Learning from a fresh set of eyes gives students a new perspective to their learning experience, this was the experience of the Modular MBA class 4 on the 29th of April 2023. The class had a guest lecturer, Mr Olasope who was the Business Development Manager for British Petroleum, a key player in Nigeria’s Oil and Gas Industry.
The discussion began with a brief description of British Petroleum and her operations in Nigeria during the fragile democratic society in Nigeria’s early days. Being a major exploration company in the early ’70s, the erratic democratic clime forced British Petroleum to close shop and down tools in Nigeria. This was as a result of the hostile takeover of players in the petroleum industry by the Nigerian government in 1979.
Despite the previous business experience in Nigeria, the British Petroleum seeks a re-entry into the Petroleum industry, this time as a supplier of Petroleum products; gas oils, aviation fuels and petrol, to the Nigerian government (the NNPC).
The scenario painted by Mr Olasope created nostalgic feelings for the participants, especially about how Nigeria carries out business, despite the acclaimed improvements on the ease of doing business in the country.
To the layman, this difficulty can be seen in the processes involved in registering a business and running such in the country, with the government’s nonchalant way of refusing to abide by known business ethics. This creates a drawback on carrying out business in Nigeria.
Will we get it right as a country? This question tops all others in the country.
After discovering oil in the oil-rich deltas and offshore, Nigeria’s path became shrouded with dark clouds and corruption grew tremendously, attacking the once flourishing agrarian society to a cesspit of an import-only country.
This nature made the country dependent on the importation of fuel to meet up the domestic needs. This deficit created a business opportunity for any player to supply the government in bulk, since they don’t refine the crude oil obtained from the holding reserves.
The British Petroleum saw this opportunity and decided to make a comeback to the sector, this time as a supplier of these products. Their previous experiences with the Nigerian government continued to leave a bitter taste in their choice of doing business with the state actor, NNPC.
With eyes set on the crude oil swap program by the NNPC, British Petroleum was included in the first 2 bidding rounds. The impending fuel scarcity drove the NNPC to request for a credit from suppliers, this without a line of credit.
The profit returns from doing business with the NNPC outweighs the risk involved, but there needs to be a way to de-risk the situation and win the heart of the organization management team consisting of the credit office, the compliance department and the senior management team.
The business team had to prepare a slide deck that showed how to de-risk the business proposal by introducing the use of an escrow account for paying NNPC their due.
This move gave the team the opportunity to secure the deal and become a trusted partner with the state actor.
The lessons obtained from this case study includes understanding in detail the context of the business problem, thinking outside the box to apply uncommon approaches that will secure the deal, and one must be conscious of the amount of risk involved before proceeding with the deal.
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