NIGERIA: The news of Forte Oil's diversification from fuel retailing into power generation drove the oil company's share price up over 1,000 percent last year, making it one of the best performing companies on Nigeria's bourse

Record ID: 236304

  • Title: NIGERIA: The news of Forte Oil's diversification from fuel retailing into power generation drove the oil company's share price up over 1,000 percent last year, making it one of the best performing companies on Nigeria's bourse
  • Date: 10th February 2014
  • Summary: LAGOS, NIGERIA (RECENT) (REUTERS) STREET IN LAGOS WITH CARS IN TRAFFIC/CAR DRIVING OUT OF FORTE OIL PETROL STATION LOGO READING "FO" VARIOUS OF PETROL STATION ATTENDANT FILLING A CAR WITH FUEL PETROL PUMP NOZZLE IN A FUEL TANK PETROL PUMP SHOWING COST OF PURCHASE AND VOLUME LAGOS, NIGERIA (FILE) (REUTERS) POWER LINES VARIOUS OF MAN SWITCHING ON GENERATOR LAGOS, NIGERIA (RECENT) (REUTERS) VARIOUS OF FORTE OIL CHIEF EXECUTIVE OFFICER SPEAKING TO JOURNALIST IN HIS OFFICE CLOCK ON THE DESK (SOUNDBITE) (English) AKIN AKINFEMIWA, CHIEF EXECUTIVE OFFICER, FORTE OIL, SAYING: "We acquired the Geregu power plant in November 2013 and we've consolidated two months of the business performance from that plant into our 2013 result so that's also a key driver." VARIOUS OF PETROL STATION ATTENDANT SERVICING A CUSTOMER MONEY BEING COUNTED (SOUNDBITE) (English) AKIN AKINFEMIWA, CHIEF EXECUTIVE OFFICER, FORTE OIL, SAYING: "We're going to be spending some money on the overhaul of the plant; in addition, I'd mentioned to you that we are going to be looking at pursuing aggressive strategies in terms of the retail network so we're going to be aggressive like I said but we're also going to be strategic in the acquisition so we plan to spend between 750 million naira to 1 billion naira to expand our retail outlet base." VARIOUS OF FORTE OIL PRODUCTS (SOUNDBITE) (English) AKIN AKINFEMIWA, CHIEF EXECUTIVE OFFICER, FORTE OIL, SAYING: "At the moment we are operating at about a third of the installed capacity and it's not as if we cannot run at the entire 414 but we have gas supply constraints and that is what we still have now so the plant can actually operate at the maximum capacity but we're still constrained with the supply of gas however, we are currently in strategic alliances with gas suppliers in order to be able to boost this. Yes, there are problems with the infrastructure but we also have a role to play in terms of entering into strategic alliances with gas suppliers." VARIOUS CARS DRIVING INTO PETROL STATION PETROL STATION ATTENDANTS STANDING BY PETROL PUMPS SIGN READING "1/FO"
  • Embargoed: 25th February 2014 12:00
  • Keywords:
  • Location: Nigeria
  • Country: Nigeria
  • Topics: Business,Industry,Energy
  • Reuters ID: LVA5I78RG9UF62TADVE94FWTGNCS
  • Story Text: Nigerian fuel retailer Forte Oil's newly acquired power plant contributed 10 percent of its total 2013 earnings, even though it only took control of the plant in November.
    Amperion Power Distribution Company Limited, a subsidiary of Forte Oil, which is majority owned by business tycoon Femi Otedola, in October paid 132 million US dollars to acquire the 414 megawatt Geregu Power Plant under a government-led privatisation scheme meant to tackle decades of chronic blackouts that has plagued the country.
    Despite holding the world's seventh largest gas reserves, Nigeria only produces around 4,000 megawatts (MW) of electricity for its 160 million people, less than a tenth of the amount South Africa provides for a population a third of the size.

    "We acquired the Geregu power plant in November 2013 and we've consolidated two months of the business performance from that plant into our 2013 result so that's also a key driver," said Akin Akinfemiwa, Forte Oil's chief executive officer.
    Before the acquisition of Geregu, Forte Oil imported fuel, marketing it and car lubricants at retail petrol stations.
    Forte Oil said its 2013 full-year pretax profit surged five-fold to 6.5 billion naira (40 million US dollars) and proposed a dividend of 4 naira per share.
    Akin says the company plans to invest 65 million US dollars to upgrade the plant.

    "We're going to be spending some money on the overhaul of the plant; in addition, I'd mentioned to you that we are going to be looking at pursuing aggressive strategies in terms of the retail network so we're going to be aggressive like I said but we're also going to be strategic in the acquisition so we plan to spend between 750 million naira to 1 billion naira to expand our retail outlet base," Akinfemiwa said.
    The firm hopes that in two years' time, the plant will make up around 50 percent of annual profits.
    The CEO says to get to the maximum capacity in order to be able to generate the income, they will need to overcome the challenge of gas supply.

    "At the moment we are operating at about a third of the installed capacity and it's not as if we cannot run at the entire 414 but we have gas supply constraints and that is what we still have now so the plant can actually operate at the maximum capacity but we're still constrained with the supply of gas however, we are currently in strategic alliances with gas suppliers in order to be able to boost this. Yes, there are problems with the infrastructure but we also have a role to play in terms of entering into strategic alliances with gas suppliers," said Akinfemiwa.
    Forte Oil plans to plug that gap by bidding for marginal fields from multinational oil companies selling assets.
    Akinfemiwa said Forte Oil will invest up to 1 billion naira over the next two years in the petrol distribution business to expand and upgrade its network of 550 outlets across Nigeria, and to expand into other West African countries.
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