A success story in ‘local content’

Posted by News Express | 15 April 2021 | 626 times

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On Tuesday, the French Minister for Foreign Trade and Attractiveness, Mr Franck Riester was in Lagos for the unveiling of the Full Flight Simulator at the Maintenance, Repair, Overhaul (MRO) and training facility of Caverton Helicopters. With that, the Thales Reality H full-flight simulator, regarded as one of the most advanced commercial helicopter simulators in the world, is now operational at the company’s Ikeja base. The first Level D full flight simulator in Africa allows pilots to train in complete safety for a variety of complex situations, including adverse weather conditions, helicopter failures and such other emergencies that could occur during flight operations. Besides, it will not only provide the needed services to helicopters that operate in Nigeria, it will also save our country over $500 million foreign exchange in maintenance, training and spares annually.

Peter Hitchcock, Vice President of Training & Simulation at Thales, said that working with Caverton, despite uncertainties brought about by the COVID-19 pandemic, “We have safely finalized the shipping, commissioning and acceptance of the first level D full flight helicopter simulator in Africa, representing a major milestone in the continued effort to improve the efficiency and safety of flight operations.” This was reaffirmed by Riester who represented the French government: “This amazing simulator is another illustration of a success story between France and Nigeria and the strength of the partnership between Thales and Caverton. Supported by Bpifrance on export credit, this project involves unprecedented top technology at the scale of Africa, allowing Nigeria to fulfill its ambition to become the training hub of the region.”

Having followed the business trajectory of Caverton for the past 16 years, I am delighted at what has turned out to be a Nigerian success story. It all started in 2005, at the prompting of Mr Tayo Amusan who said “Segun, you cannot only be using your popular column to attack (President Olusegun) Obasanjo every week; you need also to look at the business environment and begin to promote game-changing entrepreneurs in our country. Come and see what I am doing at The Palms. There is a change of guards going on.” That was how I started the monthly series titled ‘The Change of Guards’ where I first featured The Palms Shopping Mall (which houses the first Shoprite in Nigeria) before I wrote on the acquisition of the United Bank for Africa (UBA) by Mr Tony Elumelu’s Standard Trust Bank (STB) at about the same period. But of all the companies I profiled at that period, it is Caverton Helicopters (then about three years old), that has refused to let me go. The chairman, Mr Remi Makanjuola, insists that I am part of their success story, having given them unsolicited but major media exposure at a time of small beginning.

Now with operational bases across Nigeria and Cameroon and a staff strength that includes about 200 pilots and engineers, the company has been able to provide a wide array of services to the offshore oil and gas industry as well as other business sectors including marine and coastal surveillance, emergency medical evacuation, search and rescue. From one Agusta 109 Helicopter in September 2002, Caverton currently operates a mixed fleet of 24 modern aircraft across multiple locations in West Africa. And since inception, Caverton has successfully operated for major International Oil Companies with a combined contract value of over $2 billion.

Makanjuola has no doubt done well with Caverton but one man who deserves to be proud is Mr Babs Omotowa, former Chief Executive Officer and Managing Director (CEO/MD) of Nigeria Liquefied Natural Gas (NLNG) Limited. Omotowa spent 18 years at Shell where he reached the peak as Vice President for Shell companies across Africa, responsible for Infrastructure, Logistics, Health Safety and Environment. He was the person who, in applying the local content law, took perhaps the biggest gamble of his career that has now paid off in spades. There are several lessons from the story but for me the most significant is that we must create an enabling environment for our entrepreneurs to thrive. That is the only way to create wealth and take many of our young people off the street.

Back to Omotowa. At Shell, one of the portfolios he managed was helicopter services to the company’s platforms and locations. As he explained in a recent interview, “We had this helicopter contract that had been with an international company for decades. They had been running that helicopter contract long before I joined Shell. They became a monopoly, and they were milking that. They would usually come with increases, and it was ‘take it or leave it’, and I felt this was not the right way to run a company. At the same time, I thought, ‘why don’t we even have local companies who could do this service?’ Considering that transporting people in helicopters was high risk, and we didn’t have Nigeria companies working in the oil industry at that time, I decided to work with my team. I said, look, let’s find the best Nigerian companies. Let’s encourage them to invest in themselves, find overseas partners, and stand the test of what an oil company will require in terms of standards. And as we were working with these local companies, two of them took the challenge. They found partners in Denmark and Canada and started to develop their management system, their technical capacity, and all of that. At some point, we felt that they had started to have the kind of capacity that we could make use of.”

Omotowa continued: “So, I got the Shell technical authority to come and audit and assure that they can perform to the sort of challenges that we had in the oil and gas industry. And so our experts came from London, assessed them, and they passed the companies that they could indeed provide the services with the partnerships they had formed. So, we went for a tender, and as I expected, the incumbent did not win because they had become quite expensive. The first time they were facing competition, they didn’t win. So, this local company won, and of course, it became a pause time for everyone. Now that the local company has won, what’s going to happen? Of course, it was evident to me what was going to happen. We were going to go forward with that company. They had won the tender. We had assessed them. So, when I started the (contract) award I was summoned to my boss’ office. He was an expatriate who had just resumed about a few months before. He asked me about the contract. First, I said, ‘you must be asking because someone was asking since you’re relatively still new’. He said, ‘yes, there’s a concern from the aviation team in the head office’. I said, ‘well, they cannot be concerned because I called them in to audit this company and they gave a pass mark, so I have their approval of the company as capable. Then he said, ‘but Babs, you know this is a high-risk area and this company has never worked in the oil industry, why would you want to go forward?’ and I said, not only am I prepared to take the risk and go forward, I am also even going to ask for more things. And he said, ‘what do you mean?’ I said, ‘I have looked at their plan. They plan to lease helicopters for the seven-year contract’. I said ‘that’s not acceptable. I want them to buy helicopters. But they cannot buy helicopters because they don’t have enough funds. So I am going to ask Shell to lend them the money to buy new helicopters’. He said, ‘Babs, you must be out of your mind, I have not even accepted that we should go forward with this contract, and now you’re asking for more!’

That unnamed company is Caverton Helicopters.

Demonstrating what a Nigerian with character in the right place at the right time can achieve, especially while working with multinational companies in the country, Omotowa decided he would not allow Caverton to be muscled out: “I said, ‘There is absolutely no reason not to go forward. They have been assessed, and they have provided the best bid. It fits into our Local Content Development Plan as a company. We’ve been working here for 56 years. We cannot continue to say a local company cannot provide this type of service’.”

That was how Omotowa convinced Shell to secure a loan of $85 million to enable Caverton to purchase, rather than lease, helicopters after the company had won the bid for a logistics contract in the sum of $630 million. “Of course, when I first brought the proposal everybody refused. The finance team in the head office refused and I justified why we had to lend them money. One, it was for our own safety. Two, we had committed as a company to develop local capacity, so why not put our money where our mouth was?” he asked. “They said ‘but you know this is unprecedented for a company to lend a contractor money. Besides, this is Nigeria and the risks are too high; they won’t pay back’. I said they will pay back because I have asked them to bring a bank guarantee. So if they default, we will call on the bank guarantee.’”

With that $85 million, Caverton purchased six aircraft, paid back the loan and from there began to expand not only within the country but also across West Africa. And Omotowa feels justified: “The company ran for seven years, there was no accident. The safety performance was about the best in the industry, and their service performance was better than the previous company and they repaid back all the money within the seven years we wanted. Not only did they do that, they developed capacity, they went on to win contracts of other international oil companies (IOCs) in Nigeria. They even won contracts of IOCs outside Nigeria. Now we have a local company that is able to provide that service to Nigerian companies.”

What is particularly instructive is that Omotowa took the decision following the formal enactment of The Nigerian Oil and Gas Industry Content Development (Local Content Act) 2010 which states that “all regulatory authorities, operators, contractors, subcontractors, alliance partners and other entities involved in any project, operation, activity or transaction in the Nigerian oil and gas industry shall consider Nigerian content as an important element of their overall project development and management philosophy for project execution”. The Act defines Nigerian content as “the quantum of composite value added to or created in Nigeria through the utilization of Nigerian resources and services in the petroleum industry resulting in the development of indigenous capability without compromising quality, health, safety, and environmental standards”.

Meanwhile, Makanjuola once told me that Omotowa and his team at Shell were so professional in their dealings with Caverton that they would even come to meetings with their own bottled water. Incidentally, Simbi Waribote, the present Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), was on Omotowa’s team in Shell at that period.

I congratulate Makanjuola for what Caverton has turned out to be. When he started almost two decades ago with just one helicopter, he could not have envisaged he would go this far. On a regular basis in the past 16 years, Makanjuola has kept me abreast of the success story of his company just as he never forgets a prayer of the then President Olusegun Obasanjo following a chance encounter: “Won ni iwo lo ni helicopter company yen. Eyokan yen si ma pe ogorun lojo kan (they say you own that helicopter company. That lone helicopter will multiply into a hundred one day.)

However, Makanjuola’s success is not accidental. I once used the Biblical story of talents to demonstrate how many Nigerian business people have been given ‘talents’ which only a few have bothered to judiciously utilize. Unlike those who fritter their ‘talents’ on frivolities, Makanjuola grabbed the opportunities available to him with both hands and now he reaps enormous rewards. With 24 aircraft now in the fleet and two more expected, Caverton has made good in a critical sector but the MRO is the real deal. The multifaceted maintenance facility can carry out major checks on engines, main gearbox, tail rotor gearbox and other parts of aircraft. It is also expected that Caverton facility will be the maintenance hub for West and Central Africa, as there is no other major maintenance for choppers that provide oil and gas shuttle and other services in Gabon, Ghana, Equatorial Guinea, Cameroon and Cote d’Ivoire.

To the extent that present economic realities and escalating foreign exchange rates are making it increasingly challenging for Nigerian airline operators to carry out proper maintenance on their aircraft, the Caverton MRO project has come at a most fortuitous moment for the nation. With the average cost of a C or D check running into hundreds of thousands of dollars, there are already serious concerns for flight safety since airlines could, counting cost, begin to cut corners. The biting economic situation has already led to some airlines either being grounded or taking their services out of the country. The Caverton example has shown that with government’s support, local investors can create businesses that add value to our society and provide needed jobs.

The lessons from the Caverton story are many but two will suffice. Affirmative action, when well designed and accessed by genuine beneficiaries, can actually work in Nigeria. Had the federal government not put the local content law and policy in place, Caverton Helicopter might probably have remained another air-shuttle company. Credit is therefore due to President Goodluck Jonathan who signed the bill into law. Much more importantly, while Caverton needed that window to take off as a big company, I am aware it has also not rested on its laurels. It has grown beyond a one-off contract with Shell and a marginal player in a sector dominated by two expatriate companies, to becoming a major player, while expanding outside of Nigeria into other areas of opportunity within the space. So beyond being a testimonial to local content, the continuing odyssey of Caverton is a tribute to the ingenuity of Nigerian enterprise!

All said, the future of Nigeria as a free-market economy depends on the seriousness of our private sector. Makanjuola provides a clear example of the main ingredients that serious minded businessmen need to succeed: tenacity, integrity and purposeful risk taking. This combination has made Caverton a clear leader in its field – to the glory of the nation. But the ultimate lesson for those in authority is this: There are many Cavertons waiting to fly if only the government will pursue the right policies and create the environment to give them wings! (THISDAY)

Source: News Express

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