The deal will help Oando to bring down debt. At the end of June, the group had total short-and long-term borrowings of 279.7 billion naira ($888.6m) against 138.2 billion naira of total equity.
Oando’s shares, which are thinly traded, were unchanged at 40c on the JSE after the announcement. Two years ago they were at 245c.
OGP has 260km of gas infrastructure in Nigeria and delivers 70-million standard cubic feet of gas a day to more than 175 industrial and commercial customers. Africa Oil & Gas Report said there were three bidders for the assets.
Nigeria is critically short of power, with about 10,000MW of capacity serving a population of almost 200 million, compared with SA’s 43,000MW serving a population of about 53 million.
In July, HV Investments, a joint venture between Helios and Vitol, completed an investment of $210m in 49% of a new entity to hold Oando’s downstream fuel-distribution businesses in Nigeria including filling stations and storage. Oando retains 49%, with 2% held by a local entity. The funding injection has also helped Oando to pay down debt.
The shareholding arrangement for OGP is similar, as it will result in Oando holding 49% of the voting rights in OGP, Helios holding 49% and a local entity holding 2%.
Oando group CEO Adewale Tinubu said the transaction would enable OGP to expand its footprint in Nigeria.
Helios partners co-founder Tope Lawani said the move was in line with the firm’s strategy of investing in energy solutions businesses. One of the objectives would be to improve reliability of gas supply, which would promote economic growth in Nigeria by helping businesses.
In a July presentation, Tinubu highlighted the steps Oando was taking to adapt to an environment of low oil prices and the depreciation of the naira. These included completing the divestment of a stake in the downstream businesses and OGP, a management buyout of Oando Energy Services, and restructuring debt.
•Adapted from a Business Day (South Africa) report. Photo shows Oando Group CEO Wale Tinubu.
