Indigenous oil firm, Heyden Oil and Gas has announced over N10billion investment in its downstream retail chain, which involved acquiring and rebranding 40 filling stations in Lagos, bringing to 50, the total number of outlets in Lagos and Ogun states owned by the firm.
A couple of banks including Wema, Access and UBA provided the facility for the outlets acquisition, which it hoped to repay from the accruable margins from running the stations.
The Managing Director/Chief Executive, Dapo Abiodun, who spoke with newsmen on the sidelines of the opening of one of the outlets at Alapere, Ketu, while admitting that the venture was expensive, said: “These are the easiest ways of penetrating the market.”
Abiodun said the company is not stopping on its oars as it also planned to expand operations “to Oyo, Osun, Ekiti, Edo, Kwara, FCT Abuja (which we are currently working on) and other parts of the country.”
He revealed that the investment in retail outlets is aimed at consolidating its wholesale and other downstream operations including petroleum products importation, tank farms, ships and distribution networks.
He said the essence of the partial deregulation of the petroleum downstream is to encourage more private sector investment.
“The deregulation by President Buhari is a great landmark. With the feat, it means that efficiency is what determines the margins. Dr. Ibe Kachikwu and Maikanti Baru, have said we are under retailed; in Victoria Island, there are only three fuel stations, and if there is a small tightness in the market, there will be queues everywhere. What NNPC did was to invest in retails by placing the most margins in retail,” he explained.
The Managing Director, Wema Bank, Segun Oloketuyi, said the bank participated in the funding of the outlets because it had faith in the retail business, saying it has been part of the success story from 10 years ago.
“The only to sustain the retail business is to integrate the system,” noting that prevalent challenges in the downstream sector are traceable to distortions in the system, he added.
The firm also disclosed that it was considering available options to take advantage of Federal Government’s offer to private sectors on refinery collocation.
