Energy Tycoon Otedola To Pump $1bn Into Geregu Power

FUNSHO AROGUNDADE

Billionaire energy tycoon, Femi Otedola will soon pump close to $1 billion into his newmega interest, power generation through Geregu Power Plc, a reliable source disclosed.

On Wednesday, Otedola, who started his oil business in the mid-90s with Zenon Petroleum and Gas and later acquired majority shares in AP Plc which transformed to Forte Oil, on his verified Instagram handle said he had exited the downstream and upstream sub-sectors of the oil and gas industry but he did not disclose the buyer of his stakes in the upstream business.

The Nigerian billionaire also disclosed that his next investment focus will be on Nigeria’s power generation business.

“In line with my principle of business focus, we have divested from our marketing and upstream businesses and shall from now on focus and consolidate on the gains of our power generation business, Geregu Power Plc,” Otedola said.

Otedola’s market action follows the completion of the sale of 75% of his investment interest in Forte Oil, which is reported to be around N64 billion.

By migrating from the Oil business, Otedola made a bold statement concerning his interpretation of the changing local business environment where the power sector is likely to appear more sustainable and profitable

Experts have suggested that by selling off its downstream operations in Nigeria and its operations in Ghana, Forte Oil has increased its liquidity, reduced short-term debt to equity ratio and upscaled its operations in mining and gas.

“The move means the company has exited the high turnover low margin end of the oil business and settled into the capital intensive but operationally more profitable upstream activities. The strategic decision will effectively change FO’s operational life cycle and business risk,” an expert submitted.

With the Forte Oil turnaround legacy, Otedola now faces the challenge of running a profitable and scalable power franchise.

In 2012, Otedola through his company, Amperion Power Distribution Ltd, a consortium of United Kingdom-based company, Guernsey; Shanghai Municipal Electric Power of China and Forte Oil Plc,  won the bid for the 414MW Geregu Power Plant with a $132 million offering as announced by Mr. Atedo Peterside, who was the Chairman of the National Council on Privatisation (NCP) then.

“As a testament of my commitment to the Federal Government’s Power Sector Recovery Program in Nigeria, here is my company’s $350million investment in Geregu Power Plc,”the Epe-born billionaire once  tweeted.

Seen as a huge, strategic move, Otedola has since heavily invested additional hundreds of millions of dollars in the Kogi State-based power generation as part of efforts to liberalise the sector in Nigeria.

Geregu Power Plc is a corporate entity incorporated under the laws of the Federal Republic Nigeria on November 10, 2006, as one of the unbundled companies from the defunct Power Holding Company of Nigeria, PHCN with the sole interest of electricity generation through the use of Gas Turbines.

The company started operations in 2007 with GT 13 and was officially commissioned by the former President, Chief Olusegun Obasanjo in February 2008.

The plant is an Open Cycle Gas Turbine Power Plant, with a total installed capacity of 414MW at commissioning comprising of Siemens SGT5-2000E 3 x 138MW V94.2 Gas Turbines using natural gas.