Alook into Nigeria’s lubes market

In this edition, we are joined by Ajay Pandey, the Director and Global Head of lubricants at Delta Group, a seasoned professional in the lubricants industry with 30 years of experience. Mr. Pandey gives us deep insights about Nigeria’s lubricants market where he has been working for the last 15 years.

EXPERT INTERVIEW

Ajay Pandey, Director Global Head of Lubricants -Delta Group

1 Could you take us through your journey in the lubricants industry?

I started my career in the industry in 1994 when I joined Elf Lubricants, a French multinational company that was setting up operations in India. I was part of the team that rolled out Elf lubricants in the Indian market, and in the next 10-15 years, Elf became a major lubricant brand in India after Castrol. In 2000, Total acquired Elf Lubricants, and the company later became Total India.

Between 2002 and 2005, I oversaw the lubricants business in Northern India. In this capacity, I also sold the Total and Elf brands of lubricants. I left in 2005 and joined Reliance Industries as the General Manager for the northern region of India. My team and I launched a lubricant brand for Reliance and rolled out the Relstar brand in Indian market.

2 When did you get involved in the African Lubricants business?

I left Reliance in 2009 and joined Conoil Plc in Lagos, Nigeria. I was the head of the lubricants business and stayed for four years. At Conoil, I helped launch Okada Golden Super, a lubricant for motorcycles and tricycles. I also launched other specialized oils for the generator and gas segments, and those brands are doing well in the market.

In 2013, after leaving Conoil Plc, I joined Masters Energy Group as Group Chief Operating Officer, in charge of developing several business segments for the company which include Oil & Gas, Lubricants, FMCG, Plastics, Shipping, Rice trading, Tricycle and Logistics. I left Masters Energy Group in 2017 and rejoined Conoil Plc as a Managing Director, stayed for over a year, and then joined Gulf Petrochem (GP). GP had just bought a blending plant in Nigeria and was setting up another one in Tanzania, so I came on board to oversee the business.

Hi-Speed Lubricant was GP’s first brand in Africa because it took over the assets of Hi-Speed Lubricant and bought the brand, too. We re-launched the Hi-Speed lubricants brand in the Nigerian market in late 2020 and changed its look and feel. In 2022, GP’s African assets were up for sale, and it was bought by Delta Corp, which I currently work for.

3 What is the scope of your responsibilities as the Director and Global Head of lubricants at Delta Group?

I look after all the lubricants business in Africa, and Iam also responsible for setting up the lubricants business worldwide. We plan to be present in more than 10 countries in Africa by end of 2024 and further expand to UAE and Indian subcontinent by 2025. We are also positioning Delta as a one stop solution for toll blending. We are presently toll blending for few Multinational oil Companies (MNC’s) and Local brands in Nigeria and Tanzania.

4 Delta Group has the Hi-Speed lubricants  brand; what market segments do you serve, and how have these products been received?

Hi-Speed lubricants are primarily more popular in the Business-to-Customer (B2C) segment, and we cater to 2-wheelers, 3-wheelers, the vehicle segment, the truck segment, the generator segment, and the hydraulic segment.We also have aspecialized range of lubricants under the Delta brand, focusing on the Business-toBusiness (B2B) segment. We are therefore covering the automotive and the industrial segments. Some of the industries we serve are steel, construction, plastic manufacturing, FMCG, Mining, Sugar, Cement and logistics industry.

As for the reception of the products, we have repositioned Hi-Speed as a high-premium lubricant brand of high quality, and the market has positively received it.

5 Apart from Nigeria, Delta Group operates in which other African countries, and what are the similarities and differences in these markets?

We are present in six African countries: Nigeria, Tanzania, Kenya, Uganda, Rwanda and Zambia. We have blending plants in Nigeria and Tanzania. In Kenya, our subsidiary is DC (Delta Corp) Energy. We have a more significant presence in Uganda in the fuel business. We also have a distributor partnership with ADNOC in Rwanda and Zambia and hope to start selling Hi-Speed lubricants in Rwanda soon. We also plan to sell Hi-Speed in Mozambique and increase presence in East Africa.

I have seen differences between the West African market, where Iam based, and East Africa. In West Africa, companies do cash sales with no credit, but the East African market is credit-driven, and companies give credit to sell. Consequently, in Nigeria, bad debt is low due to the no-credit policy to distributors, while in East Africa, bad debt is high.

These countries are similar in that they are growing markets with great potential. Both the markets, premium brands are growing at a faster rate with improved customer awareness. With better Industrialization, demand for Industrial & specialties lubricants are increasing.

6 Nigeria has multinational and local lubricant companies. What has helped Delta Group gain market share and cement its position as a significant regional player?

The first thing we have done with Hi-Speed lubricant is repositioning it as a premium-level brand, which means our price positioning is slightly lower than what the multinationals in Nigeria sell their lubricants at. Still, it is also higher than the price of local lubricant brands. We also conduct training in the market so that people understand that the quality of our lubricants is very close to that of multinational brands, but our lubricants are more affordable. This has helped us solidify our position as a quality brand.

7 You have extensive knowledge about Nigeria’s lubricants market. What changes have you witnessed over the years, and what changes do you foresee happening in the future?

Having worked in the Nigerian lubes industry for about 15 years, I noticed that when I started, the industry was largely unorganized; many recycled products were imported, and substandard goods were sold. The duty of imported base oils and finished lubricants was the same. Hence, there wasn’t much growth in the local lubricants industry. The Lubricant Producers Association of Nigeria (LUPAN) came into action and worked hard to ensure the duty was revised. Currently, the duty for importing finished lubricants is 30%, and for base oil, it is 5%.

I also observed that the products being sold in the market had very low specifications or no specifications at all. However, the government has worked to get rid of these oils from the market. Previously, about 50% of the lubricants business came from the unorganized sector, which has reduced to 35%, and now currently, 65% comes from the organized sector.

Over the years, the industries have also grown and increased in number, and consequently, the B2B business is also growing. The primary power source in Nigeria has been generators, but some of the things we are seeing start to happen are efforts to revive the power grid and plans to bring back the rail. This will mean increased lubricant business in the areas of power generation and rail.

>> Lubricants professional bodies like MOMAN and LUPAN are important because they can talk to higher authorities on behalf of the market players on matters like policies governing the industry.

8 Nigeria has a significant backup power  generation segment. Do you think this segment will grow or diminish if the grid power distribution becomes more reliable?

The segment is divided into two parts: organized and unorganized. The organized side has players like Caterpillar, Wartsila, and Cummins, who require specific lubricants from multinational companies to be used in their generators, so they are more OEM-specific and more established in B2B business. There is a shift towards the use of gas, and the government has been pushing for the use of this in industries; hence, the gas engine oil business is growing. This segment’s second part is B2C, which is mainly unorganized and deals with small household generators. These generators are powered by petrol. This business will start shrinking as there is an increased uptake in solar and the use of gas.

9 What are some of the challenges in Nigeria’s lubricants market?

One of the significant challenges is that the logistics aspect of the business is expensive, and it eats into the profit margins for most traders. Another difficulty is the awareness of the importance of using good quality lubricants, which needs to increase among customers in Nigeria. The Oil Marketing Companies (OMCs) have a role in raising this awareness. Also, organizations like The Standards Organization of Nigeria (SON) and LUPAN need to be stricter in ensuring better products are sold in the country while protecting the interests of local players. There are also a lot of loopholes in the policy governing the lubricants industry, and it would be better for SON to seal them. This includes implementing better policies to discourage the importation of recycled oils into the market.

10 Looking at Nigeria’s lubricants segment, professional bodies like MOMAN and LUPAN exist. What would you say are their contributions to the lubes market, and can they be strengthened? Would you also recommend that other African countries form such bodies?

Having such bodies in every country is important because they can talk to higher authorities on behalf of the market players on matters like policies governing the lubricant industry and duties on products like base oils. Since these bodies have many members, the individual interests of companies take a back seat, while the common interest in terms of the long-term goals for improving the industry in the country takes the lead. .