Elumelu, Otedola and the quiet repricing of Nigeria’s energy market

The most critical signals about the health and vitality of Nigeria’s energy system have come from the response of capital allocators to the policy, macroeconomic and sector-specific developmentsover the last 30 months. We are now seeing custodians of capital and investors take long-term, risk-based & significant investments in complex assets. We are also seeing, perhaps for the first time, credible exits beginning to happen in value-generating, non-distressed assets. Two transactions concluded at the close of 2025, involving Tony Elumelu and Femi Otedola, provide a useful lens for us to examine this shift.

These transactions matter not because of the personalities involved, but because of what they say about market maturity, capital discipline, and the evolving confidence of local investors in Nigeria’s oil, gas, and power ecosystem.

Tony Elumelu and Femi Otedola arrived at energy ownership from very different starting points. Elumelu’s foundation was built in banking and financial services, where governance, balance-sheet strength, and regulatory compliance define long-term survival.

Otedola’s early successcame from downstream energy, building large diesel trading and logistics businesses at a time when grid unreliability made liquid fuels essential to economic activity. Those backgrounds continue to shape how each approaches risk, capital structure, and timing.

Heirs Energies and the scale-up of indigenous upstream ownership

Heirs Energies was established in 2021, coinciding with a period of accelerated divestment by international oil companies from Nigeria’s onshore and shallow-water assets. Its entry into the sector was anchored by its acquisition of OML 17. At the time of takeover, public disclosures placed production at about 27,000 barrels per day, with material operational challenges and deferred maintenance.

Within months of assuming operatorship, Heirs reported a rapid increase in output, and by subsequent disclosures through 2024 and 2025, OML 17 was consistently described as producing over 50,000 barrels of oil per day, alongside gas production of roughly 120 million standard cubic feet per day.

This alone places Heirs among the larger indigenous producers in Nigeria. Its acquisition of a roughly 20% stake in Seplat Energy materially changes the picture. Seplat’s recent production profile has averaged roughly 48,000 to 52,000 barrels per day, with gas production exceeding 400 million scf per day. A 20% economic interest translates into an additional 9,000 to 10,000 barrels per day exposure/ownership for Heirs, plus additional gas volumes, albeit without direct operatorship responsibility. On a combined direct and indirect basis, Heirs Energies now has exposure approaching 60,000 barrels per day, placing it firmly within the top tier of indigenous Nigerian producers by barrels owned or influenced.

Heirs’ c. $500 million acquisition of France-based Maurel & Prom’s stake in Seplat is also emblematic of a broader and quietly important shift, one that reflects a growing willingness by Nigerian firms to buy into foreign-owned Nigerian assets using African balance sheets, rather than waiting for foreign capital to return or for external conditions to improve. This pattern is reinforced by moves such as Aradel’s recent consolidation of its position in ND Western, which appears to have been funded largely from its internal balance-sheet resources rather than a highly leveraged external raise.

Together, these transactions send a signal that African institutions such as Afrexim, the African Finance Corporation (AFC), and increasingly the sponsors themselves now have the capital depth, risk appetite, and structuring discipline to underwrite much larger energy exposures on their own terms. They point to rising confidence in Africa’s ability to monetize its hydrocarbons, manage complex assets, and recycle capital internally, rather than outsourcing that responsibility to offshore financiers. That shift may prove as consequential for the sector’s long-term resilience as any formal policy reform.

Financing discipline and lessons from the past

During the 2010s, several oil, gas, and power assets in Nigeria were financed on optimistic assumptions around oil prices, foreign exchange stability, production numbers and power sector cash collections. When those assumptions failed, lenders were left with stressed exposures, sponsors were forced into restructurings, and confidence in the sector deteriorated.

What appears to have changed is not necessarily the investors’ risk appetite, but rather their ability to better understand and quantify risks, manage and structure deals that reflect a deeper, more nuanced understanding of the assets, the macroenvironment and operating conditions.

African lenders are re-entering the sector with tighter covenants, clearer security packages, more conservative cashflow assumptions, and reduced tolerance for currency mismatches.

These lessons are now enabling more durable capital flows into energy assets where governance and operational control are demonstrable.

Otedola’s energy arc and the reality of business cycles

The Geregu Power transaction must be viewed within the broader context of Femi Otedola’s business history, which includes both notable successes and visible challenges. His rise through Zenon Petroleum and later African Petroleum (later Forte Oil) was built on deep exposure to Nigeria’s downstream realities. His eventual exit from Forte Oil in 2019 followed a period of margin pressure, regulatory scrutiny, and structural change in the downstream sector.

Otedola foray into banking through First HoldCo brought him into another highly regulated sector, where capital adequacy, governance, and public scrutiny are unforgiving. His appointment as Chairman in January 2024 placed him at the centre of an institution navigating both internal reform and external macroeconomic stress. These experiences appear to have sharpened a preference for assets where operational control and cash flow visibility are clearer.

In energy, his investment in the Dangote Refinery, later partially exited, reflected an early bet on domestic refining scale. The Geregu Power investment represented a longer-duration commitment. With installed capacity of 434 MW, Geregu is one of Nigeria’s more stable baseload thermal plants. The reported US$700–750 million control transaction, executed through its shareholder vehicle, represents a rare, voluntary monetization of a power asset by a local sponsor under relatively positive terms.

The absence of full public disclosure on financing terms has drawn commentary, but reputable reporting indicates participation by Nigerian banks. More importantly, the transaction signals that domestic capital now believes large power assets can be financed, held, and exited under improved structures.

Outlook

Together, the Elumelu and Otedola transactions point to an energy market that is beginning to recycle capital internally. Assets are being built, stabilized, and exited in an orderly manner.

Consolidation is accelerating, and institutional behaviour is gradually replacing tactical opportunism. If this pattern persists, Nigeria’s energy sector over the next decade is likely to be shaped less by unconstrained and unstructured ambition and more by disciplined ownership, governance, and execution. This will further de-risk the sector, making it more appealing for pension funds and other major allocators of long-term capital to bring much-needed investment into the ecosystem.

Afolabi Akinrogunde is a senior energy executive with over 20 years of experience across Nigeria’s oil, gas, power, and renewable energy sectors. He has worked at the intersection of energy infrastructure investment, operations and policy, leading and supporting complex transactions spanning upstream & downstream gas, power and renewable investments. His experience includes working with indigenous operators, multinational energy companies, DFIs, and African financial institutions on commercially viable energy deals and projects.