Oando Plc, Nigeria’s leading indigenous energy group, listed on both the Nigerian and Johannesburg Stock Exchange, said it had completed the sale of its subsidiary East Horizon Gas Company (EHGC) for $250 million to Seven Energy Limited.
Wale Tinubu, group chief executive, Oando Plc, said: “This transaction aligns with our corporate strategy, as the proceeds of the sale will boost the group’s overall liquidity in furtherance of our main growth initiatives in the Upstream.”
The company said the EHGC sale underlined its desire to divest into the more profitable upstream, whilst rationalising its present business portfolio to reflect key opportunities for growth and value extraction.
EHGC was originally set up as an Oando midstream special purpose vehicle to build and operate an 18-inch, 128km natural gas transmission and distribution pipeline with a capacity of 100mmscf/d, traversing Akwa Ibom and Cross River States.
The company said the divestment of the asset signified a considerable profit margin for the company, and validated the intrinsic value that lies within its gas business and indeed, the midstream sector.
“This is testament to the enabling environment evolving in the midstream created by the Nigerian government. This validation is likely to attract more funding and instill confidence in potential investors in infrastructure development and pipeline networks in the midstream.”
He said the company remained steadfast in its commitment to grow the midstream business, evidenced by ongoing expansion efforts of its various assets, including the construction of the 4th phase of its Greater Lagos pipeline to increase capacity and customer base in Lagos; the enhancement of its newly acquired Port Harcourt pipeline franchise; the growth of its Compressed Natural Gas distribution programme, commissioned in 2013; and the increase in its power generation to 23.55 megawatts (MW), with the addition of a 2nd power plant, the 10.4MW Alausa IPP.
“We also have projects which are at the conceptualisation phase and are expected to create value for us in the longer term; the 400km SW-NW EIIJ pipeline and the Central Processing Facility that will serve as a gas gathering and processing hub in the Niger Delta,” Tinubu said.
Oando said its commitment to the development of midstream infrastructure and energy solutions aims to unlock and harness the available vast resource potential of Nigeria, thereby reducing the perennial power challenges currently plaguing the country.
FEMI ASU
