News Column

Nigeria, Hub for Lubricant Production in West Africa - Total Boss

August 26, 2014

Anayo Korie

Nigeria, with a population of about 170 million people is a potentially big lubricant market for West African region .

Managing Director, Total Nigeria Plc's, Mr. Alexis Vovk who revealed this said, the lubricant market in Nigeria is estimated at about 400 kilo tons, without any official statistics on the lubes market as all the figures are based on assumption.

Vovk, who spoke in recently at the just concluded first lubricant summit held in Lagos said, there are about 38 lubricant blending plants with capacity well over 800 kilo tons in Nigeria, mostly producing at below capacity utilization.

According to him, the lube market is divided into automotive and industrial. He revealed that automotive market occupied 80 per cent market share while industry took the remaining balance of 20 per cent.

The industry, he noted, is further classified into smaller segments as follows; transport passenger Cars (PCs), trucks, and buses; manufacturing; power generation; food and beverage; agriculture; construction; oil & gas; and marine, adding that each of these markets presents varying dynamics and huge potentials that can be optimized for maximum growth and sustainable development of the sector.

Speaking on transport sector, where lubricant is mostly used, he noted passenger car engines are becoming more complex (that is smaller and more powerful) and requiring higher quality lubricants when compared to a few years ago where mono-grade lubricants were sufficient.

" Today, more and more passenger car owners are requesting for better quality lubricants (regardless of cost - even synthetics), to protect their cars and ensure they get best value for their money.

"On the contrary, not as many truck owners (as well as coach owners) are as concerned with the quality of lubricant. Bad roads always ensure tyres and other parts such as shock absorbers are changed almost as often as the lubricant in the trucks. The cost of overall maintenance is the major consideration - as most truck fleets are managed by informal setup, thereby making truck owners less willing to invest in high quality lubricants, which by their reckoning, will only increase the maintenance cost,"he added.

In manufacturing and power generation, he said these two sectors of the lubricant market make for a very interesting irony. "Power generation in Nigeria is very poor, with most areas getting less than 3 hours of power supply a day. Power plants are very few, old, and inadequate. With the government's NIPP projects, more power plants are being built and this will only increase the lubricant demand in this sector, " he noted.

The state of power supplies means industries have to generate their own power to stay in business, backup power supply becomes main power supply. Most industries buy more lubricants for power generation than for their core business.

He observed that the huge cost of generating their own power (as well as other factors such as poor infrastructure) makes most industries operations financially unsustainable. This is evident in the total closure of some industries or relocation to other neighboring countries, for example, Michelin Tyres.

The lubricant market in these two sectors is deceptive as even small industries buy lubricants for power generation. The power generation sector in Nigeria can only grow from the present situation with more NIPP commissioning expected in the nearest future. This is expected to improve the demand for high quality lubricants in this market..

Laying further emphasis on mining and agriculture, he said the two sectors of the lubricant market are still under-developed. Mining is virtually non-existent due to the nation's reliance on crude oil and agriculture is still mostly at the subsistence level in most parts of the country, with very little mechanization. It is not likely there will be much change in the short term as regards practical steps to change the status quo.

While public works and construction sector is a very active part of the lubricant market with public spending focusing more on physical infrastructure provision, particularly roads, by most states and the Federal Government. Considering the huge deficit of public infrastructure (and their subsequent maintenance) this sector presents another big potential next to the transportation sector. Cost of products in this sector is irrelevant as most companies take OEM recommendation and the replacement cost of equipments into consideration in making buying decisions.

The potential in the Nigerian lubricant market is enormous. Effective realization will depend on the ability of the authorities to provide the enabling environments, and key amongst them are fully equipped and competent standard monitoring body to ensure that lubricant standards are upheld by all manufacturers and/or marketers to curb the activities of adulterators and fake claims, as well as better public infrastructure policies to ensure healthy competition.

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Source: AllAfrica

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