Axxela: Powering West Africa’s Gas Landscape

Axxela stands as a prominent energy company in West Africa, holding a significant position in the region’s rapidly evolving gas sector. Primarily focused on Nigeria, a nation blessed with substantial gas reserves, Axxela is at the forefront of unlocking the potential of this cleaner, more efficient fuel source. Its operations are critical in transforming Nigeria’s energy mix, moving away from traditional, often more polluting, alternatives.

The company’s role transcends simple gas delivery; it is a key enabler of industrialisation and economic growth across its operational footprint. By building and managing vital gas infrastructure, Axxela facilitates the availability of natural gas to various sectors, thereby fostering a more reliable and sustainable energy ecosystem. This infrastructure is the backbone upon which much of West Africa’s future energy security will be built.

In a region grappling with energy deficits and the need for cleaner energy solutions, Axxela’s focus on gas provides a crucial part of the answer. Natural gas, when compared to fuels like diesel or heavy fuel oil, offers significant environmental benefits, emitting fewer greenhouse gases and pollutants. This aligns with global energy transition goals, while also providing practical economic advantages for businesses.

Axxela’s presence is particularly felt in key industrial and commercial hubs where energy demand is high. By strategically locating its infrastructure, the company ensures that businesses in these vital areas have access to a consistent and affordable energy supply, which is paramount for their operations and competitiveness. This strategic positioning highlights Axxela’s understanding of the market’s needs and its commitment to meeting them.

The company’s activities cover a broad spectrum of the gas value chain, from distribution to marketing and related services. This integrated approach allows Axxela to offer comprehensive energy solutions to its customers, addressing diverse energy requirements with tailored gas-based offerings. This holistic model differentiates Axxela in the market and enhances its capacity to serve a wide range of clients effectively.

Axxela’s ambition extends beyond national borders within West Africa. While Nigeria remains its primary focus, the company is strategically exploring opportunities for expansion into neighbouring countries. This regional vision underscores the potential for natural gas to play a transformative role across the sub-continent, leveraging Nigeria’s abundant resources for broader regional development.

The impact of Axxela’s work is visible in the increased adoption of gas by industries previously reliant on more expensive or less reliable fuels. This shift not only improves operational efficiency for businesses but also contributes to a cleaner environment and strengthens the overall energy security of the nation and potentially the region. Axxela is actively shaping the energy landscape for a more prosperous future.

Ultimately, Axxela embodies the drive towards a gas-fueled future in West Africa. Its investments in infrastructure, innovative delivery methods, and strategic partnerships are paving the way for wider access to natural gas, cementing its position as a pivotal player in powering the region’s progress and sustainable development.

Delivering Energy: Axxela’s Core Gas Business

At the heart of Axxela’s operations lies the business of delivering natural gas to end-users, a function it performs through both physical and ‘virtual’ infrastructure. The conventional method involves extensive networks of pipelines that transport gas directly from supply points to customer gates, ensuring a steady and uninterrupted flow.

A significant portion of Axxela’s core business revolves around building, owning, and operating these gas distribution pipelines. These networks are meticulously designed to serve specific industrial and commercial clusters, providing the last-mile connection that makes natural gas accessible to businesses that previously lacked this option.

Beyond fixed pipelines, Axxela has pioneered and significantly invested in ‘virtual pipeline’ solutions, primarily utilising Compressed Natural Gas (CNG). This innovation allows the company to deliver gas to customers located far away from the existing pipeline grid, effectively extending its reach without the need for immediate pipeline construction.

CNG is compressed natural gas stored and transported in high-pressure cylinders mounted on trucks or trailers. Axxela employs a fleet of these specialised vehicles to transport CNG from compression stations, often located near pipeline hubs, directly to customer sites, including factories and power plants.

This virtual pipeline solution is particularly vital for industries in remote or developing industrial zones. It offers them the benefits of natural gas – cost savings, cleaner emissions, and reliability – enabling them to transition away from more expensive and polluting fuels like diesel or propane. The flexibility of CNG delivery is a game-changer for scattered energy demand.

While CNG is a key virtual solution, Axxela also explores and utilises Liquefied Natural Gas (LNG) where applicable. LNG, natural gas cooled to a liquid state, is suitable for transporting larger volumes over even greater distances than CNG, opening up possibilities for supplying gas to larger industrial facilities or power plants further afield.

The company’s service delivery model is comprehensive, often including the design, construction, and maintenance of on-site gas receiving and pressure reduction facilities for customers. This ensures that once the gas reaches the customer’s premises, it is delivered safely and at the required pressure for their specific machinery or operations.

In essence, Axxela’s core business is about overcoming geographical barriers and infrastructure limitations to bring reliable and affordable natural gas to where it is needed most, supporting economic activities and fostering a cleaner energy landscape across Nigeria and potentially beyond.

Axxela’s Reach: Mapping Critical Energy Pipelines

A significant part of Axxela’s operational footprint is defined by its network of gas pipelines, which act as critical arteries delivering energy across key industrial zones. These pipelines are not sprawling national grids but rather focused distribution networks designed to serve specific demand centres efficiently.

One of Aila’s prominent networks is the Greater Lagos Industrial Gas Network, a vital piece of infrastructure serving the bustling industrial areas within Lagos and its environs. This network connects numerous manufacturing facilities, power plants, and commercial users to reliable gas supply, underpinning a substantial portion of Lagos’s industrial output.

While specific lengths fluctuate with ongoing expansion, Axxela manages and operates hundreds of kilometres of gas pipelines across multiple states in Nigeria. These pipelines are typically low to medium pressure networks designed for safe and efficient distribution within urban and industrial areas.

Beyond Lagos, Axxela has strategically developed pipeline networks in other industrial hotbeds, such as the areas around Port Harcourt and the South-South region, where significant industrial and oil & gas-related activities take place. These networks are crucial for providing energy to refineries, petrochemical plants, and other heavy industries.

The strategic placement of these pipelines is dictated by the concentration of energy demand from large industrial and commercial customers. Axxela invests in these networks where there is a clear and sustained need for reliable gas supply, ensuring efficient use of capital and infrastructure development.

Maintaining the integrity and security of these pipelines is a paramount operational concern for Axxela. Significant resources are dedicated to surveillance, monitoring, and community engagement to prevent damage, vandalism, or theft, which can disrupt supply and pose safety risks.

Expansion of the existing pipeline network is an ongoing effort. Axxela continuously assesses potential new routes and industrial clusters to connect to its grid, gradually extending its reach and making natural gas accessible to a wider customer base as demand grows and infrastructure becomes feasible.

These physical pipelines, combined with Axxela’s virtual solutions, create a comprehensive energy delivery system. While virtual pipelines bridge immediate gaps, the physical networks represent long-term, high-capacity infrastructure investments that solidify Axxela’s role as a foundational energy provider in West Africa.

Powering Industry: Axxela’s Vital Role in Energy

Axxela plays a transformative role in powering industry across Nigeria by providing a cleaner, more cost-effective, and reliable energy alternative to traditional fuels. Businesses that switch to natural gas supplied by Axxela often experience significant improvements in their operational efficiency and profitability.

Historically, many Nigerian industries have relied on diesel generators or heavy fuel oil boilers, which are expensive to run, volatile in price, and environmentally detrimental. Axxela’s gas supply offers a stable and predictable energy cost, crucial for long-term business planning and investment.

Consider a manufacturing plant that uses large quantities of energy for heating, drying, or power generation. By connecting to Axxela’s gas network or receiving CNG deliveries, that plant can potentially reduce its energy costs by as much as 30-40% compared to using diesel, a substantial saving that directly impacts the bottom line.

Industries benefiting from Axxela’s gas supply are diverse, including:

• Manufacturing (textiles, plastics, goods)
• Food and Beverages
• Cement and building materials
• Chemicals and petrochemicals
• Steel and metal fabrication

Reliability of energy supply is another critical factor Axxela addresses. Frequent power outages or disruptions in fuel delivery can cripple industrial operations. Gas delivered via pipeline or dedicated CNG trucks offers a consistent and dependable energy source, minimising downtime and ensuring continuous production.

Furthermore, transitioning to natural gas helps industries meet increasingly stringent environmental standards. Gas combustion produces significantly lower levels of pollutants like Sulphur Oxides (SOx), Nitrogen Oxides (NOx), and particulate matter compared to diesel or HFO, contributing to better air quality and corporate social responsibility goals.

Axxela doesn’t just supply gas; it often provides technical support and expertise to help companies convert their existing energy systems to run on natural gas. This includes advising on equipment modifications or installations, ensuring a smooth and efficient transition for the industrial user.

By enabling industries to access reliable, affordable, and cleaner energy, Axxela directly contributes to increased productivity, job creation, and overall economic competitiveness. Its role is vital in fostering a conducive environment for industrial growth and sustainability in Nigeria.

Axxela’s Journey: Tracing Roots and Growth

Axxela’s story is one of strategic evolution and growth, originating from the pioneering efforts of Oando Gas & Power. Oando, an indigenous energy group, was one of the first to recognise and invest in the potential of developing gas distribution infrastructure in Nigeria, particularly for industrial and commercial users.

Oando Gas & Power established foundational gas distribution networks in key areas, laying the groundwork for what would become Axxela. These early projects demonstrated the viability and strong market demand for reliable piped natural gas beyond the traditional power sector.

A pivotal moment in the company’s history was the investment by Helios Investment Partners, a leading Africa-focused private equity firm. This strategic partnership, finalised around 2016/2017, led to the rebranding and transformation of Oando Gas & Power into Axxela Limited, marking a new phase of accelerated growth and expanded vision.

The investment by Helios brought not only significant capital injection but also global expertise in infrastructure development and operational excellence. This enabled Axxela to scale up its ambitions, invest more heavily in infrastructure expansion, and explore innovative delivery solutions like virtual pipelines more aggressively.

Since the transformation into Axxela, the company has achieved significant milestones, including substantial expansion of its pipeline networks in areas like the Greater Lagos region. It has also rapidly built out its CNG compression and transportation capacity, serving numerous off-grid customers.

The strategic focus under the new structure has been on becoming an integrated gas and power portfolio company, although the core strength remains gas distribution and marketing. This focus has allowed Axxela to streamline operations and concentrate on key growth areas within the gas value chain.

Axxela’s growth trajectory reflects the increasing market acceptance and demand for natural gas as the fuel of choice for industries and power generation in Nigeria. The company has effectively capitalised on this trend, leveraging its foundational assets and new investments to capture market share.

From its origins as a division within a larger energy group, Axxela has successfully evolved into a standalone, dedicated energy infrastructure company with a clear mandate to deliver gas solutions across West Africa, solidifying its position as a market leader in the sector.

Future Forward: Axxela’s Strategic Plans Unpacked

Looking ahead, Axxela is poised for continued growth, driven by a clear strategic roadmap aimed at expanding its footprint and enhancing its service offerings. The company’s future plans are intrinsically linked to the growing demand for natural gas in West Africa and the opportunities presented by the energy transition.

A core element of Axxela’s future strategy is the significant expansion of its existing pipeline networks. This involves extending lines into new industrial clusters, connecting more businesses to the grid, and increasing the capacity of current infrastructure to meet rising demand. Projects targeting underdeveloped industrial corridors are high on the agenda.

Parallel to pipeline expansion, Axxela plans to substantially grow its virtual pipeline capacity, particularly for CNG. This includes investing in more compression stations and expanding its fleet of CNG transportation trucks to serve a larger number of customers who are not geographically close to pipelines.

The company is also exploring the potential for increased utilisation of LNG as a key component of its virtual pipeline strategy, especially for supplying very large industrial users or power plants in remote locations. Investments in small-scale liquefaction or regasification facilities might be part of this long-term vision.

Geographical expansion beyond Nigeria remains a strategic objective. Axxela is actively evaluating opportunities to replicate its successful gas distribution model in neighbouring West African countries with undeveloped gas markets and significant industrial potential, leveraging its expertise and experience.

Innovation and technology are also central to Axxela’s future. This includes deploying advanced monitoring systems for pipeline integrity, optimising logistics for virtual pipeline operations, and exploring digital solutions for customer service and energy management.

As the energy landscape evolves, Axxela may also explore opportunities in related areas, such as integrating gas with renewable energy solutions for hybrid power systems, or exploring the potential role of natural gas in future hydrogen production, although gas distribution remains the primary focus.

Ultimately, Axxela’s strategic plans are geared towards solidifying its position as the leading integrated gas solutions provider in West Africa, capitalising on the region’s abundant gas resources to drive industrial growth, provide cleaner energy, and contribute to economic development.

Partnerships and Structure: The Axxela Network

Axxela’s success is significantly underpinned by its strategic ownership structure and a network of vital partnerships across the energy value chain. The company is majority-owned by Helios Investment Partners, a prominent private equity firm with deep expertise in investing and building businesses across Africa.

Helios’s ownership provides Axxela with access to substantial capital, crucial for funding large-scale infrastructure projects like pipeline construction and virtual pipeline investments. It also brings global best practices in corporate governance, operational efficiency, and strategic management.

While Helios holds the majority stake, other stakeholders and minority investors may also be part of the ownership structure, contributing diverse perspectives and resources to the company’s growth strategy. This blend of local knowledge and international financial backing strengthens Axxela’s market position.

Axxela relies heavily on partnerships with upstream gas producers and suppliers to ensure a consistent and reliable source of natural gas. These relationships are fundamental, as the availability and pricing of gas directly impact Axxela’s ability to serve its customers and execute its business model.

Collaborations with engineering, procurement, and construction (EPC) companies are essential for the development and expansion of Axxela’s infrastructure. Partnering with experienced firms ensures projects are completed safely, on time, and within budget, maintaining the quality of their assets.

Axxela also works closely with regulatory bodies in Nigeria, including the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the Ministry of Petroleum Resources, and relevant state-level agencies. Navigating the regulatory landscape effectively through constructive engagement is crucial for obtaining permits, approvals, and operating licenses.

Financial partnerships with local and international banks and financial institutions are key to securing the necessary funding for capital-intensive projects. These relationships facilitate debt financing and other financial instruments required for significant infrastructure investments.

Internally, Axxela is structured to focus on its core business segments – primarily pipeline gas distribution and virtual gas solutions (CNG/LNG). This structure allows for specialised expertise and dedicated teams focused on the unique operational and market requirements of each segment, fostering efficiency and innovation across its network.

Outlook and Challenges: What Lies Ahead for Axxela

The outlook for Axxela remains broadly positive, driven by the increasing recognition of natural gas as a critical transition fuel and the significant energy demand growth in West Africa. Nigeria’s declared “Decade of Gas” initiative provides a supportive policy environment for companies like Axxela.

Opportunities for Axxela abound in connecting the vast potential of Nigeria’s gas reserves to the unmet energy needs of its rapidly growing industrial and commercial sectors. The shift away from more expensive and polluting fuels presents a substantial and expanding market for Axxela’s services.

The regional energy transition, moving towards lower-carbon sources, positions natural gas favourably compared to coal or heavy liquids, offering Axxela the chance to be a key player in providing cleaner energy solutions and helping industries reduce their carbon footprint.

However, Axxela, like any infrastructure company operating in the region, faces notable challenges. One of the most significant is infrastructure security, including pipeline vandalism and theft, which can lead to operational disruptions, safety hazards, and increased costs for repairs and security.

Availability and pricing of gas from upstream sources can also pose challenges. Fluctuations in supply or unfavourable pricing terms from producers can impact Axxela’s ability to consistently deliver gas at competitive rates to its customers, affecting profitability and market position.

The regulatory and policy environment in Nigeria, while increasingly supportive of gas, can sometimes present hurdles. Navigating complex approval processes, potential policy changes, and ensuring consistency in regulation requires dedicated effort and stakeholder engagement.

Competition, while limited in terms of established, large-scale piped networks, could emerge from other energy sources or new entrants leveraging different technologies. Axxela must remain agile and innovative to maintain its competitive edge.

Despite these challenges, Axxela’s established infrastructure, diversified delivery methods (pipeline and virtual), experienced team, and strong partnerships position it well to capitalise on the significant opportunities ahead. The company’s resilience and strategic focus will be key to navigating the complexities of the West African energy market.

Ultimately, Axxela’s future trajectory is closely tied to the successful development and utilisation of Nigeria’s gas resources. Its ability to continue expanding infrastructure, innovate delivery, and manage operational risks will determine its success in powering West Africa’s industrial and economic future.