Nigerian energy firm Forte Oil plans to enter into talks to sell its power unit to its major investor, billionaire Femi Otedola, after it failed to secure a deal via a public tender, Reuters reports.
Forte said in a statement it was seeking shareholder approval in a vote on Feb. 7 to start talks with Otedola.
Otedola will not take part in the vote, it added.
Forte plans to use proceeds from the sale to expand its fuel retailing unit, its main focus.
Amperion Power Distribution Company Limited, Forte’s power subsidiary, paid $132 million to acquire a 414 megawatt power plant six years ago under a government-led privatisation scheme meant to tackle decades of chronic blackouts.
Forte also imports fuel and car lubricants, which it resells at petrol stations.
Nigeria’s retail fuel sector operates under a tightly regulated fixed margins, and so requires a lot of capital to expand. The sector could be deregulated given its impact on the Nigerian currency and import bill.
Last year, Forte decided to sell its power generating unit, upstream services business and downstream venture in Ghana to focus on its fuel distribution operation at home.
The company said on Thursday that Otedola had shown interest in bidding for the power unit and that his proposal would be reviewed by management and an independent adviser.
A public tender to sell the power asset received “unexpectedly low interest”, Forte said, adding that pricing proposals it received did not meet its expectation.
Shares in Forte rose 2.55 percent on Thursday to 30.15 naira, valuing the company at 39.3 billion naira ($128 million).
Otedola has also agreed to sell his 75 percent interest in Forte Oil’s downstream business, with the deal expected to close in the first quarter.