A major downstream player in the oil industry, Nipco Plc, has bought another 3.23 per cent stake in 11 Plc, the fuel retailer formerly known as Mobil Oil Nigeria, for N4.84bn to increase its holding to 70 per cent.
Nipco’s investment subsidiary bought 60 per cent of Mobil Oil Nigeria from Exxon Mobil Corporation in October, when the United States oil giant pulled out of downstream fuel distribution in Nigeria. Having amassed a stake of almost 67 per cent, it wanted to increase that holding to around 70 per cent, Reuters reported on Wednesday.
Under Nigerian takeover rules, it had to offer the same price of N417.12 per share to minority investors. The downstream oil industry in Nigeria is consolidating as multinational oil firms sell out to focus on higher margin exploration and production, following a drop in crude oil prices. Nigeria exports nearly two million barrels of oil a day but imports the bulk of its refined products because its refining capacity is unable to meet the country’s daily fuel needs of 40 million litres.
Nipco ventured into retail marketing of fuels in 2007 with an underlying motive of replicating our performance at the depot level also at the retail marketing end. Having been successful as a depot operator, we felt that the business should be taken to the next phase which is retailing thereby impacting the consumers positively through effective and efficient service as well as ensuring good returns to our shareholders.
In order to achieve the above objectives, different business models were considered like Dealer Owned Dealer Operated (DODO), Company Owned Company Operated (COCO), Company Owned Dealer Operated (CODO), Dealer Owned Company Operated (DOCO) embedded with 3 income streams which has the capacity to change the way and manner our would be partners were doing their business and and make their business grow substantially.
With a very strong customer base majority, IPMAN Members, it was not too difficult for us to acquire very strategic outlets in focused markets through a lease arrangement.
Currently, we have acquired 150 retail outlets spread across the country, with a plan of increasing that to 250 by the end the year 2017.