• Wednesday, July 24, 2024
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BusinessDay

Oando completes profitable sale of EHGC gas franchise

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Oando PLC, Nigeria’s leading indigenous energy group with a current market capitalisation of over $1 billion, has completed the sale of its East Horizon Gas Company (EHGC) subsidiary, for $250 Million to Seven Energy Limited.

EHGC was originally set up as an Oando midstream Special Purpose Vehicle to build and operate an 18-inch, 128km natural gas transmission and distribution pipeline with a capacity of 100mmscf/d, traversing Akwa Ibom and Cross River States.

Commenting on the sale, Wale Tinubu, Group Chief Executive, Oando PLC said: “This transaction aligns with our corporate strategy, as the proceeds of the sale will boost the group’s overall liquidity in furtherance of our main growth initiatives in the Upstream”.

Tinubu further said the divestment of the asset signifies a considerable profit margin for the company, and validates the intrinsic value that lies within its gas business and the midstream sector.

He added that the development was a testament to the enabling environment evolving in the midstream created by the Nigerian government. “This validation is likely to attract more funding and instil confidence in potential investors in infrastructure development and pipeline networks in the midstream,” he enthused. Also, he said, Oando’s commitment to the development of midstream infrastructure and energy solutions aims to unlock and harness the available vast resource potential of Nigeria, thereby reducing the perennial power challenges currently plaguing the country.

The EHGC sale underlines Oando’s desire to divest into the more profitable Upstream, whilst rationalising its present business portfolio to reflect key opportunities for growth and value extraction, observed.

“ We remain steadfast in our commitment to grow the midstream business, evidenced by our ongoing expansion efforts of our various assets: the construction of the 4th phase of our Greater Lagos pipeline to increase our capacity and customer base in Lagos, the enhancement of our newly acquired Port Harcourt pipeline franchise; the growth of our Compressed Natural Gas distribution programme, which we commissioned in 2013; and the increase in our power generation to 23.55MW, with the addition of our 2nd power plant, the 10.4MW Alausa IPP.

“We also have projects which are at the conceptualisation phase and are expected to create value for us in the longer term; the 400km SW-NW EIIJ pipeline and the Central Processing Facility that will serve as a gas gathering and processing hub in the Niger Delta.”