Dangote, Otedola, Transcorp Buy PH Refinery for N72bn
Posted Thursday, May 17, 2007
Bluestar Oil Services Limited Consortium, a Nigerian consortium comprising Dangote Group, Zenon Oil, Transnational Corporation of Nigeria (Transcorp) and Rivers State government yesterday emerged the preferred bidder/core investor for Port Harcourt Refinery Company. The consortium submitted a bid of $561 million (N71.808 billion) for 51 per cent of Federal Government’s equity in the ailing crude oil refining company.



The sale of the refinery, however, comes against the backdrop of protest by National Union of Petroleum and Natural Gas Workers (NU-PENG), which members yesterday shut down operations of the Nigeria National Petroleum Corporation (NNPC) Lagos, Port Harcourt, Mosimi and Kaduna.



But the transaction for the Kaduna Refinery and Petr-oleum Company (KRPC), which received only one bid for 51 per cent Federal Government’s stake was not concluded as China National Petroleum Corporation offered $102 million, which was below the reserve price. The offer by the Chinese firm would have to be ratified by the National Council on Privatisation (NCP).



Bluestar consortium immediately paid $300 million, re-presenting more than 50 per cent of the bid price for the company, in line with the payment mechanism of the Bureau of Public Enterprises (BPE) for the transaction. The consortium is expected to pay the 50 per cent balance of the purchase consideration into a designated account by 4 pm of the seventh working day immediately following the official notification of a successful bid.



The sale of the Port Harcourt Refinery, which involved Oando Plc and Refinee Petroplus Nigeria Limited as bidders was part of the financial bids opening for 18 transactions conducted inside the Congress Hall of Transcorp Hilton Hotel, Abuja. Oando and Refinee Petroplus were, however, disqualified for failing to include a draft of 50 per cent of their bid prices in the envelopes submitted to BPE.



The 18 transactions included Lagos International Trade Fair Complex; National Arts Theatre and Tafawa Balewa Square; Egbin Power Plc; Onigbolo Cement Company, Benin Republic; Ayip-Eku Oil Palm Company; eight Liquefied Petroleum Gas depots; Ajaokuta Steel Complex, Coal Blocks and Mining Titles.



Onigbolo Cement Company of Republic of Benin in which the Federal Government owns 35 per cent was bought by Dangote Group for $1.781 billion. Dangote Group, the nation’s major cement producer was, however, the only bidder for the company.



The Group has already paid 10 per cent of the bid price ($178 million), although the rule of the transaction provides that the first 10 per cent of the purchase consideration must be paid into a designated account on or before 12 midnight of the 10th working day immediately following the official notification of a successful bid.



The remaining 90 per cent would be paid into BPE’s designated account latest by 12 midnight of the working days immediately following the official notification of the successful bid.



Egbin Power Plc, presently managed by Korea Electric Power Corporation (KEPCO) /Energy Resources was bought by the same company at $280 million.

Also, Ajaokuta Steel Company Complex hitherto on concession to Global Infrastructure Nigeria Limited was converted to joint venture partnership on a 60 per cent to 40 per cent basis between Global Infrastructure and the Federal Government respectively. Yesterday’s bid opening saw the former paying $525 million for its own 60 per cent stake.



The National Arts Theatre, which attracted bids from eight prospective concessionaires, went to Infrastructica, which emerged preferred bidder with N35.84 billion for a 35-year concession. Jadeas Trust, which offered N28.902 billion, was declared the reserved bidder.



Similarly, Tafawa Balewa Square, which had a 25-year concession arrangement, was snapped up by BHS International for N9.5 billion. Black Swan followed with N9.2 billion as reserve bidder. The Lagos International Trade Fair Complex with a similar 25 years concession was won by AulicNigeria Limited with a bid of N40 billion while Unison Property Development is the reserve bidder.



For the LPG depots, Sahara Energy Resources Limited bought Calabar depot for $11.1 million while MRS Oil and Gas was the reserve bidder with $10 million; MRS Oil and Gas got Kano depot for $4 million. The bids of Brockport Limited ($3m) for Enugu depot; Le-Global ($1.05m) for Ibadan depot; Le-Global ($1.948m) for Ilorin depot and Global Gas and Refining, which offered $250,000 were all below the reserve prices and would have their offers ratified by the NCP.



Chairman of the Bluestar Oil Services Limited Consortium and President, Dangote Group of Companies, Alhaji Aliko Dangote said Nigerian entrepreneurs must take the lead in the nation’s march towards greatness. “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. That's why we are here to make sure that we bid and win,” he said.



He disclosed plans of the Consortium to expand the refinery. He, however, said before the Consortium bought the Port Harcourt Refinery, it had plans of building a refinery of 300,000 barrels per day in Lagos. “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,” he said.



Dangote said the Consortium will inject $200 million into the first phase of the project while the second phase will gulp about $3 billion. He also said his Group would invest $2 billion in the cement sector in the next three years.



He dispelled insinuation that Dangote Group was working towards a monopoly in the cement market.



“Its not a question of catching the entire market. Like I said earlier, if we don't build our economy nobody is going to do it. If anybody (else) is going to come in, he is quite welcome, it's a free entry, free exit market. 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 2.3million tons. In a single location last week, we commissioned five million tons of capacity. If we are not there, you will not be able to build a house forever,” he said.



He said by 2010, prices of cement would be less than N1,000 per bag. “If you look at it today, we are selling cement at N1,130 depending on the location. Ideally cement shouldn't cost, even in Abuja, more than N1,200. Our capacity today, Obajana, Benue and the two terminals in Lagos and Port Harcourt, can churn out about 38,000 metric tons per day. That is about 2000 trucks per 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 doing at about 10,000 metric tons.



“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 than all the production plants in Nigeria,” he said.



Chairman, Technical Com-mittee of the NCP, Mr. Patrick Akinkuotu assured the bidders that the transaction would be conducted through internationally acc-epted standards.



Meanwhile, oil workers under the aegis of National Union of Petroleum and natural Gas workers (NUPE-NG) yesterday protested the commencement of sale of government's equity share in two of the country's petroleum refineries - Port Harcourt and Kaduna - by the BPE. While the bidding exercise for the sale of the refineries and depots were going on at the Transcorp Hilton Hotel, Abuja, the oil workers staged their protest in front of Nigerian National Petroleum Corporation (NNPC), a distance of 5km.



The workers who began their action at about 10.30am, took over the main entrance to the headquarters of the Nigerian National Petroleum Corp-oration (NNPC), blocking its main gate and making movement in and outside the premises of the oil company almost impossible for the greater part of yesterday.



Leader of the protest, Mr. Williams Ibiba Inko told newsmen that the workers were not happy over the way the privatisation of the plants and depots were handled by government.



He said an immediate fall-out of the sale of these facilities, is loss of an estimated 4,000 jobs with no concrete arrangement on how to deal with the terminal benefits of the workers in place.



"BPE confirmed that the process will lead to job losses to the tune of about 4,000 when the two refineries and PPMC goes out for sale. What then happens to the pensions of NNPC staff. We are saying, yes you can privatise, but let us sit down and trash out the labour issues. Even some of our rights, we can negotiate them," he said.



While expressing the union's support for the current effort to reposition the refineries, the NUPENG chairman said the union had last week signed an MoU with BPE on the issue on the condition that "we would articulate our position and get back to them".


"This process is going to kill our pension. Most of the concerned staff have passed the employment age bracket. There is no way NUPENG and PENGASSAN will go ahead to fight against government policy, but how it is being implemented that is the problem. We believe it is being hijacked by the BPE to suit its purposes," he said.



Therefore, he said the workers want to secure an agreement with government on some of the things it can offer them as palliatives.



“In Eleme Petroch-emical, till today, the workers do not know where the shares allocated to them are. We want to ensure that the proper partnering that takes place, unlike the case of Eleme Petrochemical where they say 51 per cent, we finally saw outright sale," he said.



Inko said the oil workers want to guard against what happened to NITEL workers and how they were thrown out without entitlements.



"We are pensionable staff and we realize that the new investors, being a capitalist would not be able to keep the number of staff. We are saying, if these persons are going, what becomes their take home pay and on what basis are they going," he queried.



He advised that government should call in the experts, who would evaluate workers pension bill and the consequences of retiring more people into the pension fund.



"Right now we have about 8,000 NNPC pensioners out there and 9,000 people in the system sustaining them. If you shut out about 4000 after completing the process, only few persons would be contributing. Ultimately, it means the pensions scheme can no longer hold," he warned.



Vice President of NUPENG, Comrade Bako Joseph Yuba said the protest is taking place simultaneously nationwide, adding the union has already shut down NNPC operations in Lagos, Port Harcourt, Mosimi and Kaduna. - ThisDay

my brother, i just read it now ooo,

if these guys buy up the whole country, what is now left for us to strive to achieve

@Tmoney
you dey vex say them no tell you so you fit buy one refinery like you don BUY Access bank finish,

I would say good development.

Who is taking wagers? I wager that fuel scarcity will be a thing of the past within the next dispensation ! Any takers?

ijogbon:

@Tmoney
you dey vex say them no tell you so you fit buy one refinery like you don BUY Access bank finish,

Don't mind Tmoni i think he likes money 2much he is still after more access bank you know, 1 mill is not enough

How does it affect Transcorp shares?

but the thing about it that i like is that it is not just foreign comapnies investing in Nigeria, our people like Dangote and Otedola are buying in refineries and AP and doing cement, this shows commitment which would encourage the likes of Tmoni to part with their money in to Access bank, this will create a ripple effect which will attract more investors, if this keeps on going and legislation is right, and they try and curb corruption and improve social ammenities such as mortgages ,loans, water supply, transportation and the almighty electricity, who knows Nigeria might emerge in about 20 years, fingers crossed

I just hope those fucking military don't come back and ruin things!!!!

Hopefully what this will do to Transcorp shares is that it will increase the sources of revenue that are available to the organisation. I also detect a good business strategy here since Transcorp has an Oil block (I think) and this will make its operations Vertically Integrated (meaning it will supply itself raw material and produce end products ensuring that the risk from suppliers will be reduced). In the LOOOOONG term Transcorp might become a viable conglomerate. I would advice they get into the banking market (Buy a bank) to take a good position for cheap funds, mind boggling returns in the short term and working capital.
In the short term GOVERNMENT policy opportunities should make transcorp win more bids like this (NEPA) and position it as a big player for funds on the capital market. Meaning when the PENCOM funds hit the market there will be copious amounts of it invested in transcorp. HOPEFULLY.

@Jandonguy

If them try am!!!

Anyway I think that is what OBJ is trying to do. Did anybody notice, gradually and surely the only way a politician can make money nowadays is to blatantly STEAL what he is given to manage (and so traceable to him) no more PH refinery to give to cronies to rundown in the name of turnaround maintenance, no more Nitel to abuse and supply substandard equipments etc. OBJ is trying to make RULING Nigeria unappealing for theives. Who noticed the bill passed by the house of assembly regarding dodgy contractors? !!! Plus Globalisation - many foreign investment groups have Billions of Dollars invested in Naij now they wont watch their money go to waste. And if they do Tmoni, frankiriri, jen33, my goodself and many other people I know here on this forum and in real life go carry gun, enter bush, dey burst pipeline, dey kidnap people FROM WHATEVER TRIBE THE SO CALLED MILITARY MEN COME FROM, dey form insurgency and resistance, abi my people? Una don hear oh!!!! beg your ARMY chilun make them no try do coup O!!!! We go kidnap YOU if them try am.

Verbum sapienti satis est !!!!!!

@ijogbon

Very well put, at least if the army come, Nigerians have something to fight for, the backlash will be so severe and then there is the alienation from the international community.

I hope nigerians put up a good fight if they ever try and come back, anyway I also hope the politicians try and govern well and they put through good legislation, anyway my papa don become senator and he has a very good pedigree, I know he will try his best when called upon especially in the financial sector!!

long live Nigeria

had a very good laugh on this post,

well, i would like to work with Transcorp, they should need a project manager _{plus i somehow have a control of my funds},

@ijogbon, dollypcute and jandonguy