Oando Plc, a leading Nigerian energy company, has been shortlisted by the Trinidad and Tobago government as one of the three final contenders to take over operations of the country’s state-owned Pointe-a-Pierre refinery, previously operated by the defunct Petrotrin.
This is part of the country’s efforts to restart the refinery, which has been closed since 2018 due to heavy financial losses.
During a budget presentation on September 30, Trinidad and Tobago’s Finance Minister, Colm Imbert, announced that Oando was among the top three companies selected from an initial pool of 10 proposals. The other two companies shortlisted include the CRO Consortium, a group of three Trinidadian firms, and INCA Energy, an American company.
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These contenders will now enter a formal selective Request for Proposals (RFP) process, aimed at determining which company will take over the refinery’s operations.
Refinery Evaluation Criteria
The bidding process for the refinery, managed by U.S.-based Scotia Capital, began in February 2024. Proposals were evaluated based on key criteria, which include the following:
- Clear Restart Plan: Each bidder was required to provide a detailed plan and timeline for restarting the refinery, including an asset integrity assessment and utility requirements such as power, natural gas, and water.
- Financing Plan: Bidders had to present a viable financing plan that covers working capital and includes assurances to safeguard Trinidad’s fuel security, particularly through agreements with the state oil company, Paria.
- Crude Supply Management: A key aspect was the ability to collaborate with Heritage Petroleum, another state entity, on crude supply management, ensuring national energy security.
- Transparency and Openness: The bidders were required to demonstrate transparency throughout the bidding process, ensuring open communication and smooth information-sharing with Trinidad and Tobago authorities.
The Pointe-a-Pierre refinery, built in 1917, has played a pivotal role in the Caribbean oil market, supplying petroleum products to the region. However, in recent years, it became a financial burden, prompting its closure in 2018.
The facility was losing up to $2 billion annually, and by the time of its closure, the accumulated losses had reached $15 billion. The Trinidadian government currently carries a public debt of $3 billion related to the refinery’s operations.
Similar to Nigeria, Trinidad and Tobago is an oil-producing nation but has had to rely on imported petroleum products for its energy needs. The reopening of the refinery could help reverse this trend, improving both fuel security and the country’s fiscal health.
Oando’s Adding to Recent Milestones
In addition to being shortlisted for the Trinidadian refinery project, Oando has recently achieved several significant milestones. The company has reached a market capitalization of N1 trillion, placing it among an exclusive group of Nigerian firms in the “Stocks Worth Over One Trillion” (SWOOTS) club. Other members of this prestigious group include Zenith Bank, SEPLAT, BUA Cement, and Dangote Cement.
This achievement follows a remarkable surge in Oando’s stock price, which rose by 207.6% in August 2024 alone, making it the best-performing stock that month. The company’s shares traded at a volume of 547 million, contributing to its market capitalization boost. As of September 3, 2024, Oando’s stock had climbed over 700% year-to-date.
This stock performance and recent growth have been driven in part by Oando’s strategic moves, including its $783 million acquisition of Nigerian Agip Oil Company (NAOC) in August 2024. This acquisition significantly increased Oando’s interest in various joint venture assets, giving the company control over 40 oil and gas fields, 24 of which are currently producing. The NAOC deal has enhanced Oando’s capacity and solidified its position as a key player in both the Nigerian and global energy markets.
Call for Nigerian Refinery Privatization
As Oando vies for the Trinidadian refinery, industry experts have pointed to this development as a model for Nigeria, which has long struggled with its own refinery issues. Despite being Africa’s largest oil producer, Nigeria has been unable to operate its state-owned refineries effectively.
Former president Olusegun Obasanjo’s decision to sell the refineries was reversed by his successor, Musa Yar’dua. Since then, billions of dollars have been spent on rehabilitating the country’s refineries, including the Port Harcourt and Warri refineries, but these facilities have consistently failed to restart operations.
Experts in the oil and gas sector have long advocated for the privatization of Nigeria’s refineries, arguing that government ownership has led to inefficiencies, mismanagement, and waste. These experts believe that privatizing the refineries, as Trinidad and Tobago is doing with its Pointe-a-Pierre refinery, would attract the necessary investment and technical expertise needed to make the facilities operational.
It is also believed that privatization would also eliminate the financial burden of continued rehabilitation efforts, which have shown little result over the years.
In contrast to the wastage associated with the rehabilitation of these refineries, the Dangote Refinery, which is privately owned, has been cited as a successful model of refinery operations in Nigeria, proving that private-sector-led initiatives can be more effective in addressing the country’s energy demands.