Nigerian energy company, Oando PLC, the Government?s preferred bidder for the lease of the Pointe-a-Pierre refinery in Trinidad and Tobago, has been struggling financially, a scrutiny of the company?s financial records has showed.

According to Oando?s unaudited statements and separate financial statements ending December 31, 2024, the company is in accounting insolvency.

The financial statements, viewed by the Investigative Desk of Trinidad Guardian, showed the company?s total liabilities were 7.8 trillion Naira (TT$34.4 billion), while its total assets were 7.5 trillion Naira (TT$33 billion). Oando has borrowings of 2.8 trillion Naira (TT$12 billion).

According to financial experts, accounting insolvency, also known as balance sheet insolvency, occurs when a business is considered insolvent on the books, meaning it owes more than it owns and cannot meet its financial obligations when they come due. It means while operations may be ongoing, financial pressure is increasing. While the business can stay afloat in the short term by lowering prices, divesting assets, selling unpaid receivables, or through capital injection from its owners, the measures are considered unsustainable in the long term.

Restarting the refinery is expected to cost at least $1 billion (TT).

Over the last decade, Oando reported significant losses in several annual financial statements.

2015, a N34.9 billion loss (TT$154 million)

2016, a N25.8 billion loss (TT$114 million)

2018, a N28.8 billion loss (TT$127 million)

2019, a N207.1 billion loss (TT$912 million)

2020, a N132 billion loss (TT$582 million)

2022, a N78.7 billion loss (TT$347 million)

However, despite these struggles, Oando rebounded in 2023 and 2024, with a N60 billion (TT$26 million) profit and N65.5 billion (TT$29 million), respectively.

Although these gains mark a positive shift for Oando, the company still faces substantial liabilities. Should accounting insolvency persist, creditors and lenders could force the company to declare bankruptcy or sell its assets.

When asked if the Government sought independent verification of bidders? finances, Prime Minister Stuart Young, who is also the Energy and Energy Industries Minister, said on Friday, ?The Cabinet evaluation committee went through a rigorous process which included the use of independent international advisers and recommended Oando, which was accepted by Cabinet. Thereafter it is TPHL (Trinidad Petroleum Holdings Limited) as owner of the refinery that decided to proceed with Oando. TPHL is negotiating with Oando, and that process will determine proposed terms and conditions.?

So far, the Government has not disclosed whether Oando?s accounting insolvency was flagged in this evaluation process, nor has it clarified how it factored into the final decision.

Although Oando has experience in the refinery sector, it had no prior experience operating a major refinery.

Financial concerns

Financial concerns about Oando were also raised in a 2023 independent financial audit by BDO Global, one of the world?s leading firms.

?There is significant uncertainty that the group and company may be able to continue as a going concern and, therefore, may be able to realise its assets and discharge its liability in the normal course of business,? the audit stated. According to BDO Global?s 2023 report, ?The reversal of this trend is dependent on the successful outcomes of its planned actions to refinance its debts in order to manage the fund?s gap of N3 trillion (TT$1.3 billion) and N1.4 trillion (TT$614 million).

?As stated in the note, if the planned actions are successful, it will only address 53.6 per cent of the group?s projected funding gap shortfall through equity raises until such a time that profit and healthy cash flows from profitable operations will be achieved.

?The group and company have going concern indicators which include reporting consistent total comprehensive losses in the last three years, negative working capital, inability to settle loan facilities.?

Sources close to the bidding process are puzzled as to how and why Oando was chosen as the Government?s preferred bidder a month ago by Cabinet. The CRO Consortium, Oando?s main competitor, has not disclosed its financials publicly. However, sources close to the process claim its finances are in order. Unlike Oando, no regulatory infractions or financial misconduct have been publicly documented for CRO?s partners.

The CRO Consortium comprises the local company DR Commodities, the international oil and gas company Ocala (of Venezuelan origin), and the Indian engineering company Chemie-Tech.

No further information was available on CRO Consortium?s plans and track record.

Top contenders

Oando and the CRO Consortium are the top contenders in the Government?s third bidding round for the refinery, with INCA Energy LLC also in the mix.

According to former finance minister Colm Imbert, previous bidders failed to prove their financial capacity to restart operations. Among them were Patriotic Services Company Ltd (a joint venture of the Oilfield Workers Trade Union).

Naveen Jindal (Indian billionaire who withdrew after facing criticism over corruption allegations).

DR Commodities (a subsidiary of local engineering firm D Rampersad, engaged in oil and gas investments).

Ocala (this Miami-based firm, led by Venezuelan engineer Luis Ramirez, has experience in refinery operations and maintenance).

Chemie-Tech (an Indian engineering firm specialising in bulk storage and petrochemical plants, with US$2 billion in revenue).

The bidding scoring matrix

According to the bidding scoring matrix obtained by Guardian Media?s Investigative Desk, the assessment was conducted as follows.

?(a) Offeror or its financial affiliates have a proven track record of providing financing to cover the funding for its restart plan, inclusive of an asset integrity assessment (10 % of scoring)

(b) The Offeror has provided a plan to fund the Working Capital required for their restart plan (10% of scoring)

(c) Offeror has provided a realistic long-term financing plan for funding full operations of the refinery (10% of scoring).?

As seen in the scoring matrix, ?The Offeror and its affiliates/partners have demonstrable experience and capability in operating and maintaining refineries (demonstrated through Leadership & Management Team org chart and supporting resumes with references)

(a) Less than 10 years = 0

(b) 10 ? 12 years = ~7% (of score) (20/3)

(c) 13-15 year = ~14% (of score) (20/2)

(d) >15 = 20% (of score).?

Oando?s CEO speaks on Pointe-a-Pierre refinery, finances

Oando is one of Africa?s largest integrated energy solutions providers and is Nigeria?s largest indigenous oilfield service provider. It is listed on the Nigerian and South African stock exchanges and is led by CEO Wale Tinubu. It has a market capitalisation of around US$1.3 billion.

Commenting on the impending acquisition of the Pointe-a-Pierre refinery, Tinubu told the Nigerian Independent last week that it was a testament to Oando?s escalating presence on the global energy stage.

?We are honoured by the confidence the Trinidadian Government has placed in us with this award. This strategic investment aligns with our operational footprint, leveraging our vast technical expertise and global partnerships to finance projects. We recognise the significance of this opportunity and look forward to working with all stakeholders to deliver maximum value for all parties involved,? he said.

The story said, ?With a processing capacity of 175,000 barrels per day and a Nelson Complexity Index of 8.0, it is adept at refining regional crude oils to supply both domestic and regional markets with petroleum products.?

Oando?s recent ?impressive? financial results, he said, ?reflect its strategic initiatives and robust growth trajectory.?

?These impressive financial results are partly attributed to Oando?s strategic acquisition and integration of the Nigerian Agip Oil Company Limited (NAOC Ltd). This acquisition significantly enhanced Oando?s production capacity, achieving peak operated production of 103,206 boepd and net entitlements of 45,000 boepd,? Tinubu shared.

?2024 was a year of transformation for Oando, the key highlight being our successful acquisition and subsequent integration of NAOC Ltd, which significantly enhanced our production capacity.

"In 2024, Oando invested $18.1 million in capital expenditures for the development of oil and gas assets, alongside exploration and evaluation activities. This strategic capital allocation aligns with the company?s cost optimisation and efficiency goals,? he added.

He outlined Oando?s priorities ahead of 2025, saying the company aims to drive cost optimisation, enhance operational efficiency, and leverage technology to boost productivity.

On Wednesday, Afreximbank told a daily newspaper that it was willing to finance Oando?s lease of the Guaracara Refinery.

However, the terms of this financing, including whether the loan is contingent on operational success, have not been disclosed.

Oando?s troubles

2024 - Oando purchases Agip Nigeria Oil from Italian firm Eni for US$783 million. It was purchased through a US$650 million loan from Afreximbank.

The purchase was viewed as controversial because the Niger Delta Region, where Agip operates, has suffered from serious environmental degradation, affecting livelihoods and the health of thousands of residents.

2021 - Oando reaches a settlement with the Nigerian Securities and Exchange Commission (NSEC) following an investigation by the commission. Oando pays an undisclosed amount and does not have to accept or deny liability. The settlement resolved allegations of misstated financial statements and insider trading.

2019 - Investigations by the NSEC found that there were infractions of securities and other laws committed by Oando. The commission found that the disposal of Oando Exploration to Green Park Limited was done without commission approval; financial statements in 2013 and 2014 were misstated; there was suspected insider trading; and declared dividends in 2013 and 2014 were derived from unrealised profits. The commission called for the resignation of all board members and the barring of the CEO and deputy CEO for five years.

2017 - Alhaji Mungal, 18 per cent owner of share capital, complained to the commission about negative working capital and ongoing concerns by auditors. (Adapted from a report by Trinidad Guardian)

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