Abayomi Awobokun is the chief executive officer of Enyo Retail and Supply, a downstream player in Nigeria’s oil and gas industry, utilizing technology to simplify and optimize product retailing. The company presently supplies up to 2 percent of the national demand for refined products in Nigeria.
In this exclusive interview with Dipo Oladehinde, he explains how Enyo is reshaping its strategies through the application of technology in service delivery.
Enyo Retail and Supply has been in operations for about four years. What has been the major strategy for growth?
We were founded at a time when the industry required a new entrant, so both the regulators and established players were receptive. Furthermore, having a well experienced and aligned board and shareholders, in addition to a robust team, was fundamental to get the ball rolling. As for any downstream player, the initial question was where in the value chain we wanted to focus. We started to deliver a fuel service off the back of a well-built network of strategically located bespoke retail stations. The key vision was to have a high-tech platform, an advanced layer of technology on which our stations would sit. This has been our edge, as it boosts our operations, transparency and efficiency. In a way, it helps monitor our whole operational basis while keeping our costs fairly competitive.
The company’s drive to add new products such as lubricants offer, vehicle maintenance service, an LPG home delivery (SL-Gas) service and newly launched confectionery business has also been serving market gaps and meeting more demand.
Read Also: Enyo Retail expands presence in Lagos
What growth and sustainability strategies is Enyo’s retail business following?
We currently have 95 operating retail stations, with a network that covers 19 different states, serving more than 80,000 people daily. Regarding our distribution capacity, we currently own 210 trucks. As for strategy, there is never a time that growth is not on the agenda. There is, however, a need to manage the pace of that growth. While in previous years we were growing at a pace of 30 or 40 sites annually, last year we managed to expand but at a slower rhythm. What is most important to us now is to build a robust business.
The coronavirus pandemic affected a lot of businesses, what are your learnings from this experience?
If there is one thing the pandemic has taught us, it’s that your business has to be founded on solid grounds. This entails training up your team and improving your points of sale and the products you sell there as well. Another vital element is to bring technology to the consumer so that they can interact with us both physically and digitally. These are fundamental pointers that will solidify one’s business.
There have been changes in Nigeria’s downstream sector over the years, what are the key changes being experienced?
The more exciting things about the downstream are seldom spoken about. Most of the time we focus on the age-old deregulation and supply challenges, which although important should start taking a backseat.
Firstly, there is a refining revolution taking place. This is being spearheaded with the $12-million, 650,000-bpd refinery being constructed by the Dangote Group in the Lekki Free Zone. From here, there should be further talk about the benefits and wealth created once the complex becomes operational. Its completion will anchor a retail renaissance in this country.
Secondly, the pandemic has prompted downstream companies to reshuffle their business models. In other words, one does not only want to focus on a single product, as in fuel. There is an urgent need to diversify one’s portfolio. Most retail chains have begun to think of other products or business lines to add to their parcels.
Thirdly, the bet on LPG, which has been growing in recent years, is now beginning to blossom. LPG consumption has risen to unprecedented levels, but there are still more than 30 million households that do not get this product at the right price or time. This has become a huge opportunity. In addition to this, the government has announced its autogas programme. Lastly, technology is gradually changing the art of downstream and it is only a matter of time until it takes over the industry. When a client buys fuel in Nigeria, they should get a text from the retailer thanking them. There should be more functioning loyalty programmes and more alternative payment systems. This is something that we are proactively pushing for.
There have been significant investments by the Public and Private sector in local refineries, what further impacts will the “refining revolution” bring to Nigeria’s economy?
Nigeria’s economy was designed to be self-sufficient; it was designed to export crude, which means that our forex income is based on crude oil and crude oil-related products. However, the reality is that we are purely dependent when it comes to refined products. With the completion of the Dangote Refinery, added to modular refineries and the refurbishment of our underutilised ones, comes also the opportunity to export refined products and earn foreign exchange. This could help our country in many ways.
The impact will also be felt in terms of job creation. In the coming years, the refining and retail sector will offer a pool of opportunities for local investors and local employees, as well as for local companies to school local capacity. This, of course, will have a ripple effect on our economy: It will raise government income through taxes, propel our banking and insurance industry, and boost our logistics sector.
Lastly, this “refining revolution” will also spur other potential industries in Nigeria such as the petrochemicals sector, which will ride off the back of many of the byproducts produced in our refineries. The marine sector will also benefit. This industry will not be the same in 24 months’ time.
Given the current scenario, is consolidation an inevitable step the downstream will take?
We are now witnessing a wave of consolidation via mergers and acquisitions, while in other instances there will be moves to rebrand. There seems to be a natural inclination towards consolidation, which will eventually improve the robustness of both companies and their operating platforms, allowing them to do more.
The Federal Government of Nigeria began the rollout of the Autogas programme in 2020, how would this affect the downstream sector and autogas conversion in retail stations?
The courage the government has shown by rolling out the autogas programme is truly commendable. It is certainly beneficial to have numerous sources of fuel in the transport space. In addition, they have committed to equipping 9,000 stations in a year, which is quite bullish. The government’s fundamental role should be to create an enabling framework and from there, the private sector should match it with execution.
For retail players like ourselves, the autogas programme represents a good opportunity. We are currently looking at eligible stations that could be part of this value to customers. However, experts will first have to assess the desired station changes. Also important is a sensitisation process for customers covering safety, how to operate the fuel and so on so they truly understand the benefits and implications of autogas.
Enyo is known as the most innovative, technology-driven distributor of quality fuel products, how are you digitising the retail space via platforms like Velox?
Velox is a digital gateway for customers into the “Enyo world.” Initially, it is just a prepaid fuel card but once you have it, the system compiles all the data provided and from there, vehicle owners can manage control and accountability and gain more value from their fuel budget. On it we can even suggest to our customers nearby vehicle maintenance stores or other useful information.
We are also working to introduce a credit scheme to support customers with their liquidity. On the Velox platform, registered clients can purchase confections, get diesel delivered to their doorstep or acquire LPG products. From here, our ultimate aim is for Velox to become a lifestyle product.
We also have a product called Ggenie, which we expect to release to the public later this year. Ggenie is a unique touchless payment system that involves the use of USSD [Unstructured Supplementary Service Data] to pay for products or services in our retail stations. This virtual wallet allows a customer to refill at any Enyo station by simply telling the attendant a PIN code, and the pump will dispense the amount you have programmed on your mobile device. This goes to show that we are not just a fuel retailer but a sector leader driven by technology.
What could a possible acquisition by Ardova represent for your company?
Ardova is in talks about a potential acquisition of Enyo. If all goes as planned, we both expect the acquisition to be concluded in Q2 of pursuant to the successful completion of due diligence by Ardova and the receipt of all the requisite regulatory approvals.
Ardova is one of the majors. They are a publicly-traded company with a great management team and a strong logistics basis. This would make sense for us as they have critical assets such as a terminal and a depot which we do not have and which are crucial for competing in this market. We have grown thus far and prepared the company for a time like this – for a suitable company to come and potentially improve the plausible outcomes with what we have built.
What is the rationale and potential behind your Superior Liquefied Gas (SL-Gas) business unit?
SL-Gas is a greenfield product. The rationale behind this business line is simple: We buy gas from the market, bottle it at our own filling plants and deliver it to your doorstep, replicating the traditional B2C model. The difference is that through our LPG programme, the customer only buys the gas while the cylinders still remain ours to maintain, fill, brand, bring to you and pick up from you.
As of today, we are expanding the number of filling stations across the country to cover the increasing demand for LPG. We are selling to approximately 8,000 homes per month and this number will only increase. We expect that by the end of 2021, we will be selling to about nine times that number.
What milestones do Enyo aim to reach in 2021 and beyond?
Firstly, we aim to reach more people through our bet on technology. Our second milestone would be to continue to grow the company, not only in terms of expertise and our cohort but also in our SLGas and lubricants business. We would also like to enhance our vehicle maintenance business, Vehicon. Lastly, we want to continue retaining and attracting the great people who, at the end of the day, make our Enyo world possible.
