Boosting The Nigerian Power Sector

We profile Ayotunde Olayinka, MD and COO of BU Power Nigeria Ltd, a foremost independent power generation company with its natural gas plant in Ileshan Remo, Ogun State that generates uninterrupted power supply to its target customers with clients experiencing 98.75% service power supply since 2017.

Ayotunde is a chartered accountant and industrialist but got started in the power sector because he saw a need in an environment like Nigeria where electricity supply still presents a challenge and saw the capacity to meet that need. He notes that the journey has been challenging but nevertheless exciting which he sees as a highlight of being an SME director.

He outlines lessons learnt while doing business. Firstly, there are always people looking for the solutions that SMEs create, and SMEs just need to find these interested parties. In addition, there are more resources available to SMEs than they realise – money is not a barrier to going into business, nor is a lack of employable staff, as Ayotunde says that resourceful and smart young Nigerians are abundantly available for the job. He also spoke on the importance of partnership among SMEs as a key resource as it removes some of the burden on a business, generates more ideas that allow businesses to thrive and can attract investors.

In response to issue of financing SMEs, Ayotunde says that many SME founders borrow funds with a good idea but no concrete plan for execution, and that this is a factor that causes many of them to fail. He emphasises that extensive planning and understanding target markets are necessary for success, and not just hope for a successful business, because even well-planned SMEs can fail, and advises that if an aspiring entrepreneur cannot put their life savings into a business venture because it has not been thoroughly planned, then they should not seek for external investors.

Speaking on the effect of the COVID-19 pandemic on BU Power, Ayotunde shares that human resources are paramount to them  – most workers are working from home, but some field workers are on site at the power plant and are being provided with standard hazard allowance, accommodation that allows them to maintain social distancing and other necessary precautions. He acknowledges that the situation has raised the cost of personnel, but also notes that the pandemic is an unusual situation, and a situation where a business achieves a lower profit margin than usual or experiences a little loss in this time is understandable and manageable. Raw materials are difficult to have shipped in at this time, but the company hopes to tide over for as long as possible in this period as they proactively stocked up on these materials in January.

On the challenges that many Nigerians face with estimated billing charges by distribution companies, he acknowledges that it is an unsustainable and illegal practice, but one that arises when pricing caps prevent distribution companies from covering their costs of operation and making profit and when pricing mechanisms are not transparent enough. Another issue is that of verifying that electricity meters are calibrated and read correctly.

For SMEs looking to go into the power sector, he advises that power generation and distribution are high investment projects, and that there are other profitable ways to break even in the sector by providing services to the generation and distribution companies. By realising the problems faced in the sector, such as the aforementioned, and arming themselves with skills to provide the needed solutions, SMEs can drive transparency in the power sector and translate the challenges to opportunities to provide solutions and make profit.

He concludes by noting that the Nigerian government alone cannot ensure stable power supply in the country and needs to break down electricity generation and distribution companies into more manageable sizes to supply fewer areas. There is also a definite need for more private companies like BU Power Nigeria Ltd, as the power they generate into the system frees up the supply that their clients would have received from the National Grid to other Nigerians.

The African SMEs Stories series is brought to you by Support4AfricanSMEs in partnership with BusinessDay Nigeria hosted weekly on Instagram by Linda Ochugba. Interview edited by Oluchi Buchi-Njere.