OVER N16M IS SPENT MONTHLY RUNNING DIESEL IN ESTATE – STEPHEN JAGUN
Mr. Stephen Jagun, principal partner at Jagun Associates, in this interview with EHIME ALEX, shares his thoughts on the effect of diesel scarcity on facility management.
What effect is the diesel hike having on facility management?
Diesel price has gone beyond the plans we ever prepared for. The price has gone over the roof! In 2021, diesel was still about N280, which we thought was outrageous. Last January, in one of the places I was called to intervene in their budget defence for service charge, I was advising them to budget diesel purchase at N500 per litre but they screamed. They [the estate] use about 33,000 litres of diesel per month. So, if you do the mathematics, you will see that the figure is huge [that is N16.5m]. We eventually agreed for N450 per litre.
By the end of last year, the price was almost N800 per litre, which almost doubled the budget and definitely doubled what was spent in the year before.
Looking at alternative sources, what do you suggest?
In bringing out the best in facility management, we try to network and look for alternative sources that could reduce costs.
In the short run, the options could be, do we shut down appliances that consume much current, use smaller generators or try to balance the electricity load?
I was at a bank at Awolowo Road in Ikoyi; I got there by 3.05 pm but was told the bank had closed. Banks now close by 3.00 pm to cut down on cost, reducing the hours they open to the public but continuing with some internal works while relying on inverters, solar energy or any alternative source of energy. That way, they can shut down the air conditioners and other appliances, which ordinarily they would not if customers are in the banking hall. All is on the effect on the cost of energy.
On the short to medium run, efforts can be made to change electrical bulbs to LED or energy-saving bulbs. When purchasing electrical appliances, you buy those low on energy consumption; use of inverter fridges, inverter air conditioners, inverter freezers etc. These can be done at once or in phases.
In the long run, do we need to go for sustainable power, run on solar or discuss premium power supply from DISCO with our neighbours? There are some residential estates where they have guaranteed power supply for 20 hours because they had agreed with the Power Holding Company of Nigeria that they would pay their bills – just give us Mains power, which is cheaper.
By the time you add the cost of diesel, maintaining generating sets, replacing spare parts and others, you will see that it is far cheaper to deliver power [by PHCN] than generating it by yourself.
What if the price of diesel keeps rising excessively?
Facility Managers should keep innovating and try to benchmark with the world’s best practices.
In advanced countries, people pay for what they can consume. In America, London, etc, people do not joke with electricity or waste it. Here, people can put on their lights, and television sets and go to the market without anybody watching. That surreptitiously raises the bills they pay!
If we have five air-conditioners in the house, do we allow all to be working at the same time? No! After the peak period, do we need to shut down power? Same in our offices. Somebody is on the 8th floor and needs to come down to the 7th floor, does she need to jump on the lift? All these raise costs.
How do you think facility Managers should deal with unbudgeted costs?
What the facility managers must do is communicate. Communication brings about transparency. We budgeted at N450, but this thing has risen to N800; that is a fact that can be verified. At that time, Tenants could be querying what they are using against what they were using before.
They suddenly get interested in their bills. A professional Facility Manager will discuss how to reduce their consumption or cost with them.
What is your expectation for 2023?
We expect that innovation will get better. With challenges, definitely there will be innovation. One of the beauties of life is that where there are problems, people will always provide solutions.
I was in Disneyland some time back, and I discovered that they are already planning that by a certain year, they will rely more on solar power. This was because they realised that 40% of their expenses was on power. This made them look for ways to tackle it. It will obviously be a huge initial cost but definitely cheaper in the long run.
PROFILE
Mr. Stephen Ola Jagun is the principal partner of Jagun Associates. He has almost three decades’ wealth of experience practicing real estate. He is the first African Fellow of the International Facility Management Association (IFMA) and a past president of the Nigerian Chapter of the International Facility Management Association (IFMA Nigeria).
He once chaired the National Steering Committee of the Association of Facilities Management Practitioners of Nigeria (AFMPN). Currently the Chairman Board of Trustees of the Association. He is also the Vice Chairman of the Estate Surveyors and Valuers Registration Board of Nigeria (ESVARBON). A graduate of Estate Management with a master’s degree in Project Management from the prestigious University of Lagos, Jagun is active in elevating the facility management industry through leadership and mentorship
