. I would like to encourage the government to support businesses at this time so they can minimise personnel lay off.

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The kind of government we operate in Nigeria is one of the most expensive. So, I expect political office holders across the three arms of government to lead by example by taking some pay cuts and doing away with expensive lifestyles.

Similarly, reducing the misuse of public finances through a commitment to transparency, opening up budgets, and strengthening anti-corruption institutions should be a priority during and post COVID-19.

Crude fading away
The world is said to be moving in the direction of alternative and clean energy and there are already predictions that with current trends in technology and environmental concerns, over the next 20 to 30 years, there will be significant energy transition from fossil fuels. Though I do think Africa should be given a “holiday” to allow us to develop our economies as the renewables are difficult to scale and commercialise to the kinds of quantities we require.

But make no mistake about it, despite the ravaging effects of the coronavirus and attendant impact on oil prices, the search for oil is still ongoing even though it has been slowed down by the twin impact of the virus and drop in price. The virus has forced companies to slow or halt physical operations, but this challenge has not stopped drilling activities. Companies are however re-negotiating rates of service companies.

If you have noticed, the trend in oil discovery continued into the year 2020, after 2019 proved to be a banner year for hydrocarbon discoveries.

Nigeria recently announced the discovery of one billion barrels of crude oil in the northeast region after a year of intense drilling.

Elsewhere in Africa and Europe discoveries were made. Recent finds were announced also in Latin America where newcomer Guyana has already announced a series of finds totalling some 1.8 billion barrels of crude.

With global oil discoveries at some 1.73 trillion barrels, according to BP’s Statistical Review of World Energy and annual oil production running at 94.7 million barrels per day, the world has enough oil for at least another half-century.

However, there have been several predictions that Nigeria’s future in the post-oil world looks rather bleak and the inability of the country to innovate as the world heads towards the post-oil economy could spell doom for her.

Therefore, for Nigeria to avoid this impending doom, the much talked about plans to diversify the economy away from oil must become realistic now.

Reduction in PMS price
I share the sentiments of others who have said that the Federal Government’s decision to reduce the pump price of petrol from N145 to N123.50 per litre is a welcome development and should be commended.

What the government has done is in line with current trends in the global oil and gas industry as most countries are beginning to reduce pump prices of gasoline.

However, I think this development has presented the government an excellent opportunity to end the petrol subsidy regime which costs the country billions of naira yearly.

The question on my mind is what happens when we are out of the coronavirus problem and oil prices begin to appreciate. Are we going to increase the price of petrol again?

If the government can stop fixing prices and remove the subsidy on PMS now that oil prices are low, Nigerians won’t even feel anything as they will adjust when crude prices go up. But if you do it when the price is high, the impact will be obvious on Nigerians and they will not buy the idea.

So, let the government seize the opportunity this crash in crude oil presents to do the needful.

There are two main challenges we as a business face. The first one is the low level of activity. Over the last four years, there has been a very low level of activity in the oil and gas industry in Nigeria because there are no major projects going on due to a combination of factors. The outlook was beginning to look up as NLNG T7 took FID and we were expecting Bonga SW to take FID however with the current oil price everything has slowed down again.

The second major challenge we face is the length of time it takes to run the procurement process in the sector. If you do complete the tender and you win it, It can take up to years to complete the delivery cycle and then you are paid at which point the cost of funds has eaten up all your margin.

We can’t survive very long with this situation and with the high level of investment required in the sector it’s a major disaster waiting to happen. We really hope government will look into providing some sort of relief so our businesses can survive. Many small indigenous oil, gas and service companies are already overburdened with many taxes.

I grew up in a military family with my family moving from one military barracks to the other all over Nigeria (Makurdi, Enugu, Kaduna, Zaria, Lagos and Ado-Ekiti) and in Alabama US and Aldershot UK whilst my military police father was serving in the Nigerian Army. I am the second child and first daughter of Rtd. Colonel Olusegun and the Late Alhaja Ajibade Oladeinde. I have four siblings: two brothers and two sisters.

I was educated by all arms of the military, I attended Army Children School, Airforce Primary school and Navy Secondary Schools. However, after my secondary education, I came into civilian life and the University of Lagos where I obtained a Bachelor of Science degree in Sociology between 1988 and1992.

Thereafter, I attended the University of Manchester for a Master of Science (M.Sc.) degree in Organisational Change and Development in 2005.

I have worked in the local and international landscape garnering experience largely in FMCG, International Development, Consulting, oil & gas and power industries.

Starting out in Banking as a youth corp member in Grindlays Merchant Bank, to a sales role in Waxtall Logo Mats, to my first job in the Oil Industry in Abacan Resources, a Canadian Oil Company, then on to Nexen (formerly known as Canadian Occidental Petroleum), to Shell Nigerian E&P, British American Tobacco Ghana and Nigeria, and Mercer Consulting in the UK. I started my entrepreneurial journey as Managing Partner of Ancorapoint then onto Jake Riley. We have done projects for UNDP in Liberia, NPHCDA, Abuja Investments, Abuja Transport, Abuja Markets, NNPC, OGFZA, NCDMB, SON, SEC, Ministry of Petroleum Resources, Ministry of Tourism, Ministry of Industry Trade and Investment and so on and so forth.

Foray into the oil and gas industry
As I mentioned earlier, my first job in the sector was with Abacan and we were the technical partner to Alfred James Petroleum, Amni Petroleum, Yinka Folawiyo Petroleum (YFP) and we made discoveries in commercial quantities and worked with these Nigerian companies to bring their assets into production. Those were good times in the sector. I started off as the PA to the MD Wade Cherwayko, a geologist and MD of Abacan, a genius at what he does and who I call till today the oracle of indigenous participation in the upstream sector; but I also reported to Tunde Folawiyo the MD of one YFP Petroleum who really was the one that brought the administrative and financial discipline required to grow a company. It was a wonderful combination. Wade was one of the early believers and worked very well to bring those blocks on stream. My self and an engineer were Abacan’s first employee’s in Nigeria and supported Wade and Tunde Folawiyo and really did everything that needed to be done to build Abacan by the time I left Abacan in 1998 for Nexen we were producing 50,000 bbls of oil per day.

In Nexen, I started off as a human resources analyst, then a budget and planning coordinator, and finally a new ventures analyst. Nexen was a much bigger Canadian company and I spent a lot of time in their UK and Canadian Operations. However, in Nigeria, it was a start-up and similar to Abacan I helped with setting up processes, systems, job descriptions, compensation and benefits philosophy and policies etc. We worked on several high-profile projects including the development of the Ejulebe Field on OML 109 (which was done in partnership with Prince Arthur Eze) and the giant Ukot discovery on OPL 222 (a partnership with Elf Petroleum). As New Ventures Analysts I led the team of Canadian experts to review the Niger Delta Basin to seek out partnership opportunities.

I left Nexen in 2001 for Shell Nigeria Exploration and Production Company Limited (SNEPCO), Lagos where I was first the competence development adviser and later the head of diversity, inclusivity and change management. In the latter role, I had the responsibility of working with the organisation to improve diversity targets which included Gender, Ethnicity etc i.e. one of the things we looked at, was diversity in the senior positions within Shell Nigeria.

I learnt a lot in Shell, I worked with Global teams, worked on Projects and on industry committees in Nigeria Association Petroleum Explorationists (NAPE), OPTS and others.

With decades of cumulative experience working with multinational organizations and associating with professionals in the sector, I felt it was time I put in those experiences to fill some gaps I thought were lacking in the sector.

So, I established Zigma Limited, an Engineering, Procurement, and Construction (EPC) and well services Company focused on Oil and Gas Services.

Vision for Zigma Limited and Jake Riley
In 2013, I established Jake Riley Limited to provide consulting services to public sector organisations in a bid to making them operate as efficiently as private sector organisations.

We aim to integrate and influence government agencies by helping them to develop their strategic plans, implement and adopt technology, make their processes more agile and generally improve their delivery to citizens. We provide technology, people and process services and have offices in London, Abuja, Port Harcourt and Lagos.

However in 2012, I decided to diversify and get involved in an operational company so I set up Zigma, initially focused on waste management and soil remediation because I was fascinated with the UNEP Report on the damage to the environment and I discovered that water treatment was such an issue. After four years of working and no projects, we added service lines and joined the long list of companies that compete on the Nigeria Petroleum Exchange (Nipex), and Ariba trading platforms.

To date, we have successfully executed projects for NPDC, Shell, Agip, IDSL, Napims, OGFZA, Total and we work with OEM’s and International Service Companies such as Korean S&W Corp, Valve Italia, Halliburton, Flo trend USA etc.

The company which began as an oil and gas service company has turned to a full-blown Exploration and Production (E&P) company positioned to take advantage of the current commercial and regulatory environment, operate in a lean and mean manner and extract value from all opportunities. Zigma recently acquired commercial interest in a small marginal field opportunity in Nigeria and has cautious appetite for bigger E&P opportunities.

Zigma is also a member of WE Connect International, Women President Organisation and has been selected as a member of Project 100, a Ministry of Petroleum Resources and NCDMB initiative.

I have always been one of the few women in the companies I have worked but didn’t really notice the difference or understand there were any issues with women getting to any height they wanted to get to till I went to work for SNEPCO and realised the sometimes unconscious bias that people have it made me more aware of but I also became more dogged and determined to break any barrier. I think it’s the way I was brought up. My parents didn’t stop me from climbing trees, riding bicycles, playout with the boys or doing anything I decided I wanted to do. I was never treated tenderly or sheltered as most people tend to treat the girl child and my opinion mattered growing up. I am also told I took after my dad who was quite headstrong, brave and audacious as opposed to my gentle and feminine mom. Therefore, I didn’t belong to feminine groups or felt there was any need for any affirmative action. I was quite comfortable in a man’s world and always felt I would win by competing and being quite good at whatever I was called to do. I always felt the reward for good work was more work and that was what I always focused on. However, in the last few years, my eyes have really opened to the fact there really were not enough women who are financially secure and in senior positions. For a reason, I joined WE Connect International, Women’s President Organisation and started to become a keen advocate to increase the participation of women in the industry. I also started to advocate for increased domestication of our crude resources so more gas to power, gas to liquid, petrochemical plants that will help to industrialise our country and increase the contribution of the industry to GDP.

So, together with Dr Ibilola Amao CEO/Principal Consultant Lonadek Inc. and Ms Patricia Simon-Hart CEO Aftrac Limited, we founded Women in Energy Network (WIEN) to provide a platform for women that work across the energy sector value chain; to network, develop, collaborate and advocate for increased women participation.

At WIEN, one of the causes that we are passionate about is “Closing the Nigerian Energy Gap” and our vision is to become the leading Women’s Association that advances women’s participation and leadership across the energy value chain.

Our mission includes but not limited to; helping women emerge as leaders in the field of energy, ensure they have the required capabilities to win projects, have access to funding opportunities and use the most technologically advanced methods in all that they do.

At WIEN, our key pillars of focus include but are not limited to the following: Spotlighting women-owned businesses and women in leadership and providing a pipeline through which women with capacity could earn leadership positions

As a prelude to the Breakfast Session and to celebrate the World International Women Day in a unique way, WIEN partnered with international NGOs Vital Voices and WEConnect International for a global mentoring walk.

WIEN is looking to champion more programmes devoted to networking and empowering women in the energy sector, mentoring young women professionals in energy, promoting STEM for young girls and strengthening women-owned SME’s in the energy sector.

Gender balance
It is common knowledge that the energy sector remains one of the least gender-diverse sectors and closing this gender gap will mean that we are using all our resources as a country to develop the industry. Keeping women to a minimum is like running on one leg and trying to win a marathon. Additionally, women can be quite easy to rely on because we don’t tend to have huge egos and we just want to help and see results. We also tend to be quite nurturing and good at multi-tasking.

We must not lose sight of the strategic roles women are playing in the energy value chain even though various studies suggest that the sector remains one of the least gender-diverse, with sparse female representation in technical and field roles. For instance, statistics show that women constitute less than 20% of the workforce in Nigeria’s oil and gas and even a smaller percentage in terms of women CEOs. There is no time for politics. We must utilise all our resources if we want to make it.

The women that are top of the industry have been outstanding women professionals and must be allowed to truly contribute and pull up other outstanding women. We truly have no other choice as a country.

Therefore, when the barriers that prevent women from having equal access to energy and economic opportunities are removed, significant productivity gains are unlocked. Additionally, women can transform the energy sector in their roles as energy entrepreneurs, innovators and decision-makers.

I think that integrating more women into all levels of the energy value chain will lead to more effective and efficient energy initiatives, have greater return on investments and expand opportunities in the sector.

There should be deliberate policies of government to encourage women content in the award of contract and tenders. If the many barriers to entry in the corporate market for women are removed, it broadens the space for job creation and community development.

Governments at all levels must promote women leadership in the energy sector by appointing more women as heads of agencies, parastatals and institutions at sectional, regional and international levels.

This interview was first published in The Sun courtesy Uche Usi

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