Bloomberg News

Forte Oil CEO Sees Profit Tripling on Power Investment

October 28, 2013

Forte Oil Plc, an operator of gasoline stations in Nigeria, expects profit to triple next year as investments in electricity generation drive up revenue.

“Group net income will be up to 11 billion naira ($69 million) from a conservative net-profit estimate of 3.4 billion naira for 2013,” Chief Executive Officer Akin Akinfemiwa said in Lagos, where the company is based. The power business will account for almost 5 billion naira of the 2014 total, he said.

President Goodluck Jonathan handed control of 14 power plants to buyers including Forte Oil and Siemens AG in September to secure funding for the facilities and end frequent blackouts. Forte is also studying possible oilfield investments, as well as ownership of a refining and petrochemicals plant, to diversify in the energy industry and expand in West Africa.

“Forte plans to be at every point of the energy value chain, from the oilfield to the retail fuel pump,” Akinfemiwa said. It’s seeking to “maximize synergies,” he said.

The company is the best performer on the Nigerian Stock Exchange All-Share Index this year, jumping more than eightfold, compared with a 33 percent gain for the index as a whole.

Forte will start operating the 414-megawatt Geregu power station in central Nigeria on Nov. 1, Akinfemiwa said in an Oct. 25 interview. The company will ensure adequate gas supply to run the site at full capacity, up from 60 percent, according to the CEO, who said it’s an “immediate revenue earner.”

Profit in the nine months through September rose to 2.7 billion naira from 656 million naira a year earlier, Forte said Oct. 21. Sales climbed 29 percent to 92.1 billion naira.

Oilfield Bidding

Forte may participate in bidding for Royal Dutch Shell Plc oilfields in Nigeria, Akinfemiwa said. The company is also considering building a refining and petrochemical site in the “long term,” he said, without elaborating.

Shell and Chevron Corp. (CVX:US) are selling onshore and shallow-water assets that can produce a combined 300,000 barrels a day. Stakes in 13 other fields have been sold by Shell, Total SA and Eni SpA since 2010 following persistent unrest, violence and crude-oil theft in the Niger River delta.

While Nigeria is Africa’s top producer of crude, it relies on fuel imports to meet more than 70 percent of its needs. Four state refineries with a combined capacity of 445,000 barrels a day are operating at a fraction of that because of poor maintenance and aging equipment.

Dangote Group, controlled by Africa’s richest man, Aliko Dangote, said in April that it planned to build a 400,000-barrel-a-day refinery in the country.

Aside from Nigeria, Forte operates in Ghana and plans to expand in Liberia and Sierra Leone within the next three years, Akinfemiwa said.

To contact the reporter on this story: Emele Onu in Lagos at eonu1@bloomberg.net

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net


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