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| Wale Tinubu, GMD/CEO, Oando Plc |
Oando Plc, through its exploration and production subsidiary, Oando
Energy Resources (OER), has a secondary listing on the Toronto Stock Exchange
with a market capitalization approximately $1 Billion.
Brief
History
The Oando story began in 1956, as a petroleum marketing company in
Nigeria under the name "ESSO West Africa Incorporated", a subsidiary
of Exxon Corporation of the USA. In 1969, the company was incorporated under
Nigeria Laws as "Esso Standard Nigeria Limited". In 1976, the Nigeria
Government bought Esso's interest and thus became the 100% owner of the
company. The company was then re-branded "Unipetrol Nigeria Limited ".
On March 1, 1991, the
company became a Public Limited Company- Unipetrol Nigeria Plc. In same year,
60% of the company's shareholding was sold to the Nigerian public under the
first phase of the then privatization exercise. In February 1992, the company
was quoted on the Nigerian Stock Exchange.
Then, Unipetrol bought over 40% stake in Gaslink Nigeria Limited, a gas
utility company, in the year 1999. This acquisition was motivated by a desire
to utilize its exclusive gas and purchase agreement with the Nigeria gas
company. In the year 2001, Unipetrol increased its stake to 51% in Gaslink
Nigeria Limited.
In the year 2000, under the second phase of the Federal Government of
Nigeria's privatization programme, Ocean & Oil Services Limited, led by
Wale Tinubu and Mofe Boyo, became a core investor by acquiring 30% of the
Federal Government's 40% equity stake in Unipetrol Nigeria Plc. The remaining
10% was sold to the Nigerian public. The investment in the then Unipetrol
Nigeria Plc by Ocean & Oil Services Limited was with the support of its
International Technical Partners, Compania Espanola De Petroleos (CEPSA), who
are currently the second largest Oil Group in Spain and ranks among the top 10
Oil Groups in Europe. CEPSA is a fully integrated petroleum company involved in
Exploration & Production, Petrochemicals, Natural Gas, Trading, Refining,
Distribution and Marketing.
In the year 2002, Ocean & Oil Services Limited led Unipetrol’s bid
stake of Agip Plc, a rival petroleum marketing firm, owned by Agip Petroli BV,
an Italian-based oil company. The merged company was named Oando Plc in 2003,
making the company the largest downstream petroleum marketing company in
Nigeria.
An integrated oilfield services subsidiary known as Oando Energy Services
was incorporated in the year 2005 in order to achieve the group’s objectives in
the upstream services industry. The company took delivery of two oil drilling
rigs in Nigeria’s Niger Delta in the year 2007. The following year, the company
became the country’s first indigenous oil company with interests in producing
deep water assets through the acquisition of equity in two oil blocs. In the
year 2009, the Oando Energy Services acquired five swamp rigs and launched its
first Independent Power Plant (IPP) for Lagos Water Corporation. The project
involved the construction of 12.5MW power plant to provide uninterrupted power
supply to the Lagos Water Corporation.
In the year 2011, Oando Gas and Power Limited commissioned 128km EHGC
Pipeline, which was built under a joint venture arrangement with the Nigerian
Gas Company (NGC), a subsidiary of the Nigerian National Petroleum Corporation
(NNPC). The gas infrastructure has the capacity to deliver up to 100million
standard cubic feet per day (mmscf/d) of natural gas and will deliver an
initial 22mmscf/d of gas to its maiden customer, United Cement Company (UNICEM)
to fuel its new 2.5 million metric tonnes per annum cement plant located in
Mfamosing, Akampka Local Government Area of Cross River State.
In the year 2012, Oando Exploration and Production Limited signed a
farm-in agreement with Network Exploration & Production Nigeria Limited for
the acquisition of 40% participating interest in the Qua Iboe Field (OML 13)
subject to the consent of the Honourable Minister of Petroleum.
In the year 2013, Oando Plc succeeded in raising excess of N55.2 billion
from the capital market as its Rights Issue recorded 101% subscription. The
company issued 4.548 billion shares to existing shareholders at N12 per share
between December, 2012 and February, 2013 with the intention of raising N54.6
billion. Oando Gas and Power commissioned 10.4 MW Alausa Independent Power
Plant to provide electricity to the Lagos State Secretariat Complex. Following
the decommissioning of Oando Energy Services professionalism in 2013 Oando
Energy currently has a fleet of four rigs: OES Teamwork, OES Respect, OES
Integrity and OES Passion.
In the year 2014, Oando divested the 128km Eastern Gas Company (EHGC)
franchise in a $250 Million transaction with Sevens Energy. The same year,
Oando Energy Resources listed on the TSX an affiliate company on Oando Plc entered
into agreement with ConocoPhillips to acquire its entire business interests in
Nigeria for a total cash consideration of approximately $1.5 Billion.
On the 30th of June 2015, Oando entered into an agreement with HV
Investments II B.V., a joint venture owned by a fund advised by Helios
Investment Partners and The Vitol Group to acquire 49% of the voting right and
60% of the economic rights in Oando’s downstream business for a cash investment
of US$276.8 million.
Overview
From its beginning as a fuel marketer, Oando has grown to become a
sub-Saharan integrated energy company. It currently operates a group structure
consisting of six subsidiaries across the energy value chain. It plans to
become African energy major. It employs close to 1,000 personnel in various
West-African countries.
Oando Marketing Limited, the company’s downstream subsidiary owns
Nigeria’s largest petroleum retail network with over 600 petrol stations. Oando
Supply & Trading, another subsidiary of the company is Nigeria’s largest
independent importer of PMS. The company imported up to 4 million metric tons
of white products into Nigeria between 2007 and 2009. In the upstream sector,
Exploration & Production is the operator of two oil blocks in Nigeria’s
Niger Delta region – OPL 278 and OPL 236. The company is also a Nigerian
Content Partner with Agip Oil on OPL 282 and has a 45% interest in a marginal
field OML 56.
Operating Divisions
Oando Plc is organized functionally into a number of operating divisions.
The divisions are grouped into three categories:
·
Upstream
·
Midstream
·
Downstream
Upstream
·
Oando Energy Resources – The leading indigenous exploration company in
Nigeria
·
Oando Energy Services – Nigeria’s largest indigenous rig services
provider.
Midstream
·
Oando Gas & Power – Building sub-Saharan Africa’s largest gas
pipeline grid and developing independent power plants in Nigeria.
·
Akute Power Limited
·
Alausa Power Limited
·
Gaslink Nigeria Limited
·
Gas Network Services Limited
Downstream
·
Oando Marketing Plc – Nigeria’s leading oil retailer.
·
Oando Supply & Trading – Africa’s largest independent and privately
owned oil trading company.
·
Oando Terminating and Logistics – Propelling development of
infrastructure to drives efficiency across the downstream.
Corporate Affairs
The current Chairman of the Board of Oando Plc is HRM Oba M. A. Gbadebo.
The Group Chief Executive is Wale Tinubu and the Deputy Group Chief Executive
is Mofe Boyo. Oando employs a work force of over 1,000 people.
Board of directors
·
HRM Oba M. A. Gbadebo (Chairman)
·
Wale Tinubu (Group Chief Executive)
·
Mofe Boyo (Deputy Group Chief Executive)
·
Bolaji Osunsanya (Group Executive Director)
·
Femi Adeyemo (Group Executive Director)
·
Mrs. Ammuna Lawan Ali, OON (Independent Non-Executive Director)
·
Mr. Francesco Cuzzocrea (Independent Non-Executive Director)
·
Chief Sena Anthony (Independent Non-Executive Director)
·
Mr. Oghogho Akpota (Independent Non-Executive Director)
·
Engr. Yusuf N’jie (Independent Non-Executive Director)
·
Tanimu Yakubu (Independent Non-Executive Director)
·
Ayotola Jagun (Group Company Secretary & Chief Compliance Officer)
Strategic Assets
·
Over 500 retail outlets in West Africa
·
7 Petroleum Storage Depots
·
3 Aviation Fuel Depots
·
2 Bitumen Plants
·
2 Lubricant Blending Plants
·
8 LPG Filling Plants
·
1 Grease Plant
·
1 Aerosol Filling Plant
·
100km gas pipeline in Lagos and 128km (ongoing) in South Eastern Nigeria
·
4 Swamp Drilling Rigs
·
16 licenses for exploration, development and production of oil and gas
concession in Oando Energy Resources.
Corporate
Social Responsibilities
Oando Plc has a thriving Corporate Social Responsibility (CSR) programme.
It has always reinforced his belief that businesses must give back to
the societies in which they do business. In the 4th quarter of 2011,
it donated 1.5% of Oando’s pre-tax profits to fund education initiatives across
West Africa. Oando PLC through its Adopt-A-School program, has adopted close to
30 government-owned primary schools in Nigeria. As part of the adoption program,
these schools have been renovated, provided with water and sanitation
facilities and Oando has sponsored key academic and non-academic events in the
schools. The company has also given away scholarships to thousands of
indigenous students in its host communities.
Its major programmes are geared towards youth, social and economic
empowerment with a special focus on improving the quality of basic education in
Nigeria. In a nutshell, Oando Plc has innovated numerous avenues for giving
back to the society such as:
·
Adopt-A-School Programme
·
Sponsorships
·
Scholarships
·
Community Development Projects.
Expanding
Frontiers and Taking Bigger Risks
WaleTinubu
led Oando to be the first African company to get listed on the Johannesburg
Stock Exchange with a market capitalization of more than three billion South
African Rand. This was considered to be the biggest single listing since
telecoms giant Telkom entered into the South African market a few years ago.
The company also became the first Nigerian company to set up a secondary
listing elsewhere. According to Tinubu at the epoch making event in
Johannesburg, “A foreign listing is the logical step for Oando to achieve its
Pan-African objectives.” Under Tinubu’s leadership, Oando has over 500 fuel
stations with operations in Nigeria, Ghana, Sierra Leone, Republic of Benin and
Togo. On his reasons for migrating from core legal practice into business and
subsequent business breakthroughs especially in the early years, he says “I
looked around and I asked myself, what area would get me in more contact with
the rest of the world because I thought it was important to travel and have
commercial interaction with the rest of the world. I picked the oil industry.
It was a question of looking for an opportunity. I think I was 25 or 26 when we
got our first big loan which was $100,000. We had to pay 10% a month in
interest. I was so proud that I actually had a loan and was credit worthy. If
they had asked me for 20% a month, I was quite willing to go out there and find
the 20% interest… When we said we would deliver at 3pm, our ships would be
there at rigs to deliver. And every time we did that they said, well I never
knew it was possible to receive your fuel at the time it was requested in
Africa.”
Reaping
the Gains of Risk Taking
Reminiscing
on the significance of delving fully into business he adds, “Let me say I was
lucky enough to have started the business with my colleagues at the point in
time when the tide was changing because what happened was that in the year
2000, the Government decided to privatize. Privatization in certain countries
like England is about raising money for the Government. In Nigeria, it’s
entirely about efficiency; well, more than efficiency, it was about survival.
We had a nation state that was growing by 5% every year, we had a population of
140million people, we had power requirement of 15,000 mega watts, yet we
produced 5,000. We had petrol queues, huge shortages, housing shortages. And
the only way the Government realized we could do it was to sell the companies…
The company which we acquired was SO’s former downstream assets; we paid 16
million dollars for a 30% stake. The company’s market value was about 30
million dollars, and we’ve been able to grow that business. The group has a
market capital next to a billion dollars today and we’ve been able to achieve
this literally from about 15 years of operation from start.”
Doing
Business in Africa
Wale Tinubu
gives a short expose on the African continent: “There is really no other
frontier that compares to Africa, ‘A’ from the perspective of the population,
the resources that are available and the demand for them and the fact that over
60% or 70% of that population is under the age of 20 which shows growth
opportunities. Africa is evolving, democracy is spreading amongst the
continent, good governance is increasing, corruption is certainly on a major
downturn – it’s just not fashionable any longer. The days when you could have
all these resources and not be able to explain how you got them are gone and I
think investors should realize that there is something new, which I think is
special which indigenous companies are. I think fundamentally believe – you can
do it. Second thing is: build very strong partnerships, and I think more than
anything else, persistence; never give up. There are going to be a lot of
obstacles you will face, just treat any obstacle you might face as a learning
opportunity and just never give up. I think those things in a nutshell will be
my own advice.”
Tackling
the Challenges of Doing Business
Nevertheless,
it has not all been a smooth journey too. Tinubu and his Oando team have
battled serious challenges to get to this point in their business history. The
challenges of project financing and corruption have stood out of the pack, and
he goes on about the clogs: “I think the biggest challenge always clearly was
finance; raising capital to do business. The demand for infrastructure and
products are so high in the country. We flare enough gas in Nigeria to power
the whole of Africa, yet we don’t have enough gas pipelines feeding 140million
people that exist in Nigeria. We’ve got massive LNG plants which export gas to
the rest of the world on a daily basis and bridging that gap was probably the
biggest challenge we faced.” He takes an optimistic stand on corruption:
“Corruption becomes less of a problem when you liberalize a nation. Petty
corruption is totally different from fundamental corruption. The scope for
corruption has been limited…” Explaining further, he says “My country is 140
million people. Very few people have a market that size to manage. So in the
old days the Government provided all the resources and was the allocator of
resources, and they asked for payment in exchange. When you revert to a system
which liberalizes an economy and encourages people to come and trade and build
and invest, the scope for corruption practically disappears. In fact, the
Government announces a project, it takes them five years to deliver it; we
announce a project, it takes us 18 months to deliver it, so there’s not just
much scope any longer and the Government is gradually receding to what it
should really be doing, which is creating an enabling environment for the
private sector to take over.
Sustainability
and the Future of Oando Plc
On
sustainability of the successful systems, particularly a big establishment such
as Oando, he is not myopic. He is quick to emphasize the need for sustainability.
He says, “Succession is important. I spend a lot of time trying to make our
people understand that we are only as good as being able to create our
capacity- the ladies and gentlemen behind us. Successful societies have taken
the best and ensuring that they multiply that best and ensure that there are
many more coming. The issue I have is that we are building this company, we are
building it very fast and aggressively, but are we ensuring that we are leaving
the people behind to keep it going, and keep the succession.”
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