Sahara Group, a Nigerian energy company which trades crude oil and owns Nigeria’s largest power plant, has made known its plans to raise as much as $1.4 billion through a dual listing of its oil and gas unit in London and Lagos along with a debut dollar bond sale.
The Lagos-based Sahara’s Executive Director Tonye Cole, says the company needs the money to buy oil blocs in Africa’s largest producer as it seeks to increase production five-fold to 60,000 b/d. Sahara is in search of as much as $600 million in the primary public offering, which may take place within a year, and $800 million through a seven-year bond that should be issued by the end of October, he said.
“Over the next five years, our target is to be one of the largest indigenous producers in Nigeria,” Cole told Bloomberg in an interview. “A lot is dependent on the IPO. We started down that road before oil prices collapsed, but we’re still focused on it.”
Outside oil and gas production, Sahara, which makes revenue of about $10 billion per annum, is expanding its trading and power divisions. It plans to double generation at the Egbin power plant in Lagos to 2,600 megawatts within five years, according to Cole. Sahara needs to retrieve its debts from the government-owned bulk buyer of electricity before that happens, he said.
The company is likely to re-bid for new government oil-swap contracts, also known as offshore processing agreements. The company’s OPA, which saw it provide refined petroleum in return for crude, was canceled last month after Nigerian National Petroleum Corp. (NNPC) termed it as crooked.
Sahara Group is determined to also consider entering into a joint venture with Nigeria’s four state-owned refineries. The NNPC is presently under pressure from President Muhammadu Buhari, who promises to refurbish the graft-ridden oil industry, to resuscitate the dilapidated refineries and put an end to Nigeria’s reliance on imported fuel.
Sahara and other companies including Seplat Petroleum Development Co. and Shoreline Group are taking advantage of supposed indigenization laws in Nigeria’s oil industry that are meant to boost production by local companies. Those groups account for about 20 percent of Nigeria’s production of nearly 2 million b/d.