Chuks Umezulora graduated with a degree in Industrial Chemistry from the Imo State University, but you would find that hard to believe because of his fascination with machines.
“Even though I studied Industrial Chemistry, I have always been interested in technical side of things and I discovered I had keen interest in the subject,” said Umezulora.
It is this love for machines that led to an interest in how it could be deplored to solve Nigeria’s energy challenges. His first foray into the renewable enegy sector started when he was asked to be on the technical team of Sky Resources Nig Ltd where he was happy to work without pay just so he could work with a team doing installations for solar components. Though solar was yet to go main stream, he recognised early on the potential that existed in the industry and stayed.
He co-founded Chume Integrated Services Co. Ltd in 2005 and Auxano Solar Nig Ltd was registered in 2014 specifically for Solar Business. Auxano Energy is an indigenous company that deals in procurement, sales, designs, installation and maintenance of solar and inverter systems.
Auxano, runs one of biggest solar assembly plants in the country and is ramping production of solar panels and has partnered with All On, an impact investors in the sector as well as the Bank of Industry to increase production of solar panels in NIgeria.
The company’s factory in Lagos boasts of high-tech machines for cutting, welding, resizing and assembling the components required to build solar panels. The outfit employs over 30 people who have been trained through all the stages of the company’s operations.
In the early stages of the business, Umezulora said the company hired labour from a local technical school and involved them in training sessions it had with the Chinese.
“This helps us manage our costs,” he says, “it also reduces downtime,” But it also raised the problem of employee turn-over as many left after just staying six months to pursue higher education.
Two years ago, Umezulora told BusinessDay that response from the local market to solar energy was just beginning to thaw now it seems it is turning the corner. Many Nigerians have grown from a deep-rooted aversion for solar energy to acceptance such that even banks, government offices and even power companies now have solar as part of their energy source.
The initial challenge was competing with imports from China which were cheaper even though the quality of suspect.
Umezulora said that the initial question he got was whether it would work even when he knew his product was better than what was being bought from China.
The entrepreneur said that with support from organisations like All On, many local operators have become more receptive. Auxano was among the four companies that benefited from the N180 million assistance to renewable energy companies, to provide solar power for emergency health centers in support of the response to fighting the COVID-19 pandemic.
All On said the four companies, all investees of All On, were selected based on their immediate preparedness to respond with products, inventory, technical capabilities and their efficient delivery track record. The investees will tap into initiatives that support the national effort to alleviate the burden on the nation’s fragile health care sector in this time of crisis.
In 2018, Auxano also won All On and USADF energy challenge, organised in partnership with USADF and awarded $100,000 grant, half in the form of low interest loan between 7 and 10 percent over five years and half as grant to support 10 different companies providing energy solutions for productive use in agro processing to a solar power assembling plant.
“The process for application was very rigorous,” Umezulora said, “we had calls for three hours on some occasions and they ensured every detail was verified to ensure regulatory and technical compliance and that the business plans are realistic.”
The growth of renewable energy in 2018 saw the government imposed a 10 percent duty on renewable energy components though Nigeria lacked the capacity to manufacture all the solar panels it needs.
“Locally we don’t even have capacity to assemble enough panels to meet demand. Nigeria cannot live in isolation in comparison with other West African countries, imposing this kind of tariff will only move investments to other countries,” said Umezulora at the time.
The new duty will increase acquisition cost of solar panels and made other African markets attractive for new investments. East African countries already miles ahead of Nigeria in terms of solar adoption attracted millions of dollars in new investments.
But the Nigerian government was not backing then and rather continue to pine, the entrepreneur along with others in the sector have seen it as a challenge to ramp production by expanding partnership which sometimes require improved corporate governance because an investor may have a seat on your board.
Umezulora has canvassed government support systems like the Chinese model to assist local manufacturers including consistent exchange rate policy, access to finance and working capital and implementation of already developed policies to improve ease of doing business.
Much of the funding for Auxano’s operation have come from grants and commercial loans both from lenders and partners.
The impact the funding is that it has given the company the opportunity to begin to actualise some of its dreams; increase working capital and then with more working capital, it has been able to improve profitability and their numbers now look better from what it used to be said Umezulora .
“When you have more funding you have more raw materials more goods, your profitability actually goes higher because with the same workforce you can do so much more.
“Let me give a simple example in lay terms, before when we were doing manual restringing we can do maximum of 20 panels in a day but with the auto stringer we can do 100, even up to 150 in a day. You can see the jump, so that has made a lot of difference and also it has eased off the pressure on me because when you know what to do but lack the resources it can be very depressing.
So auto stringer has not fully come up the installation will be done next week and we expect it to come up by May latest. What it does for use is that it makes our cost of production to drop so with that we can compete more effectively,” he said.
According to the entrepreneur, challenges with assembling is improving. “It is improving because on our side, due to the recent VC grant and support from BOI we just recently got a machine, an auto stringer that helps us automate processes we used to carry out manually and with that our output is being improved 6 to 7 times of what it is to be.”
On importation, Chuks said it will take time. “Yes, but its going to take some time because the honest truth is that most of the activities you seen in the Nigerian energy sector is being done in the downstream so maybe about 10 percent at the mid-stream but nobody has gone upstream, so it might take some time.
On ways to improve policy, he said: “I will give a very simple example. Based on my studies I have found out that the Chinese did a solar concession for 10 megawatts, sponsored it and took it as a case study for other 100 megawatt, 150 megawatt and so on.
“What I recommended is that government do a tender for a smaller system, maybe 10 megawatts, sponsor it, take the risk, pay for it assume the risk so we can use it for a case study and iron out all the issues that have to do with costing. This approach would give the government the opportunity to know what the actual cost per watt that this thing was delivered at; forget theoretical and paper calculations, what is the actual watt in the Nigerian context.
“Then what are the technical challenges faced which includes infrastructure, how much did it actually cost us because most of what the government add/had was actually learnt from other places.
“We need to upgrade our grid infrastructure what is the cost? We can now say we did for 10MW his is how much it costs and then extrapolate and say if we do 100 megawatts this is how much it is going to cost but if the government wants the company to take all the risk and get the guaranty it is not going to work.