He comes across, unassuming, gentle, soft spoken, but you will be mistaken if you think that is all there is to the man. Beneath that gentle look, lies a burning desire to dominate his operating space. A thinker, an innovator and disrupter. He crept on his competitors and before they realised it, he had displaced them to reach the commanding heights of competition with his unique service offerings. The next level according to him is to disrupt his own offerings with even more innovation and dexterity. Enter the world of work of Mr. Peter Mbah, Chief Executive Officer of Pinnacle Oil and Gas. He was recently elected the Peoples Democratic Party (PDP) governorship candidate for Enugu State. He has a long track record of entrepreneurship and his experience cuts across various sectors and activities including, import trade, oil and gas sales and distribution, and maritime logistics. He also has his footprints on the sands of public service, having served as the Chief of Staff to the Enugu State Governor and Commissioner for Finance and Economic Development of the Enugu State government in the past. In this interview with THISDAY, Mbah speaks about how his company started off as a tiny organisation in a one-bedroom studio apartment to becoming an industry leader with 23 per cent market share. He also stresses the need for the federal government to fully implement the Petroleum Industry Act so that the country can reap its expected benefits. Excerpts:
Tell us how Pinnacle Oil & Gas Limited started off as a company?
Pinnacle commenced operations in 2008 and we started off in a one-bedroom studio apartment somewhere on Ahmed Onibudo Street (where used to be known as Princess Court) on Victoria Island, Lagos. It is a block of studio apartment. So, we took a space there. I started it off with about two other guys -one was my secretary and the other was my dispatch man. That was essentially how we started and what we did was largely the buying and selling of petroleum products. We bought and sold products from the terminals and we also got involved in looking at the movement of the market onscreen. In summary, we started from that humble background, what you could describe as zero-base and of no reckoning. But we also knew that we weren’t just another oil business firm. We were clear from the outset, even from that humble beginning. We made our mission clear; which was to distribute petroleum products at a price that is unbeatable in the market, and then, we also envisioned that we were going to play a dominant role in the petroleum products market in Nigeria. In the course of growth, the only thing that changed was that we moved the word ‘Nigeria’ to Africa. It got to a point where we felt that the Nigerian market was not going to be our limit, we started looking at the entire continent as to play a dominant role.
That means from that your small corner, you already had a dream to dominate?
Absolutely! And that again became largely the driver of a lot of decisions we made. We knew that this market – the downstream oil and gas industry – was a matured market and we already had dominant players. The market was already distributed. The big players had already captured their shares in the market. The question then for us was: how do you become a dominant player in an already matured market? If you were dealing with an evolving market, a nascent market, it’s easier because everybody is struggling for a market size and companies are trying to capture different segments of the market. But that wasn’t where we were. We were in a space that companies had already taken their positions and had captured their various sizes. So, we knew that growing incrementally was not the option. We knew we needed to come up with a disruptive idea that would help us displace some of the dominant players and take that dominant position that we had envisioned.
What we did was to look at the compelling business problems that existed. We observed that those problems, those challenges existed in the operations space. We observed that the industry relied a lot on multiple handlings of cargoes before they get to the end-user, and we felt because of the cost intensity of those multiple handlings, made it largely inefficient. I mean in terms of cost and also time. And so, we felt that the sub-optimisation needed to be disrupted which was how we came up with this idea of eliminating those multiple handlings by creating what is known as an offshore intake facility, or if you will, what is also described as an SPM and CBM. SPM is a Single Point Mooring system and the CBM is a Conventional Buoy Mooring system. The best way to describe them is like an open seaport – a port in the middle of the sea. So, just like you have ports for dry cargo by the shore, the difference with this is that we had to do a subsea pipeline of about 40km network of pipelines.
It is subsea, so it’s beneath the seabed. We did that and have what is also known as a pipeline end manifold that sits on the bottom of a sea – where you tie in the pipes that connect to your terminal from the shore, and then you connect your hoses that would hook up to the manifold of the vessel on the same pipeline end manifold sitting on the seabed.
These are complex engineering that require a whole lot of data and survey in order for you to even commence the design. But we knew that this was radically going to change the face of the industry. It was going to be a major changer. So, it took our attention away from those huge trading that our colleagues were doing at the time because we knew that ultimately, it was going to be a quantum leap once we got it right. So, we persevered, we carried on. To cut a long story short, by March last year, we operationalised one of the mooring facilities – the CBM. That became operational in March 2021, and by September, what we had envisioned became a reality.
We became the market leader by market share and also by volume. We were able to launch this facility that allows us to turn around what typically takes the industry 30 days (the volume that a typical marketer will require 30 days to do), is what we can do in three days. The reason is that those large tankers that normally have to come with shuttle vessels to light at the mother ship, could easily moor at our facility in the open sea, discharge from that point to our terminal. And we have also constructed the largest storage facility in the country. We started with a 300 million litres capacity which is poised to be increased to over a billion litres. That design is already done, the approval got, we are just in the process of implementation now.
How long did it take from the time you envisioned dominance to actualising and achieving it? So, looking back at when you took that decision to getting the mooring facilities in place, you must be delighted that you took that decision?
Yes, we are excited, and I think that we are just at that position any company would love to be in its industry. Because we are not a company that is basically in a bandwagon kind of thing, where people are already in, you have everybody doing the same thing. At some point, what was fashionable was people trading, going of course, to increase their retail footprint and doing trading, which is on its own not bad. But again, it’s a function of what role you want to play in your industry. If what you wanted was to grow incrementally and to just keep growth rate at maybe, five or six per cent, which is on its own, a beautiful growth rate by any standard, you will be fine. Increasing your retail footprint might be a good strategy for you. However, if your corporate objective is to play a dominant role and that’s your long-term goal, then you must begin to craft strategies that would enable you play that dominant role. Except you only want to pay lip-service to that thing you have envisioned.
If you truly want to become the dominant player, that means you want to be the market leader. Your whole strategy would be geared towards ways that you can employ to get to that destination. And that was what we felt at the time, that incremental growth was not the way for us, that we needed that quantum leap, that exponential growth and what could bring it to bear was disruptive innovation: doing things completely different and not doing it in a conventional way. So what we did was largely a disruptive innovation, which enabled us to capture the market share.
What is your market share today, and what were the cost elements of this disruptive innovation – the entire mooring project that catapulted you to this dominant position?
Well, in terms of cost, there are a whole lot of things that you have to consider, but in terms of the project size and what we had envisioned it was going to cost in our budget, it’s about a billion dollars. We knew this was going to cost a billion dollars when we started, to be able to realise this full size of project. So, it wasn’t also just spending a billion or more dollars to do this project, it’s also the sheer time it took, the number of regulatory approvals you have to obtain, the data, the surveys you have to do.
We got our first concession in 2011, and I told you we started operation in March 2021. That is clear 10 years from when we got the concession from the Lekki Free Zone to do the SPM. Because the SPM is an offshore Port, it goes beyond a ministerial approval. You have to escalate to the Federal Executive Council. So, you need to obtain a presidential approval for the facility sitting offshore in the sea, you have to obtain presidential approval for the Pipeline Right of Way, because you are saying that, that Right of Way in the sea is owned exclusively by Pinnacle and it’s all recognised by the navigational authority that vessels cannot come there because it’s exclusively owned by Pinnacle.
And indeed, 500 metres from our right of way is also within our exclusive zone. So, there will be notice issued to mariners that this space in the sea belongs to Pinnacle and of course, vessels in the navigational chart will clearly see it. So, it requires a whole lot of regulatory approvals to get to this point. And again, because things that you do offshore are weather sensitive, you have to be careful about what time of the year you are doing your installation because of the weather downtime. It’s sensitive to a lot of things unlike the installations you do onshore. This is offshore, so the weather plays a lot of role.
On the market share, we currently have 23 per cent of the market share and we believe that, that is a good market share. We also see ourselves increasing that, because we have just done the first phase of this project. We are continuing with the second phase.
Do you have any competitor in this country regarding this facility you just described for us?
No, we don’t have any marketer in our space that has a terminal that can take a vessel size of 150,000 tons or a vessel size of 90,000 tons without lightering. We have two mooring facilities. One is sitting at a water depth of 17 metres. The other is sitting at a water depth of 23 metres. That is as deep as you can get. Imagine that, deep seaports, their Draft is usually 14.5 or 15 metres. If you have a deep seaport with 12 metres, it’s still significant. But we are talking about a port of 17 metres and 23 metres respectively. So you can take all sorts of vessels. You can bring in your Suez Max, your LR2 (Long-range 2), your LR1 (Long-range 1) Vessels. They can all berth there without worries.
You have a market share of 23 per cent. Can you tell us the market share of your nearest competitor for the sake of comparison?
I think, again, the market share we enjoy today is largely because of the efficiency of our terminal. What that means is that our turnaround time is much lower, much reduced than our competitors. As I mentioned earlier, what will typically take the market 30 days to turn around, takes us three days. So, I think, the closest competitor is perhaps, five per cent. So, we have a considerable market share, and we are not really resting on our oars. We believe that there is still room for improvement as we want to continue to improve what we have on ground.
Talking about room for improvement and growth, you know, innovation and expansion are endless things for any corporate organisation. What is your medium to long-term plan to ensure that you either maintain your market share or increase it?
Well, I think, the best way to describe our management behaviour is to describe us as a company that has a management structure and a management team that is ambidextrous. We have a strategy that is called ‘exploit and explore’. We continue to exploit the space we are in, continue to incrementally improve on the value that we created and the services that we are providing. But in addition to that, we will also continue to look at ways that we can disrupt our own self, create new things, that’s the exploration part. So, we are ambidextrous by behaviour. If there is someone that is going to disrupt this market in future, it will still be Pinnacle disrupting our current service provision. So, we are not just relying on the fact that we are dominant players, we are number one. But we are looking at other ways we can even disrupt what we have just created, and as we do that, the reason I talked about ambidexterity is that we are also deepening the depth of what we are doing – those incremental improvements that we need to do even in the current value proposition that we have. That is still ongoing.
But how did the name ‘Pinnacle’, come about?
It’s not by accident, I have to confess. When we were tinkering with names, what struck us was what role did we want to play in the space we were going into? And it became clear that we wanted to be the leader, and we started looking for a word that captures the height of your industry. That was how I was struck by the word, ‘pinnacle’. We conducted a search, it was available and we went for it. But first of all, it was where we wanted to be that led us to the name, pinnacle.
Is there any benefit the Petroleum Industry Act (PIA) has brought to your expansion drive? And again, are there government policies you want to see to support your business?
If the PIA had been implemented as it was envisaged (you know that the PIA came into operation in August last year) and it was envisaged that six months after coming into operation, we are going to have the downstream market deregulated, there will be no more price control. That was what the PIA prescribed. But you know that, that portion of the PIA has been suspended because as you and I know, the market is still regulated and it is still price-controlled. We had hoped that the market will be deregulated because we have created this value. Are we fully capturing the value we have created? The answer is no. The reason is because we are playing in a regulated environment where your prices are controlled. If the market was liberated, we would have been able to feel the actual cost the value we have created is and charge the market for that. But because we don’t have a liberated market, we are still operating as a regulated market. So, we think that once the market is fully liberated, it will enhance our earning potential, it will enhance the full capturing of the value we have created. We look forward to the full implementation of the PIA.
Nigeria’s refining capacity has been projected to hit 1.4 million barrels per day in the next couple of years, with this projection hinged on the completion and coming on stream of ongoing refinery projects. If this happens, how will it impact the petroleum marketing business in the country?
The infrastructure we are providing is not a substitute for refineries, it’s actually a complement to refineries. Refineries will see them as complementary assets. We look forward to increase in refining capacity because the more availability of products we have locally, the better use or need for our facilities. What we do have is the infrastructure that refineries need to evacuate and to store. So, we are not in competition with refineries. We will actually at some point work with them closely. So the assets are complementary, it’s not the other way round because our facility has bidirectional capability: you can import and you can export. You can receive products from vessels and you can also load back products to vessels. So, it has bidirectional capability. It’s also a resilient infrastructure.
How is the current Russia-Ukraine war affecting the importation of petroleum products into the country? Also, what is your take on the issue of energy transition?
First, on the Russia-Ukraine war, obviously, you noticed that the price of crude has hit the roof and the products that we market are derivatives of crude. What it means is that the commodity price right now is at its peak, it’s really high. That’s the way it impacts the sector. So, you now need a lot more capital outlay to import, like the deregulated products – the Automotive Gas Oil (diesel) which is not within the purview of the regulated products. But of course, you know, gasoline which is popularly known as Premium Motor Spirit (PMS) or petrol, is regulated. So, for us as marketers in Nigeria, we are not impacted one way or the other, but as a country, yes, you noticed that the money that the government is paying on subsidy has kind of ballooned. The reason is because of the high cost of the commodity in the international market. So, the gap between your landing cost and what the regulated price is today has widened, it’s growing bigger.
If your landing cost was at N300 per litre when the market was stable, you will notice that the pump price today is at N162 per litre. So, what the government will be paying as subsidy will be the difference between N300 and N162. But if your landing cost today is N600, based on what the crude oil price is doing, what that means is that what the government is paying today as subsidy is the difference between N162 and the N600. Whereas it hasn’t impacted the market because the market is regulated, as a country, we are bleeding because of the huge burden on the economy. You notice also that the president went back to the National Assembly to ask for additional N2.4 trillion to be able to cushion the effect of subsidy. That’s with respect to the Russia-Ukraine effect on the market.
And then you talked about energy transition. We really do have major challenge here in Nigeria in even getting access to energy. I think the first thing for us is to even have access to energy before we begin to talk about transition because we don’t have enough electricity, we don’t have enough oil, we don’t have enough gas. So, whatever energy source you are dealing with here, we still don’t have sufficient access. It is when we have enough access to energy that we could then begin to be selective as to whether it’s clean, whether the level of carbon emission each energy source that we are deploying is small or big. But the challenge is still enormous. We are still struggling to even have access, and I think that, we will get to that point when we would have had access and we can begin to say, let’s be selective, let’s be sensitive. So, access is still a major challenge.
You are running a very successful business by all indications and you are playing a dominant role in your industry. Why did you choose to go into politics?
Thank you for that question, and I get to provide an answer to this always. Just as you have pointed out, I guess anybody in my shoes today would truly wish he continues to do what they are doing. Because you wake up in the morning and you are looking forward to coming to your office because you are in an industry where you matter, where mentioning your name kind of means a lot to your competitors. And I think that is the delight of any CEO playing in a space where you are relevant and not just being relevant but where you have taken the number one position. So, to see that you are leaving all that to go into the uncharted waters or if you will, the murky waters of politics, you must have something driving you. And maybe, I should share some of those drivers. I’m largely driven by transcendent values.
I have interest in making sure that the life that I live, the decisions that I make, things that I do affect others, not necessarily self. So, my decision to go into politics in my home state or to go and serve my people in my home state is driven exclusively by service. And that service is beyond self, it is beyond Peter Mbah. It’s about several millions of people that we have, to ensure that we make decisions that will impact positively on them. So, I’m hoping that with the indication I have received, having been nominated by my party as the standard-bearer, I hope that the people of my state will also elect me in next year’s general election to serve them, and we can then offer our humble service to them.
What is that vision you have for Enugu?
My vision is clear. I envision an Enugu State that is going to become one of the top three states in the country in terms of Gross Domestic Product (GDP). I also envision an Enugu State that we will achieve a zero per cent rate in our poverty headcount index. What that really means is that we currently have a GDP size of $4.4 billion, and if we are going to be one of the top three states in the country, it means we have to grow our GDP at a minimum of $30 billion. I’m sure you would also think it’s crazy.
But before you jump into conclusion, what will give credence to what I’m saying, that I’m not just making a loose speech, is what I did in the private sector. When I came in, I recall, on one of our strategy retreat sessions, where we brought in some resource people to train us on strategy. We expressed to them how we wanted to grow our revenue then, from N29 billion to N600 billion annually, and they thought it was mad, that it was only crazy people that could imagine such a thing, because you don’t grow at that rate. If you did a 10 per cent growth rate, you are a first star company.
But growing from N29 billion to N600 billion is like growing at more than 150 per cent per annum. We did that. Today, we have beaten that number. We are not even at N600 billion; we are well above that. So, what I say to people is, before we jump into conclusion as to whether it’s possible to grow the Enugu economy from $4.4 billion to $30 billion, you have to look at what we have done in the private sector to give credence to what we are saying. It will require not incremental growth as I said, but will require taking disruptive decisions, doing things that are creative, making Enugu State the preferred destination for investors, for businesses, for living and also for tourism. Whatever we are going to do in Enugu State will be world-class, whether it’s the enablers, the pillars of our development, the education we provide, will be world-class, the healthcare services will be world-class. And we know that some of the things we have to enable in order for investors and businesses to be attracted to Enugu is the ease of doing business. And because I have been an investor myself, I have invested hugely in Lagos State as you can see from what we built, I know where the pains are for investors.
So, I know those things to enable so that investors will rush and be queuing to come to Enugu State, whether it’s the ease of obtaining your construction permit, the ease of obtaining your registration of property, the ease of enforcement of contracts, the ease of setting up business and also the subunits from a government philosophy point of view. We also intend to be transparent to make sure that people have access to information about what we are doing. So, we are committed to making sure that our budget is known, our budget is monitored, not just by government agencies but also, we will bring in the non-governmental agencies and organisations into it so that we are not acting like an Island. We are an integral part of the society, we will make sure that the people know and understand what the government is doing.
How do you intend to unlock the huge natural resources in Enugu State that are untapped?
I’m glad you pointed that out. Enugu, unknown to most people has huge mineral resources. We have huge limestone deposit of commercial quantity, we have gladstone, gemstones, alum, we have clean coal. So we have huge resources. We also have oil fields. A lot of people don’t know that. Currently, we have oil fields that are exclusively owned by Enugu and we have the ones that have lateral formation that are owned by Enugu and other states. So our aim will also be to get that part of our economy activated.
Now that you have ventured into politics which you know is different from the private sector, you have to deal with a whole lot, the lawmakers, the vested interests and all of that, are you prepared to face those vested interests?
I don’t think they are radically different because even as a CEO, I also have to manage my board. I also have to make sure that we practice effective corporate governance and in doing that, it’s also my ability to sell my project to my board to be able to negotiate with them, convince my board members why this is good for the company. So, to that end, I don’t think they are radically different. You will need engaging, getting the people, the other institutions of government that you need to carry along, making sure they understand what your priorities are and ensure that you guys work as a team. So there will be collaborative effort, reaching out to those other arms of government that you need to work with in order for us to achieve our common goals.
How do you intend to sustain the peace that Enugu State is having, considering the current insecurity in the South-east and you know security is key consideration for any investment?
I think it’s important to point out that this current administration has achieved a lot, not just in terms of peace and safety of Ndi Enugu. If you look at it in terms of the new infrastructure that this current administration has done and indeed the maintenance of the existing facilities, you notice that it is something that you will be wondering how are they able to achieve that with the paucity of fund we have today in the country, particularly receipts from the Federal Account Allocation Committee (FAAC). But you also notice that these things are happening on account of prudent and creative management of our resources. You notice that Enugu is one of the few states in the country that discharge their obligations to the teeming workers you have in their states.
And we do not only do that but it’s timely and in full. It is not common. In fact, by the 25th of every month, workers in the state get their salaries, no matter what. This current administration has zero tolerance for delay of Enugu staff salaries. They have discharged that obligation creditably. Again, the security we enjoy in Enugu State today cannot be taken for granted and it’s not a happenstance that we have that security. It is a deliberate strategy by this government to ensure that, because you know that all the fine things we talked about that will attract investors, businesses, cannot happen if you don’t have peace. You cannot have sustainable development without peace. So, in order for us to sustain what this current administration has achieved, the good thing is that we are one political family. You will notice that what the policy of this government is, like this policy that you have identified, that kind of stands Enugu out, we will have to continue it. There is going to be that continuity, we have to do everything to sustain and build on it.