‘Nigeria’s Energy Industry is Dysfunctional and Outdated’
At 70, Mr Soji Awogbade is set to retire from AELEX, a law firm that he co-founded with four other partners in 2004. He has been in the saddle as Head of the Energy Sector of the firm from the inception of the firm, and also served as Managing Partner for a number of years. In a chat with Onikepo Braithwaite and Jude Igbanoi over the weekend, he shared his thoughts on Nigeria’s challenges in the energy sector, the business of law, the secret of successful partnerships, and his next steps after his exit from the firm
Kindly, give us a brief overview of the journey of your professional life, up to the point that you became a founding Partner of Aelex Law Firm. For almost two decades, the firm has continued to thrive. Given the fact that partnerships don’t really thrive in our clime, what has been the staying power of the founding Partners? Now that you are 70, are you continuing in active practice in the firm, or what next?
I was called to the Nigerian Bar in 1997 after accidentally studying law at the University of Ife, now known as Obafemi Awolowo University. At the law faculty, Ife, I went through a column of Professors who used different styles for instructing to teach the law. Some were downright school teachers, others were pure academics, while one or two were practice oriented. I was attracted to the academics, and I nearly gave thought to becoming one myself. Life as a law student was good; the curriculum allowed many extra-curricular activities. We were overindulged by the government of the day, in terms of life on campus.
My professional career started at the Ministry of Justice, Sokoto, in the then North-Western State of Nigeria, and I still remember very clearly the mentorship I enjoyed under the then Attorney-General and Commissioner for Justice of the State, Lawal Bungudu, who was a gentleman. He took me under his wings. There, I had my first introduction to criminal law prosecution – it was a sodomy case. That was an uncommon break, and in retrospect, it must have happened because there were no Lawyers at the Ministry at the time. The thrill I got from life as a Prosecutor, ignited my interest in the advocacy. I was already beginning to enjoy law practice, even as a Youth Corper.
When I left Sokoto, I was employed as a Counsel by Fani Kayode & Sowemimo, even though I did not apply for the job. There, I had my first introduction to specialisation; a section of the firm did almost exclusively solicitors’ work. Although I was not at the firm for a long time, I took note of the distinctions between barristers and solicitors, even in a fused profession.
A very unusual conversation at the Federal Court of Appeal, handed me my next job at the Chambers of a former Attorney-General of the Federation, Chief M. A. Agbamuche, SAN; Agbamuche & Co. There, I was fortunate to do top-level barrister work, without being led by a Senior from start to finish. I use the word “fortunate” because a junior usually has a Senior to guide and teach, but, in my case, the absence of supervision compelled me to be more meticulous and thorough. This became my work ethic, and remains one of my biggest strengths to date. My work included, land suits, corporate oil and gas, construction. I also prosecuted medical malpractices for the Nigerian Medical Council, a client of the firm. I took cases through the full gamut of the judicial system, including the Supreme Court, during this period.
My restless spirit drove me to another practice, where I had a brief sojourn before setting up my law firm, Soji Awogbade & Co. So, by my 10th year at the Bar, I was self-employed with five juniors working with me. .My work as a barrister, reached its peak at Soji Awogbade & Co. I vividly recall the excitement of being instructed by a Senior Advocate of Nigeria, who was also a Queens Counsel, to represent a company whose board he chaired, in a contractual dispute.
The matter was before one of the most respected, almost feared Judges of the Lagos High Court in those days. Justice L. J. Dosunmu delivered judgement in this case against my client, declaring that the Belgian Embassy who had engaged my client in a commercial contract, enjoyed sovereign immunity in contractual matters.
This case made the headlines of newspapers and law reporting channels, for its unique and ground breaking implications. I was up against the most celebrated Rotimi Williams Chambers. We traded law for law, and they carried the day. We filed an appeal at the insistence of my client, who believed that the learned trial Judge erred in law. One unique thing also happened; my chambers was besieged by a few academics who also urged us to appeal the decision, to reverse what they thought was a dangerous precedent on the subject-matter.
We could not persuade the Court of Appeal to see the point, so the case ended there. I also decided I no longer wanted to be a Barrister, and focused on practice as a Solicitor. It was while practising as a solicitor, that I was invited to lead Nigeria’s oldest law practice as its Managing Partner. At the time, Irving & Bonnar was at the very pinnacle of legal practice in Nigeria. The bulk of its clients were conglomerates and multinationals, with very few private clients, and the firm stood out for having participated in many landmark business transactions. With its rich heritage, it was an honour to succeed a long line of top-level Lawyers. Interestingly, despite having a very small barrister portfolio, Irving & Bonnar also produced many Judges, including former Supreme Court Justices. I recall that their portraits adorned the hallways of the office.
I spent nine years in the saddle, before delving into entrepreneurial law again under the sentimental name of Victor & Charles, which I co-founded with my late wife, Jumoke Madarikan. The firm got the attention of the market and had its fair share of corporate work, but had a unique limitation which I identified very early; the legal services market had matured by this time, in the corporate and commercial side, to demanding specialisms in law. So, clients were increasingly looking for multiple skillsets for their legal requirements. They were looking for Lawyers with numerate, Lawyers with negotiation know-how to support them in their transactions. The banking and oil and gas sectors were particularly demanding, in this respect. Having encountered a number of setbacks in landing such instructions, I decided that it was time that a multidisciplinary law firm entered the market. I consulted widely, within the industry. This was how AELEX was born.
My consultations revealed that there were a few law firms which were already working along these lines, and some who were thinking about doing so. The foundation Partners of AELEX, fell into the second category. We discussed and planned rigorously, and launched in 2004. The reception we got, more than justified our thinking. The concept is now proven to be successful, and many have borrowed from it.
As to the longevity of partnerships, the fault is not in our stars. Even now, most Nigerian, or may I say, African law practices, are founded and based on the skill or fame of their founders. The reputation of the partners is the fuel that oils the practice, and it usually stays that way, until natural forces terminate the journey. Some hand over to relations or progeny which is still the predominant culture today, perhaps, because barristers, who form at least 90% of the profession, attract business by name recognition. That may explain why partnerships are not so popular or widespread.
The second factor for longevity, is that partnerships actually have an underpinning recognition that the law is a business. Therefore, law being a profession in which you could rely almost exclusively on your personal standing, does not readily recommend itself as a zone for combinations. In between these two reasons, lie the explanation, in my view, of why partnerships do not seem to thrive in our environment. I could write a book on this subject!
So, the staying power of the partnership at AELEX was recognising that what we had agreed to do is a business which should be profitable, all things being equal. We also were determined to boost our professional standing, both as individuals and as a firm.
As part of the governance rules at AELEX, you are obliged to retire from the practice at the age of 70, even if you became a Partner at 69! So, I cannot continue as a Partner, even if I wanted to. One thing is clear – as a Founding Partner, I can never detach myself from AELEX. It will always have a special place in my heart. What I do next with the energy I have left, will be less black letter law, more policy work and civic duties. In fact, I have spent the last five years driving policy, especially with African Trade. I also plan to play more golf and spend time with my family, who have were generous to share me with the law.
As Head of the Energy Practice Section of Aelex, what direction do you believe that Nigeria’s energy sector should be going? The continuous reliance on petroleum now appears to be an anathema, while the rest of the world is moving towards coal, wind energy and even electric vehicles.
From my exposure as an adviser to the energy sector, even before AELEX, it was my view that the long standing structure of the industry is dysfunctional and incapable of meeting the requirements of a modern economy or society. Luckily, I had aired my position on this over a decade ago, and my insights were drawn from the good fortune of watching the Energy Ministers of two other countries at close range.
Nigeria still does not have my dream type of Ministry of Energy. Our structure splits the components of the energy sector into silos which sometimes don’t speak to one another as clearly as they should, in a way that conduces to building an integrated energy sector. I am glad to find out that this paradigm is about to shift, not exclusively thanks to changes in the Petroleum Sector through the Petroleum Industry Act. Even with that legislation, there is still quite a bit of mileage, to a fully integrated energy sector.
As to the global and local arguments on zero carbon and the environment, while it is difficult to argue against the science of climate change, the commercial reality and viability of the options on the table for Africa and especially Nigeria, requires a careful and educated discourse. No one can deny climate change and its effects, but the needs of the people who inhabit the planet, appear to be growing in a totally different progression to the reality that science is pushing. The consumption of energy, is one of the most universal attributes of the human race. While some may have a deeper understanding of its implications, a great majority are oblivious of what consuming energy really implicates, or directly instigates. The argument becomes even more complicated when you juxtapose the interest of energy-related resource bearing nations against the consuming nations, and the design of production and consumption. It is clear that the disparate interests may have to align in a very difficult marriage, which will continuously require skilful handling, to avert a global catastrophe. My prescription speaks to a balance, between the hydrocarbon power and environment sectors of the economy.
Why does Nigeria allow oil companies to continue to flare gas and pollute the atmosphere, instead harnessing her gas reserves for commercial value?
The petroleum sector is a peculiar sector, requiring a welter of skillsets to find and produce petroleum. As to flaring, it is important to remember that there are two broad types of gases – gas associated with oil, and gas not associated with oil. Globally, the sector recognises that it is inherent in the production of oil which has associated gas, to totally eliminate flaring. What technology has succeeded in doing is minimising flaring activity, because of its deleterious consequence to the environment. Continuous research is being conducted on the subject, and in recognition of that, progressive regulation and legislation-making is cognisant of the fact that zero flare is an ideal which can only be aspired to.
The cost implication of reducing flaring, is another kettle of fish entirely. It is popularly known that even where fines exist, operators of oil fields find gas to be a nuisance to be flared, as a result there are now mandatory requirements that alternative processes and uses must be devised for the gas that comes associated with oil. Exploration and production of gas on its own, shares the same province with the issue of gas flares, and it is therefore. subject to the same constraints and hurdles. We never issue gas only licences.
As to the rest of the world, it is difficult to see where they are moving to, apart from the fashionable slogans of environmental friendliness. With the rash of new oil exploration licenses being issued, by even the most environmentally conscious jurisdictions of the world, it is difficult to measure how quickly the rest of the world is expected to transit from hydrocarbons to renewable energy. Coal, which has the reputation of being the cheapest fuel since the Industrial Revolution, is regarded as the dirtiest fuel and is likely to go first. Luckily, the component of coal in the Nigerian fuel mix is very low. Therefore, we escape the judgement and wrath of the rest of the world on that score.
Renewables constitute less than 5% of the power mix today. Our ambition is much higher. because of our obligations under the Paris Agreement. Electric vehicles are a rarity in most economies, that do not have stable power. Therefore, it is not difficult to see why Nigeria’s allure to EVs is still very low. Needless to say that, it is in matters like this that government behaviour is the best precept to stimulate lifestyle changes, which are not mandated by law.
Nigerians apparently weren’t prepared for the sudden and unexpected removal of fuel subsidy, which has resulted in an astronomical rise in the prices of goods across board. Our refineries are comatose. How do we bridge the gap, and address these present challenges? Should Government reverse its decision, as the Kenyan Government has done temporarily?
There is a voodoo about the existence and real impact of the so-called fuel subsidies in Nigeria. The anecdotal illustrations of the subject, bring out the complexity of any kind of solution that may be deployed by any government. The seeming knee-jerk step of the current government was widely applauded, because there was a genuine belief by those applauding that the funding of the subsidy is a major drain on the national coffers. The benefits of which were going to a tiny and negligible few. However, some argue that the concept is a fiction of budgeting and economic management. The third school, actually believes that too many sectors of the economy, especially those catering to the privileged, enjoy a subsidy of one type or another and therefore, singling out fuel subsidy, as the cure of a subsidy syndrome directly targets the poor. From my little analysis, I’m sure you will agree with me that this is no schoolboy assignment.
Given Nigeria’s growing population, how can energy needs be met, especially in an inclement environment with corruption and inefficiency?
As you can see from my response on the issue of the fuel subsidy, unless inefficiency is reduced and corruption checked, it is difficult to solve a problem like energy supply or consumption.
Power plant projects in Nigeria are basically perceived as drainpipes and scams, with many either never taking off or slow in coming to full operation, after humongous amounts are pumped. How can this trend be reversed?
If the Government does not divest itself of the notion that its responsibility to power is by establishment of plants, the power supply problem will remain largely unresolved. Firstly, such initiatives when taken by Government, bow to political considerations which are sometimes at variance with economic realities in procurement, siting and operation of the plants.
A look at the current geography of power plants in Nigeria, immediately reveals lopsided arrangements in the Sector. Plants are either sitting far away from consumers, or in locations considered far away from fuel supply. Some of these plants will be expensive to connect to the national grid, while others are of a nature that only highly specialised operators should operate them. For this reason, the starts and stops that are prevalent of Government behaviour in this sector, do not come as a great surprise to many who understand power. That is not to say that Government is not conscious of the deficiencies, or that it is not attempting to correct them, however, the traditional policy flip-flops inherent in regime change, rules change, and the reality of the marketplace, make it difficult to get to a reasonable success level, no matter how much money is thrown at the problem. As I have said before, the architecture of energy in Nigeria operated in a silo fashion, is a direct obstacle in the way of any solutions to problems like this, power plants included.
The nation lacks the capacity for reliable alternative source of power, whether solar, wind or natural gas. Some have attributed this to the absence of a clear energy policy by the Government. If you agree with this assertion, what would you suggest to the Government in formulating a workable and sustainable energy policy?
In responding to your earlier question, I already addressed my personal viewpoint on this matter. All I wish to add, is that power is too important to the lives and livelihood of Nigerians, or any nation, to be left in a disorganised state; it will affect development.
At a recent Lecture on Prison Decongestion, we were informed that one of the reasons for prison congestion is Police’s poor investigative skills. There seems to be a huge deficiency in the use of forensics and technology which aids investigation to a large extent, in fact, we were told that Government hospitals do not even provide the chemicals needed for autopsies, which are crucial in murder cases. Unfortunately, Lagos State’s world class Forensic Laboratory was mostly destroyed by hoodlums during #EndSARs. How do we change this negative narrative, bring Nigeria’s law enforcement agencies investigative techniques into the 21st century?
The legal system which Nigeria operates, especially for the administration of justice and law enforcement, is overdue for a major overhaul. The institutions that were created under the system, are usually somewhat handicapped to function under the guiding principles set for them. By far the greatest handicap, is the under-investment in the administration of justice. Unfortunately, the proliferation and development of crime in the world respects no boundaries. Therefore, every system which is alive to the implications of crime, ought to continually renew its procedures and processes to be ahead or at least to catch up with crime. That doesn’t seem to be something that our legal system is equipped to do.
To mention forensics, is to ignore that the point of interest and cynosure in the law enforcement architecture, is your local Police station. A visit to most of them will reveal how inadequate they are, to execute the functions given to them. In fact, the Nigerian Police system is a campaign platform for philanthropy, whereby the rich and the prosperous demonstrate their social responsibility to the extent that it looks as if Government has surrendered the zone to non-government actors.
There is no doubt that other methods of crime investigation and adjudication, including forensics will produce a just and speedy resolution in most cases. Whether it is the mere destruction of one facility, or the lack of availability of one substrate or the other, a legion of problems are waiting to be attended to.
I have a personal interest in forensics, and it has been demonstrated to me by experts worldwide deploying forensics, that it is a tool that could correct the contracting and implementation behaviour of both the private and public sectors, if targeted at the evaluation of value for money and other indicators in public procurement.
Are you in support of ECOWAS using military intervention to restore democracy in Niger? Is there any law or treaty that supports such an action? What about the doctrine of sovereignty?
The doctrine of sovereignty of nations is inviolable, and it has been used to justify both laudable and not so laudable intentions. The tender democracies that Africa has, unfortunately suffer from the malaise of misgovernance, conflict of ideology and curious cultural interpretations of the concept of democracy. The Nigerien insurrectionists have highlighted some of these points, in their speeches. Some of these problems come from a colonial heritage, which in my view, has no current validity. With that as a background, it is difficult to see under the doctrine of State Sovereignty, how any one State can dictate a form of governance to another. Sadly, the tools that the global community has always used to discourage non-constitutional government change, may seem to be losing their effectiveness, due to the changing global power architecture; supply chains; as well as ideological shifts.
Military intervention, is a very clumsy and costly tool. So, unless it is clear that the people of a nation have surrendered their sovereignty to a regional or continental authority, it is tenuous, except in self-defence, to see why one nation or regional arrangement should invade another country under the pretext of the rule of law. The bullies of the world may have done it and got away with it, but that doesn’t make it right. The state of the countries many years after invasion under the pretext of rule of law, is another reason why it should be considered carefully.
The last bit of that architecture, is a question of humanitarian considerations. This is an even more difficult terrain to navigate, and must be carefully deployed.
What are your expectations from the Tinubu administration? Some believe that the administration has started out on a shaky footing, with the removal of the fuel subsidy. They are unhappy about the value of the Naira, which seems to be declining rather rapidly, almost in a free fall against the Dollar, Pound Sterling etc. The people are presently going through very difficult times. Do you think this administration has the capacity to reverse the dwindling fortunes of Nigeria and give Nigerians a better life, or is it too early to make that type of judgement of a Government that is less than three months old?
It is clearly too early to write the report card of the Tinubu administration, but there is a cliché that “do nothing, is not an option in any circumstances”. The Tinubu administration, is trying to do something in many areas where we had poor or no governance for decades. So long as it consults and conducts open governance, the debate should be allowed to explore all possibilities to bring the Nigerian economy out of coma. So long as Government is not arrogant about its solutions, and it can demonstrate the value proposition intrinsic in its steps and policies, they should be given a chance to intervene in various aspects of our economic and even political architecture.
As to my expectations of the Government, I resort to the creed of the Junior Chamber of which I am a Senator. The Junior Chamber International believes “that government should be of laws, rather than of people”. If you carefully unpack that maxim, it speaks to a great deal of the current state of the nation, and if deployed, we will be on our way to prosperity once again.
Will politicians subscribe to such an ethos? My response is, not willingly.
Thank you.
