Otedola’s Forte Oil Closes Shop In Ghana, Sells Nigerian Assets

One of Nigeria’s top energy firms, Forte Oil, says it plans to sell its upstream services and power businesses in the country and divest from Ghana to focus on its core fuel distribution operation in Nigeria.

The decision comes months after the company’s Chief Executive Akin Akinfemiwa told investors in Lagos that he wanted to aggressively pursue mergers and acquisition opportunities along the energy value chain, and acquire marginal oilfields to boost its upstream business.

According to Reuters, the company’s majority owner, Femi Otedola, had also been in talks with a major refinery to form a strategic partnership for local refining of petroleum products.

Forte Oil’s share price plunged 49 percent in 2017 after the company struggled to get hard currency to import products. It now has a total market value of 57.3 billion naira but gave no indication on Wednesday of how much the businesses for sale might fetch.

It said interest costs attributable to the businesses to be sold stood at 2.2 billion naira as of December. It now plans to seek shareholder approval for the sale on May 23 and appoint advisers, it said in a notice to investors.

The unit in Ghana has declared losses over the last three years and has uncollectible trade debts due to tough economic conditions and a currency devaluation in the cocoa-rich country.

Forte Oil said proceeds from the divestment would be used to expand its downstream fuel distribution business and to invest in storage infrastructure.

The company said the downstream sector in Nigeria had gone through changes in recent years and was expected to evolve further.

It added that the industry had operated under a tightly regulated fixed margin but could be deregulated, especially given its impact on the Nigerian currency and import bill.