09 May 2018, Sweetcrude, Lagos – The energy firm Forte Oil says it will seek shareholders’ approval for the sale of some of its assets on May 23.
The company announced, last week, plans to sell its upstream services and power businesses in Nigeria and divest from Ghana to focus on its core fuel distribution operation at home in Nigeria.
It also said in a notice to investors that it plans to appoint advisers.
Forte Oil said interest costs attributable to the businesses to be sold stood at N2.2 billion as of December.
The company did not give any reasons for the plan to sell the assets but stated that the downstream sector in Nigeria had gone through changes in recent years and was expected to evolve further.
It added that the industry has operated under a tightly regulated fixed margin but could be deregulated especially given its impact on the Nigerian currency and import bill.
The government increased petrol prices by 67 percent to N145 in 2016 to cut subsidies paid for fuel imports after a plunge in oil prices hit state revenues, caused dollar shortages and halted infrastructure projects with firms laying off tens of thousands of workers.
However, the hike did not prevent gasoline shortages which have plagued Nigeria for much of last year and this year.
Forte Oil has two storage depots, five aviation fuel depots and a lubricant blending plant. It also has 100 trucks for distribution of products across its more than 500 retail outlets which would require a lot of capital to expand.
Forte Oil said proceeds from the divestment would be used to expand its downstream fuel distribution business and to invest in storage infrastructure.
The unit in Ghana has declared losses over the last three years and has uncollectible trade debts due to tough economic conditions and a currency devaluation in the cocoa-rich country.