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Finance | Forte Oil Nigeria Plans to Raise US$500 Million for Expansion
LAGOS, Nigeria, Capital Markets in Africa — Forte Oil Nigeria Plc, said it plans to raise as about 100 billion naira (US$502 million) in equity or debt in 2016 as it aims to double profit and expand amidst Nigerian economic slowdown and commodity slump.
The company plans to get approval this month and raise the capital by the third quarter, Chief Financial Officer Julius Omodayo-Owotuga said in an interview. The company is “already looking at” acquiring retail outlets to boost gasoline sales after a cut in the pump price by the government led to a 27 percent decline in its revenue in 2015, he hinted.
Forte Oil expects an expansion in the downstream business and increase in the operations of its Geregu power station to 435 megawatts capacity by July from about 150 megawatts currently, which will cushion any slowdown from the decline in oil prices, according to the CFO. The company forecasts profit to almost double this year to 11 billion naira from 5.8 billion naira in 2015, while revenue is expected to grow to 224 billion naira from 124.6 billion naira.
Forte Oil took control of the Geregu power station in 2013 following the sale of electricity generation and distribution companies by the Nigerian government to private investors, in an attempt to end daily blackouts. The plant is expected to generate about a half of the company’s projected 2016 profit, from 20 percent, following an overhaul and the signing of a 10-year gas supply agreement with the aim to get it operating at full capacity, Omodayo-Owotuga said.
Commenting on the performance, the Group Chief Executive Officer, Mr. Akin Akinfemiwa, had said: “This result in a testing economic climate which we operate, is the reward from the investments made by the company in its core business and its people. It also clearly demonstrates the resilience of our business.
Furthermore, our vision to diversify into Power generation has proven to be very successful not just in the near term but in the long term and we see tremendous growth opportunities in that space,”, he emphasized.