Forte Oil plans to raise $500 million for expansion

Forte Oil Plc, which owns a power plant and sells gasoline in Nigeria, said it plans to raise as much as 100 billion naira ($502 million) in equity or debt this year as it aims to double profit and expand during an economic slowdown in Africa’s biggest oil producer.

The company plans to get approval this month and raise the capital by the third quarter, Chief Financial Officer Julius Omodayo-Owotuga said in phone interview Tuesday from Lagos, Nigeria’s commercial capital. 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 said.

Lagos-based 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 Omodayo-Owotuga. 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.

Nigeria is struggling to cope with a plunge in crude, which accounted for about two-thirds of government revenue in 2014. Gasoline importers, which are contending with Central Bank of Nigeria foreign-exchange controls that have slowed imports and created a scarcity of refined petroleum products in the West African nation, are in talks with the government on ways to improve supply. Forte Oil operates 500 gasoline stations in Nigeria as well as eight retail outlets in Ghana.

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.