The Nation Newspaper

Tag: prudence

  • ‘Integrity, prudence foundation of our success’

    Morpol Engineering Services Limited Executive Director, Engineering, Felix Ayejunikanwa, in this interview with EMEKA UGWUANYI at the yearly sub-Saharan Africa oil and gas conference in Houston, Texas, United States explains how his firm is managing security challenges in its host communities in Niger Delta, among other issues.

    Could you give an insight into the operations of Morpol?

    Morpol is an engineering, procurement and construction (EPC) contractor or firm and we are into pipeline construction work, equipment erection and we build process plants. We have been in the market for sometime. Morpol will be 50 years old by June this year. But we went into engineering about 26 years ago. Morpol started as a stockist, doing buying and selling until the owners, based on advice, had a rethink on why buying and selling only, because they were making supplies to the Nigerian National Petroleum Corporation (NNPC).

    They heeded the advice and went into engineering, that was when they started bringing in some engineers. It is on record that since we started, we have not been awarded a job and it’s abandoned in the last 26 years. We have made a record in the industry in such a way that NNPC we started with, is promoting us everywhere, telling people about Morpol.The interesting thing to me also is the Shell project, we bidded for the job, Daewoo and Saipem bidded for the job too, among others. When the bids were opened and evaluated, they realised that our offer for the job was less than 50 per cent of the average price quoted by the foreign companies.

    You know Daewoo and Saipem are international companies, so they felt that we would not be able to do the job, saying we have come there to commit suicide and there is no way we would be able to do the job. But we moved in as a management team and started the planning and preparation, at the end of the day we delivered the job and got commendation from Shell that we delivered the job a year ahead of schedule.

    Secondly, Shell Vice President, Nigeria/Gabon, gave us meritorious performance award on the job. Thirdly, two of about 16 different host communities where we worked gave us commendation letters that they have not seen a company like this that is transparent, has integrity and is fair, and equally, we always see the communities as part of us. We sat with them and sincerely tell them what we have and that we would not be able to give them what we don’t have.  We told them we are Nigerian companies just like you but, we want to prove to foreign companies that Nigerian companies can do it, give us the cooperation.

    The government also supported us. Our professionalism, fairness, integrity and sincerity, among others, saw to our success. It was in the news that the Minister of State for Petroleum Resources said the government was able to save about $2billion by awarding contracts to Nigerian companies as against their foreign counterparts. We are part of that story. Imagine saving $2 billion, it’s not a joke. So, we continue to demonstrate our capacity that we can do what these foreign companies can do if not better. Any time EPC contracts are being discussed, we are there. Apart from Shell, we have other companies that we work for.

    You have proven to have the capacity but how do you cope with the challenges of accessing finance, which is a major problem to Nigerian firms?

    Everything has to do with planning. We don’t get to the farm before rolling our sleeves. We are proactive. We believe you have to plan well ahead. We are very conservative, in the sense that, we are quiet, moderate and we don’t waste money and don’t go for expensive lifestyle. Our office is moderate and we are not people that connect to buying private jets, among others.

    So, we have been working over the years and have been saving money. Apart from the money we have saved as a result of our conservative lifestyle, we have been banking with United Bank for Africa (UBA) for about 50 years. They have seen our reliability and integrity, so when we knock on their door, they open it for us in terms of funding. Currently, whatever we need comes from UBA, particularly. UBA has demonstrated the willingness to support us as a Nigerian company that has not defaulted for once, so this is another way of managin’g funds. Just last month, Shell called us for a forum where they brought in a number of Nigerian bankers and said they have a project of about $2 billion to be executed and would want to see how their contractors will not suffer funding difficulty. The idea is for all payments to be made through these participating banks whereby the banks could rely on this to provide funds to the contractors as very attractive interest rates. This is another way to help Nigerian companies that are interested. That is one way of funding. Also you know the type of job we do is based on milestones whereby you are paid by stages you do, so the cash flow is always flexible and we are comfortable with that.

    What are the challenges your firm and those in the same operational category face in the course of duty?

    The first is security. To work in Nigeria, and particularly in the Niger Delta, is a tough one security wise. But again, we believe that this approach of involving people (the host community), giving them sense of belonging is helping us, so call those people that could be a threat and sit with them on a roundtable and tell them we have come to work here and can only deliver with your permission. I can tell you we moved into Gbarain-Ubie for the project in May 2014 and and we didn’t lose a life and nobody was kidnapped. It was peaceful for us. So, security was a major issue but again we were able to manage it.

    Second one is the communities -agitation of the youths, among others, but we had community engagements – from the king or head of the community to the youths, we normally bring everybody to the table with patience, and that involvement also gave an edge over other companies in terms of having good community relations. I told you we got letters of commendation from two communities and they even wrote to the government that this is the company they would want to work in their area. So, that area of challenge, we have been able to manage it. In terms of manpower, we have a data bank of qualified Nigerians, who can do the job, so we don’t have challenge in that area.

    Of all the jobs Morpol has executed, which one stood out ?

    There are two projects I want to reference. One, of course, is the Gbarain-Ubie project because for us to get commendation letters and meritorious performance award from the Vice President of Shell, is not a joke, it doesn’t come easy. That is outstanding as far as our record is concerned. Secondly, we did the solid state polymerisation (SSP) project for Indorama Petrochemical Company in Port Harcourt. It is about 45 metres high installation. It is a PET plant, we did the erection of the plant for them completely. The ingenuity we deployed there is amazing.

    There, another project given to us by the Lagos State government’s Water Corporation, replacement of 48-inch pipeline on Carter Bridge. The pipe carries water from the mainland to the island. That project was initially built by Julius Berger when they were constructing the bridge, so the pipe was laid under the bridge hanged but it fell into the water. A number of companies were called to replace it. They called Julius Berger, but it rejected the offer because it didn’t have the time and eventually we took interest and they gave us the job. What we did with that job was in the news. We didn’t use barge, which sometimes is used to carry your cranes amongst other installation equipment. The technology we deployed in that job is amazing to everybody and the Group Managing Director of Lagos Water Corporation, Holloway, made a comment on that feat, which is a commendation again on what we have done.

    When will work start on Gbarain-ubie’s phase three project?

    We expect to sign the contract hopefully in July this year and construction will kick off after Engineering and Procurement phase of the the project. It will be a three-year project. Remember the previous one we did was delivered a year ahead of schedule.

  • Fed Govt urges accountants to ensure prudence

    Fed Govt urges accountants to ensure prudence

    The Federal Government has urged accountants to remain prudent and accountable in the discharge of their duties.

    President Muhammadu Buhari, who spoke yesterday at the opening of the 22nd Annual General Meeting (AGM) of the Association of National Accountants of Nigeria (ANAN) in Abuja, said accountants are the first set of gatekeepers and should ensure that all transactions are conducted prudently.

    “You are all witnesses to our government’s promises on diversifying the economic base of Nigeria, confronting the security challenges and dealing with corruption in all aspects of government businesses. In all these spheres, the role of accountants cannot be over-emphasised,’’ President Buhari, who was represented by the Accountant-General of the Federation, Ahmed Idris, said.

    He noted that the association’s choice of the theme: Sustainable  Economic Management in a Recession was timely and important.

    “To strengthen the fight against corruption, we launched the Whistle Blower Protection Policy and presented as Whistle Protection Bill 2016 to the National assembly in order to ensure and protect Nigerians for supporting this fight.

    “Also a firm implementation of the Treasury Single Account (TSA)  since September 2015 has significantly enhanced  transparency in the Federal Government’s  Public Financial Management System,’’ Buhari said.

    In the area of agriculture, the president explained that so far, 200,000 small holder famers, cultivating some 233,000 hectares of farmland in 29 states had benefitted from the Agricultural Anchor Borrowers’ Programme.  “We have revolutionised rice production to allow for nation self-sustenance and have impacted on fertiliser availability which eventually led to a sharp drop i the fertiliser price from N13,000 to N5,500 per 50 kg bag, ‘’ he said.

    Buhari, however, said  interestingly, power generation had peaked to an all-time high of 7,001 megawatts (Mw)in the third quarter of this year while aiming at 10,000Mw by year  2020.

    President of ANAN, Shehu Ladan praised the efforts of government in the management of recession through laudable programmes like the Economic Recovery and Growth Plan (ERGP), inauguration of the Nigerian Industrial Policy and Competitiveness Advisory Council to boost the manufacturing sector of the economy through the formulation of sectoral and industrial policies.

    In the area of revenue generation, Ladan advised that government as a matter of policy should ensure that all registered companies submit audited accounts. According to him, the revenue of such companies can be verified by auditors and taxes from such revenue can be more accurate.

    Ladan commended the government for creating the framework for prosecuting the war against corruption and institutionalising probity by the setting up of the Presidential Advisory Committee Against Corruption.

  • Oluwo hails Aregbesola’s govt for prudence

    Oluwo hails Aregbesola’s govt for prudence

    A first-class ruler in Osun State, the Oluwo of Iwo, Oba AbdulRasheed Adewale Akanbi, at the weekend described Governor Rauf Aregbesola as a blessing to the people.

    The Oluwo said Aregbesola had never disappointed the people of Osun State since assuming office.

    The monarch said most of the governor’s campaign promises to the people had been fulfilled to an extent.

    Oba Adewale spoke during his 50th birthday and second year anniversary on the throne.

    The monarch hailed Aregbesola’s sense of commitment to serve God and humanity by turning around the economic fortunes of Osun State, despite the challenges in the country.

    He praised the governor’s leadership style, saying he had not disappointed residents.

    Oba Adewale said the state under Aregbesola had mustered the will to rewrite the history of the state, as manifested in the progress and development the state has witnessed in the last seven years.

    He said: “I am neither a praise singer nor a sycophant. But to say the truth, the government in Osun, led by Ogbeni Rauf Aregbesola, has not disappointed us.

    “I have been following the evolution of events in his administration since I became the Oluwo …I am convinced of  the quality of his governance because I can see his legacy projects all around the state, not only in Iwo.

    “I have assessed his government and I have seen the quality of his prudence. Aregbesola is a leader par excellence. Aregbesola is a diligent and prudent manager of public resources.

    “I have tested him and I have seen in him an extreme commitment not only to turn Osun to a must-be-visited state by anyone desirous of good things but as a state that will be economically, socially and politically sustainable and self-reliant.

    “We all knew the status of our state prior to Aregbesola’s government and we also know the pace of development we have witnessed so far through the present administration. To me, these, among other things, are the testimony of good governance brought to the state.

  • Bailout: Amosun as study in prudence

    It was originally derived from the 14th century Old French word, “prudence.” That French word, in itself also derives from the Latin word, “prudential” meaning “foresight, sagacity.”

    Indeed, the word prudence is usually associated with wisdom, insight, and knowledge. Little wonder, therefore, that it was considered by the ancient Greeks and later on by Christian philosophers, most notably Thomas Aquinas, as “the cause, measure and form of all virtues.”

    In other words, prudence is the mother of all virtues. It also refers to the exercise of good judgment, informed by intelligence and good character. Prudence requires the consideration of long term choices and implications of decisions, and the avoidance of biases that make us focus on instant gratification.

    This, perhaps explain why, economists would describe a consumer as prudent if he or she saves more when faced with riskier future income. This additional saving is called precautionary saving.

    Judging from this premise therefore, one can then logically come to the conclusion that no other word can better describe the decision of the Ogun State Governor, Senator Ibikunle Amosun, to opt for a 10-year repayment schedule for the bailout fund provided to states of the federation by the federal government.

    Whereas the federal government had offered to the states a 20-year repayment schedule, Amosun, a chartered accountant and prudent manager of resources, chose to repay the bailout fund in 10 years.

    Of course, that decision placed Ogun State in a class of its own. Ogun State is the only state in the federation to choose that path. If Ogun State had played along with the 20-year repayment plan, the current monthly deductions from its allocations would have been reduced by an amount in excess of N400m.

    But that would have been a short-sighted decision. Governor Amosun, being prudent, knew that what was required of him is a consideration of long term choices in a manner that avoid biases that often make the average person to focus on short-term rewards while ignoring the long-term implications.

    So by choosing a 10-year repayment plan, the governor is in the long run saving the good people of Ogun State over N80bn in debt service costs that would have been incurred over the period of the loan.

    He is in fact not stopping there. The governor is also working very hard to ensure that he saves more for Ogun State by exercising the option of making lump sum repayments of the principal whenever the state has the capacity to do so. By so doing, Governor Amosun intends to fully repay the bailout loan before the end of his tenure of office.

    “We don’t intend to leave any debt to the administration that will succeed us. Despite the apparent squeeze that this incremental repayment places on our finances in the short-term, we think it is the best decision for the people of Ogun State to have a much lower cost of debt overall, allowing financial resources to instead be directed towards the further development of our state,” the Governor said.

    So, where is this confidence coming from in an era where resources are dwindling and some have started calling for a reduction of the national minimum wage?

    Well, the answer again, lies in the meaning of the word prudence. “We took this decision because we are confident that the efforts we have made to date to diversify our revenue sources and strengthen our Internally Generated Revenue (IGR) base will continue to bear fruit as we proceed through our second term.

    “Indeed it is the fruit of these efforts that has enabled Ogun State to continue to pay salaries and pensions as and when due, despite the notable reduction of funds from the federation account,” Governor Amosun said. This also explains why the Ogun State governor was able to pay the December 2015 salaries of all civil servants in Ogun State before Christmas Day and also paid 10 per cent bonus.

    The Senator Amosun-led administration has repeatedly made it clear that it is not considering a reduction of the minimum wage or staff retrenchment as a result of the dwindling federal allocation.

    And he sure has good reasons for this confidence. Even before the current economic downturn, Governor Amosun had been forward looking by embarking on efforts that led to a quantum leap in the IGR profile of the state.

    Moving forward, the governor is not relenting in his administration’s drive towards further raising IGR through the provision of services to the people. Ogun State has a multi-pronged strategy to drive its revenues and cover recurrent expenditure. For instance, the Governor Amosun administration has been hugely successful in attracting major industries to Ogun State and this has had the effect of creating jobs for the people and increasing government revenues from taxes.

    The governor has also repeatedly stated his administration’s resolve to make agricultural production and industrialisation, which is one of the five cardinal programmes of his administration, a major source of job creation and invariably a source of revenue for the government.

    With the advantage of proximity to Lagos, the biggest market in Nigeria; being the gateway to the rest of Nigeria as well as proximity to the markets of the West African sub-region, Ogun State in fact holds the potential of seeing its revenue base grow steadily over the years.

    This growth is even further guaranteed by prudent and effective management of resources which is one of the major hallmarks of the Governor Amosun-led administration.

    • Soyinka, is Senior Special Assistant, Media, to Governor Amosun. 

  • Time for prudence

    • States must be compelled to spend CBN grants wisely

    Finally, it is hoped that the economic meltdown afflicting more than two-thirds of the states in our country, and resulting in arrears of salaries and pensions for several months, has come to an end. The cheery news follows the release of grants promised by the Federal Government to the affected states. Following the sudden dip in the accruals from the Federation Account, arising partly from the mismanagement of the oil industry, especially by President Goodluck Jonathan’s administration, and the crash in international oil prices, many states fell behind in the payment of salaries and pensions.

    Now, President Muhammadu Buhari’s administration has fulfilled the second part of his intervention policy, made in the overall interest of the general welfare of the people, and we commend it for this. By this policy, the Federal Government has authorised the Central Bank of Nigeria (CBN) to pay about N338billion as long term loans to the affected states, to help them offset the huge debts owed to banks and as arrears of salaries to workers. While the propriety of the grant had raised a lot of debate, we consider it ennobling that the Federal Government has weighed in to save the deprived workers and pensioners. After all, the welfare of the people is a primary reason for government.

    Expectedly, the grants are rightly loans, to be paid back from the states’ allocations over a long period. We hope the Federal Government has put strict measures in place to ensure timely repayments. Also, states should realise that by the grants, their future generations are constrained to pay the salaries and pensions of the present generation. While that is worrisome enough, it will be a double tragedy if the states are allowed to mismanage the grants. Indeed, if there is a way for the Federal Government to ensure that the money is strictly used for the purpose it was granted, the better for the workers.

    We know that some states may argue against a direct disbursement of the loans to the workers by the Federal Government, on the grounds of federal principles, and they are right. But, such states also need to be reminded that by allowing their states to go near-bankrupt, and now lying at the mercy of the federal behemoth; they have also compromised the principle of federalism. For a lasting solution, we urge the states to demand for restructuring of the national economy in such a way that states become viable economic entities, instead of hangers-on, perennially in economic quagmire.

    To achieve such objective, our country must move away from an oil-dependent mono economy; and seek diversification of its wealth base. The current practice cannot also sustain the over- loated bureaucracy, both at the federal and state levels. As is common knowledge, the Federal Government is also in grave financial difficulty, even when it takes the lion’s share from the federation account. So, what is needed for a healthier federation is to embrace efficiency, accountability and diversification, in place of the recent opacity, criminal mismanagement, and over-centralised economy.

    The states must also brace up. No doubt, many of the governors have been complicit in the challenges facing their states. Many of them get involved in white elephant projects; some are also corrupt and reckless in the use of the state resources. Indeed, some of the governors run their states as fiefdoms, with over-bloated security votes and other self-serving expenditures. In the overall interest of the country, states must become economically more independent and prudent in the management of their resources.