Dangote, Otedola buy Port Harcourt Refinery for N71.8bn

Again, Aliko Dangote’s name popped up in the mega-dollar deals that have characterised the twilight of the Olusegun Obasanjo administration as the Port Harcourt refinery was yesterday sold to a consortium, Bluestar Oil Services Limited, where he holds controlling shares.
BADEJO ADEMUYIWA, Abuja

For an offer of $561-million (N71.8-billion), ownership of the premier refinery now rests with the consortium partners where Dangote holds 55 percent stake. Zenon Oil, promoted by Femi Otedola, holds 25 percent in Bluestar Oil services, with the Rivers State government having 15 percent while Transcorp holds the balance of five percent.

The deal was part of many sealed at the opening of financial bids for some state enterprises held in Abuja under the auspices of the Bureau for Public Enterprises (BPE).

The consortium paid a draft of $300-million (N38.1-billion) at the bid opening and is expected to pay the balance of $261-million within seven days of notification of a successful bid.

Bluestar’s acquisition of Port Harcourt refinery is a fulfillment of the directive given by President Obasanjo that at least one refinery and cement company be reserved for Dangote under the Federal Government’s divestment from control of the commanding heights of the economy.

With Dangote’s earlier foray into cement, sugar and salt production where he exercises near total dominance as well as in rice importation, the business mogul now has effective control of the commanding heights of the economy.

The ownership of the Port Harcourt Refinery yesterday moved to the private sector with an offer of $561 million or N71.8 billion from Bluestar Oil services limited consortium.

Bluestar emerged after both Oando plc and Refinee Petroplus Nigeria Limited were disqualified from the bid in the first round for failure to include the draft for 50 percent of their offer price in their bids.

The sale of Kaduna Refinery elicited a $102-million (N12.9-billion) offer from China National Petroleum Corporation (CNPC), a bid the BPE declared as below the reserve price. If the bid is accepted, the bidder is expected to pay 25 percent of its offer.

Upon ratification by the National Council on Privatisation (NCP), CNPC is expected to pay the 75 percent balance within 60 days of notification of successful bid.

Dangote also offered $1.781-billion (N226.2-billion) for the Federal Government’s 35 percent equity in Onigbolo Cement in Benin Republic, from which 10 percent of the bid offer or $178.1-million (N2.26-billion) cheque was given to the BPE.

Dangote is expected to pay the 90 percent balance within 30 days from today.

Dangote expressed delight after the bid, declaring that Nigerians are the only ones to develop the country’s economy.

"I feel very great. There is nobody that will come and grow our own economy more than us and that is why we are heavily investing because we believe it is our own economy, we believe in the country and we believe in the economic policy of Nigeria and that’s why we are here to make sure that we bid and win. It’s not only about winning. It’s about where do we go from here."

He outlined the post acquisition plan for Port Harcourt Refinery, pointing out it would be reactivated with some investments spread over phases.

"Right now for the reactivation, we intend to pump in $200-million (N25.4-billion) that is for the first phase. The second phase is to double the refinery’s capacity, which I think is going to cost us about $3-billion (N384-billion) and we are ready to do that.

"We intend to make sure that we expand the refinery. Apart from that, we already have plans to build a refinery of 300,000 barrels a day capacity in Lagos. Because really, it is very criminal to be importing petroleum products of $9-billion when we are a producer and that is the main reason why we are here."

For Onigbolo Cement, Republic of Benin, he said: "We are investing over $2-billion (N256-billion) in cement in the next three years."

Dangote denied monopolising the cement market, stating that his intention was to help in building the economy.

"Like what I said earlier on, if we don’t build our economy nobody is going to do it. If anybody is going to come in, he is quite welcome, it’s a free entry, free exit market.

"Number two, if you remember, the first factory that we had producing cement was in 1956. From 1956 up till the time that we entered into cement, the total production of Nigeria went as low as less than 2.3-million tons.

"In a single location last week, we commissioned five million tons capacity. If we are not there, you will not be able to build a house, forever."

He predicted that the price of cement will come down by 2010, adding that the price will not be more than N1,000 anywhere in Nigeria.

"If you look at it today, we are selling cement at N1, 130 depending on the location; so ideally, cement shouldn’t cost, even in Abuja, more than N1, 200.

But at the moment because of the economic prosperity and also the bottlenecks in the import process, the price is higher."

"People are in a hurry. With our capacity today - Obajana, Benue and the two terminals in Lagos and Port Harcourt - we can actually churn out about 38,000 metric tons a day. That is about 2,000 trucks a day.

"And we are going to achieve that in the next four months. In Obajana right now, out of 15,000, we are operating about 5,000 metric tons. By next week, we are going to be at about 10,000.

"Eventually by 2010, we want to make history by making sure that cement does not cost more than N1,000 anywhere in Nigeria. And quote me that is our target.

"Local production is under about 30 percent. But mind you one single line of Obajana is bigger that all the production plants in Nigeria."

Liquefied Petroleum Gas Depots in Calabar, Kano, Ibadan, Enugu, Ilorin and Markurdi were also on offer for bids.

Sahara Energy Resources Limited emerged the preferred bidder for Calabar depot with $11.1-million (N1.42-billion) while MRS Oil and Gas Limited was the reserved bidder with $10-million offer. Lopa Energy Company won the bid for Markurdi depot with $250, 000 (N32-million).

MRS Oil services offered $4-million (N512-million) to win the bid for Kano depot, Le Global also won the bid for Ilorin with $1.948-million (N249.3-million) while Brookport emerged the preferred bidder for Enugu depot with $3-million (N384-million) offer and DSV Pipetronex Limited was the reserved bidder with $2.5-million.

For the winners of the LPG depots, 10 percent of the offered price must be paid into BPE designated accounts within 10 days of official notification of successful bids while the 90 percent balance is to be paid within 60 days of official notification.

Other transactions sealed at the bid opening are Egbin Power plc, which Korea Electric Power Corporation (KEPCO)/Energy Resources Limited at $280-million (N35.84-billion), AYIP-EKU Oil Palm; which attracted N527-million from Wingsong M-House Palm Oil Investment Limited and Ajaokuta Steel Complex, which Global Infrastructure Nigeria Limited got for $525-million (N67.2-billion).

National facilities including Tafawa Balewa Square, Lagos International Trade Fair and the National Arts Theatre all in Lagos were also offered for concession ranging from 25 to 35 years.

Infrastructica offered N35.84-billion to emerge the preferred bidder for the 35 years concession of National Theatre beating BHI Ventures, which offered N28.902-billion to the reserved bidder’s slot.

For the 25 years concession of Tafawa Balewa Square, BHS International is the preferred bidder with the offer of N9.5-billion while Black Swan is the reserved bidder with N9.21-billion.

Aulic Nigeria Limited emerged the preferred bidder for the 25 years concession of Lagos International Trade Fair complex with its N40-billion offer to push Unison Property Development Limited to the reserved slot.

Nine coal blocs and 13 mining titles were also jostled for by a total of 17 prospective investors after which winners emerged.

To interact with stock experts/analyst and share your own ideas, quickly join to become member of nairakobo forum and started posting today. Registration is free.

nairakobo forum is an Investor's friend.

Once again, you are welcome to nairakobo forum..
see you there....