By Obinna Chima
The Managing Director of Financial Derivatives Company Limited (FDC), Mr. Bismarck Rewane has said Heirs Holdings’ (HH) $1.1 billion investment in the acquisition of the strategic OML 17 from Shell, ENI and Total, will lead to job creation, transfer of technology and improved management skills.
Rewane, who said this during a chat on BBC’s ‘NEWSDAY,’ noted that the investment serves the objective of economic patriotism.
“First and foremost the profit is retained by Nigerians, so that helps. Everywhere across the world, sovereign nations and host communities are trying to have a skin in the game, rather than having the structure where the multinationals come in and get all the revenues out.
“So, it serves the objective of economic patriotism on one hand and also it helps to create jobs and transfer of technology and management skills. That is why you select the kind of Nigerian partners you want, those that have capacity. Heirs Holdings have shown that they have a track record,” he explained.
According to him, the new owners of the assets are better positioned to deal with whatever challenges that may arise in the host communities because they have a better knowledge of the terrain and are expected to have a better relationship with members of the communities.
“They are probably better at dealing with it. Heirs Holdings actually belongs to people who are from the Niger Delta, so you have what they call the son of the soil credentials which helps you to negotiate better. But not all the time. In any case, they have some risk insurance which would help you. At least they have taken the first step and the longest journey in the world starts with the first step,” Rewane said.
Responding to a question on why the valuable asset was sold by the multinational, the economist described the transaction as the optimisation of assets by the multinationals.
He explained that there are three types of assets in Nigeria, which he listed to include land and swamp, offshore and deep-water.
“In the offshore and deep water, what accrues to the multinationals is much higher than that on the land and swamp.
Besides, the land and swamp is also full of risks because of restlessness and activities of the militants.
“So, what has happened was a rationalisation of the assets because of the oil price dropping and also it meets the other objective of getting local content. So, you have Heirs Holdings, Tony Elumelu Foundation and Transcorp, which are very reputable Nigerian investors who have the resources and they have actually paid for this. The total amount was $1.1 billion and this is a good move, both for the investors, the government and the multinationals,” he said.
Analysts had described the deal as a welcome light on the opportunities that are available in Nigeria, especially given the increased pessimism globally and in Nigeria.
They highlighted the credentials of Heirs Holdings as a committed indigenous business and the presence of Transcorp, Nigeria’s largest listed conglomerate, with over 300,000 shareholders in the transaction.
According to them, the deal further demonstrates the ability of the Tony Elumelu-led Heirs Holdings to spearhead Africa’s economic resurgence amidst the calamity posed by COVID-19 pandemic.
The deal, which was announced last Friday, saw Heirs Holdings, the leading African strategic investor, in partnership with its affiliated company, Transnational Corporation of Nigeria Plc (Transcorp), acquiring a 45 per cent participating interest in Nigerian oil licence OML 17 and related assets, through TNOG Oil and Gas Limited (a related company of Heirs Holdings and Transcorp), from the Shell Petroleum Development Company of Nigeria Limited, Total E&P Nigeria Limited and ENI.
The remaining 55 per cent stays with the Nigerian National Petroleum Corporation (NNPC). In addition, the Heirs Holdings Group will take over operatorship of OML 17, demonstrating the strength and quality of the industry team assembled by Elumelu’s group.
According to the analysts, the acquisition again shows Heirs Holdings’ strategic intent in relation to the Nigerian energy sector – to ensure that Nigerian natural resource assets are deployed to Nigeria’s power network, driving broad-based economic growth.