By Peter Egwuatu, Assistant Business Editor

Dr. A.B.C Orjiako, Chairman, Seplat Petroleum Development Company Plc, in this interview with Vanguard shortly after the Company’s 8th Annual General Meeting, AGM in Lagos speaks on Seplat’s  diversification  to  renewable energy, new dividend policy,  Merger & Acquisition, M&A plans  into deep shore, financial position for the year 2020, change of name ,provision of cleaner gas, future  outcome among others.
Excerpts
Seplat has successfully concluded its 8th Annual General Meeting. How would you rate the performance of the company in 2020?
The year under consideration was a good year for Seplat. During that period, our Turn Around Maintenance (TAM) was successful and we had a very well controlled cost and despite the impact of COVID-19, we remained very resilient in supplying gas to the domestic market as 30 percent of Nigeria’s gas comes from us and we are very happy being the dominant company in that space. With respect to our growth, the performance stems from our prudential policy to comply with the International Financial Reporting Standards (IFRS).
Globally all businesses were heavily impacted by the COVID-19 pandemic and we saw an unprecedented low in oil prices in the second quarter of 2020, which has never been seen before. Last year, we showed the resilience of our business and also showed the counterbalance of our gas business, which is linked to oil prices.  Our operational and financial performance reflects the very challenging conditions described above.
Why is energy transitioning so important at this point in time?
The world as a whole is in a transition and that transition started from combustion such as airlines, cars and ships, which all constitute almost 60 per cent of the demand for oil in the world. That transition is now moving from that combustion to electricity, and to an extent, gas. And so, we are now beginning to see a lot of countries by legislation going the cleaner energy way for electricity. So being that we are an energy company, there is the need for us to align ourselves with this. Being also that we are a carbon footprint company, this is very important to us. Therefore, we have seen a world moving into cleaner energy and in providing cleaner energy solutions in the transition world, it means that apart from producing liquid hydrocarbon and commercializing our gas in which we have seen growth, the contribution of gas revenue in our topline or bottomline is continuously increasing. Our diversification to energy solutions will also boost the economy and shareholders’ value.
As part of the deliberations at the AGM, shareholders voted for a change of name of the company. What inspired this change?
When we started Seplat, environmental stewardship resonated very strongly in our core values. Today, our core values are Value creation, Integrity and Partnership (VIP). when we started business, obviously, what was happening at that time was that oil was making revenue but over time, things started to change.
Globally today, the world is transiting from combustion-driven economies to electricity-driven economies. That comes with a real strong impact on demand for oil and gas and as this happens, you then come back to what happens in the environment. From the beginning, we knew that we would have carbon footprints, therefore, we committed to making sure that environmental stewardship remains constant in our core values.
Today, when you see those core values coming down to the three things I mentioned earlier, there is partnership, not just with people and communities, but also with the environment. Looking at businesses globally, you will find that a lot of things have to do with protecting the environment, especially in terms of climate change. In 2015, the Paris Conference came alongside its agreement where there was commitment towards reducing carbon emission. And shortly after that, there were a lot of climate change advocates who have continued to make very strong statements, demanding that the environment must be protected.

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This means that Seplat is committed to providing solutions towards access to energy and providing electricity in Nigeria at an affordable rate, as well as ensuring that gas is made cheaper than diesel. This means that we have set a roadmap to reducing your emission. This is also part of the plans of the company’s development of its oil and gas business, as well as its intended diversification into renewable energy. When we say we are providing energy solutions, what we are looking to do is to balance the demand for power and make sure we provide cleaner energy which means that carbon emission is much reduced.
Seplat raised $650 million bond recently. How has this decision impacted the business?
We are sitting on good cash flows, as we just raised the $650 million which is one of the largest bonds raised in the Nigerian capital market, particularly for an oil company. It is safe to say that leverage wise and cash flow wise, we are fine and it is also safe to say that we have headroom on our debt facilities today and we do not see any need to raise equity or go to shareholders to raise money for our business. We are organic, we are growing and widening our business as we are in the gas space and going into potential renewables in the future, which is part of our organic business.
Furthermore, the inorganic is also part of it as well and in the next 12-24 months, we would witness an unprecedented shift from the onshore, to focus on a new skill set which is the deeper water. We are sensible and have some high criteria at the board to make sure that any  M&A done is profitable.
Seplat is embarking on a share buy-back, tell us about it?
This addresses the overall value creation for our shareholders and anything we do in our strategy, we have our investors and shareholders in mind. We are not going to do share buy-back if it does not bring value. If we are going to do share buy-back that will bring value and re-rate our securities, then it is something for shareholders and other stakeholders. If it is in tender offer, it means that via the process, we are putting cash in the pockets of our shareholders and so it is a value creating tool for us. We are not just going to do that for doing sake, as we want to do it for value creation.
 Seplat has aligned with the government’s gas-to-power initiative. Can you shed some light on what the company is doing?
We are ahead when it comes to reducing gas flares as we flare out and convert the gas to petro-dollar or gas-dollar to our shareholders. Once this is done, what are the impacts? One is, therefore, aligning to the government’s gas-to-power supply evolution. The industry can create jobs, as it would create the real socio-economic impact, which we do in various ways. For a country with over 33 percent unemployment rate, we are contributing towards reducing that.
Apart from providing gas to power, we are also in the process of driving the Liquified Petroleum Gas (LPG) production market as it will play a major role in empowering the economy, help preserve Nigerian forests, as deforestation and desert encroachment can be arrested by making sure the people are using LPG rather than firewood in their homes. This would not only mean that they use cleaner energy, but they are also protecting the environment.
 What is the company’s outlook for 2021?
Having proved our resilience again, and in the most challenging and unprecedented environment we have ever experienced, I am confident that Seplat will build on its strong foundations to become a larger, more diverse and more sustainable energy company in the years to come. Given Nigeria’s need to improve access to energy and the potential for significant market growth, we are very well positioned to consolidate and strengthen our position as Nigeria’s energy champion.
I believe that the move to change our brand to Seplat Energy Plc reflects our intention to be at the forefront of Nigeria’s energy transition in the next decade of our journey. We will continue to build value for our shareholders, either through organic growth or through carefully selected acquisitions that will deliver the scale or expertise we will need in the coming years.
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