As part of efforts to diversify its operations into the oil and gas sector, a leading construction company, Julius Berger Nigeria (JBN) Plc has entered into a strategic partnership and joint investment agreement with Petrolan Energy Limited.
In a notification to the Nigerian Stock Exchange (NSE), JBN said the partnership is for the acquisition and development of oil fields in Nigeria. According to the company, the alliance is in line with its strategic goal to diversify into oil and gas sector.
Petrolan Energy Limited, a Nigerian upstream energy company, established to acquire, develop, operate and finance hydrocarbon assets in the Nigerian oil and gas sector, has Mr. Mutiu Sunmonu, as its chairman. The former managing director of Shell Petroleum Development Company, is also the current chairman of JBN.
The move by the construction company is seen as timely given the fact that JBN has suffered dwindling fortunes in recent times, leading to a loss of N1.239 billion of the year ended December 31, 2016.
Summonu attributed the poor outing of the company to the persistent and increased severity of the economic hardships, specifically the large premium paid for the acquisition of foreign exchange at exorbitant rates, which resulted in the unbearable losses that absorbed the operating profit completely.
Addressing shareholders at the annual general meeting in Abuja, recently, Sunmonu said: â€œThis, coupled with the federal and state governmentâ€™s continued inability to honour contractual obligations on the majority of their projects, had drastic negative effect on the company liquidity and profitability.â€™â€™
Based on the loss, the company did not pay dividend. However, the chairman assured the shareholders that the board and management were more focussed on ensuring the survival of the company in this harsh economic and operational environment.
Sunmonu noted that JBN would continue to implement its long-term strategy of diversification with regards to business segments and client mix.
â€œThe company will continue to strengthen its presence in the power sector by enhancing its position as an engineering, procurement and construction contractor of choice. Opportunities in other new business areas will continue to be identified and explored diligently, with negotiation already proceeding on a number of promising projects, and debt recovery measures, including extraordinary actions already initiated with the federal government, will continue to be pursued to find amicable solution,â€™â€™ he said.