Otedola to venture into Nigerian troubled power sector
NIGERIAN BIL LIONAIRE, FEMI OTEDO LA is attempting to venture into the Nigerian electricity industry as Forte Oil said it would commence talk to sell its power unit to the company’s major investor.
This comes as no surprise because there has been rumors of Otedola wanting to enter the troubled power industry but the company said in a statement confirmed it and said it was seeking shareholder approval in a vote on Feb. 7 to start talks with the billionaire, according to Reuters report.
Amperion Power Distribution Company Limited, Forte’s power subsidiary, paid $132 million to acquire a 414 megawatts power plant six years ago under a government-led privatisation scheme meant to tackle decades of chronic blackouts.
Forte Oil said it plans to use proceeds from the sale of the power firm to expand its fuel retailing unit, its main focus. Besides fuel retailing, Forte also imports fuel and car lubricants, which it resells at petrol stations.
Most oil players have fled the country’s retail fuel sector because of the regulation of petrol price. The downstream industry operates under a tightly regulated fixed margins, and so requires a lot of capital to expand.
Experts have stressed the need for deregulation of the downstream sector which would have a profound impact on the Nigerian currency and import bill.
Last year, Forte decided to sell its power generating unit, upstream services business and downstream venture in Ghana to focus on its fuel distribution operation at home.
The company said on Thursday that Otedola had shown interest in bidding for the power unit and that his proposal would be reviewed by management and an independent adviser.
A public tender to sell the power asset received “unexpectedly low interest”, Forte said, adding that pricing proposals it received did not meet its expectation.
Shares in Forte rose 2.55 percent on Thursday to 30.15 naira, valuing the company at 39.3 billion naira ($128 million).
Otedola has also agreed to sell his 75 percent interest in Forte Oil’s downstream business, with the deal expected to close in the first quarter. OPEC+ urges members to double down on production cuts
In an attempt to ensure that the oil market is balanced, the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC allies have called on its members to redouble their efforts and stick to the proposed cuts in 2019.
The oil cartel and its allies in December agreed collectively to cut 1.2 million barrels per day for the first six months of 2019 to prevent a supply glut after prices plummeted.
Under the production-cut tables for all its participants, OPEC agreed to cut 812,000 barrels per day while its 10 non-OPEC allies committed to a reduction of 383,000 barrels per day.
Saudi Arabia, the world’s largest crude exporter, has committed to a 322,000 barrels per day cut from its October level while Russia has vowed to cut output to 11.19 million barrels per day from its baseline of 11.42 million barrels per day.
OPEC pumped 32.43 million barrels per day in December, according to the latest Platts survey of OPEC production, but the 11 members with quotas under the output cut deal would need to cut another 950,000 barrels per day to be in compliance. The deal exempts Iran, Libya and Venezuela.
Compliance levels of the participating countries were 98 percent in November compared with 104 percent in October, it added. The overall conformity of the coalition since it agreed to work together on production policy was 116 percent, the statement said.
The committee, composed of ministers from Saudi Arabia, Kuwait, Venezuela and Algeria from OPEC and Russia and Oman from the non-OPEC nations, is tasked with assessing market conditions and tracking the group’s compliance with production quotas.
The company said on Thursday that Otedola had shown interest in bidding for the power unit and that his proposal would be reviewed by management and an independent adviser