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As Oando Plc flounders, Wale Tinubu plans to sell subsidiaries.

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As Oando Plc flounders, Wale Tinubu plans to sell subsidiaries.

As Oando Plc flounders, Wale Tinubu plans to sell subsidiaries.
April 09
10:27 2016

• Company shares drop 5 percent.

. Fidelity Bank places  energy firm on watch list
Darker pall settles on Oando Plc as you read. Shares in the energy firm dropped 4.9 percent on Tuesday, a day after Fidelity Bank said it had placed a N22.4 billion naira ($113 million) loan granted to the company on a watch list.

In the wake of Fidelity Bank’s announcement, the truth dawned with greater ferocity on Wale and the timeless axiom: “They have his soul, who have his bonds; ‘Tis like the writing on the wall,” sank deeper in his soul, like the fangs of a poisonous snake. Oando shares, which are also listed in Johannesburg and Toronto, fell to N4.28 in Lagos by 1158 GMT, adding to a 24 percent slide so far this year. It would be recalled that the company’s shares fell 63.4 percent last year.

Fidelity Bank disclosed on Monday that it had put a N22.4 billion ($113 million) loan to Oando on a watch list and taken a special provision of five percent, in line with a Central Bank of Nigeria (CBN) directive to several commercial lenders exposed to the energy firm. The loan accounted for 3.7 percent of Fidelity Bank’s total loan book and 15.2 percent of its energy loan book, according to the Head of Strategy, Gbolahan Joshua.

Joshua said the loan to Oando has not been classified as non-performing but that the CBN had advised commercial lenders including Fidelity Bank, that are exposed to the energy firm, to make a special provision of five percent. The bank said it lent N12.9 billion to Oando Marketing and N7.5 billion to Oando Energy service Ltd. Shares in Oando were down 1.75 percent after Fidelity Bank put the loan on its watch list.

Consequently, Oando has agreed to sell its downstream business to oil trading group Vitol. It also revealed plans to sell its power and gas subsidiaries in order to raise up to N80 billion through a rights issue after reporting a record loss of $1.10 billion for 2014. Oando is still due to post results for 2015, having reported a $246 million loss in the nine months to September.

Oando paid $1.5 billion to acquire ConocoPhilips’ Nigerian assets in 2013, when oil prices were at a peak. But high financing costs coupled with the plunge in oil prices have hit profits, despite an increase in production volumes. Fidelity Bank said it had taken the Oando charge against profits, making a provision of N1.1 billion.

No doubt, Wale Tinubu has once again, encountered his tender state. This time around, his dissembling may occur in the full glare of the world. For the Oando Plc boss, tomorrow dawns harshly and with unprecedented ugliness thus nipping his hopes of redemption from the roots to the bud.

Few months ago, Oando Plc suffered a N189 billion loss thus raising eyebrows and inciting doomsday speculations about his capacity to steer the ship of the oil corporation to prosperous bights. Since the disclosure about the monumental loss and Fidelity Bank’s dire announcement about the energy firm, initial excitement about the prospects of Oando under Wale Tinubu’s leadership vanished into thin air.

In the wake of the N189 billion loss, he appeared on television, looking downcast. He tried to explain the reasons for the loss in a subtle image laundering campaign. His attempt at currying the favour of his company’s publics however, generated virulent criticisms across the nation’s oil and financial business sectors. Pundits were of the opinion that the Oando boss should have simply towed the honourable path by tendering his resignation letter instead of going on TV to offer frantic rationalizations of the company’s loss.

The fact that the bulk of the lost money was attributed to administrative expenses particularly incited the annoyance of the company’s publics.

The embattled boss of the energy giant is yet to articulate an acceptable explanation to the firm’s current financial crisis. But financial pundits and stakeholders in the company have started calling for his resignation. Who knows? This time around, he may tow the honourable path and resign before he runs Oando Plc ship into.

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Opeyemi

Opeyemi

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