Wale Tinubu has consistently reiterated his ambition to build Africa’s first oil major. Is it time to start taking him seriously?
VENTURES AFRICA – Tinubu’s company, Oando PLC, is fast attaining multinational status and has successfully cemented its position as Nigeria’s foremost-integrated energy service provider. Already, the $2 billion (Market capitalization) company has tentacles spanning the entire energy value chain- the downstream, the midstream and the upstream. Oando Marketing, the group’s downstream subsidiary, is the largest marketer and distributor of refined petroleum products with over 650 service stations strategically positioned all across Nigeria, Ghana, Togo and Sierra-Leone, among other West African countries. The group also owns deep offshore exploration assets, power generation interests, and is currently managing the development of a Greenfield refinery with the capacity to produce about 240,000 barrels per day (bpd).
Oando is currently one of the largest indigenous energy company listed on the Nigerian Stock Exchange (NSE). In 2005, the company made history as the first Nigerian company to dual-list on both the Nigerian and Johannesburg Stock Exchange.
Wale Tinubu, 44, made it all happen. The trained lawyer has carved for himself an enviable position as one of Nigeria’s most venerable dealmakers and inserted himself atop the perking order in the league of major Nigeria’s oil industry.
The making of an entrepreneur
The son of a modestly successful legal practitioner, Tinubu was privileged, at least by African standard, to have studied in the U.K. When he was 16 years old, he left Nigeria to study law at the University of Liverpool, England. Even as a student, the young Tinubu was always on the look-out for new ways to make money. Using his school fees as working capital, he used to travel to Europe to purchase luxury German cars, and then he would drive the car through Europe and back to London, while trying his best to sell it off for a profit on the way. Tinubu repeated this operation about four to five times, and each time he netted a profit of about $5,000. He was only 21, but he was building the foundation for a future in deal making.
Tinubu went on to pursue a Masters in Law from the prestigious London School of Economics, returning home to Nigeria at the age of 22 to attend Law school, a prerequisite for any Nigerian lawyer. After law school he started working as a lawyer at his father’s firm, but it was not for long. Tinubu soon became restless. He had become bored of the law profession, and more importantly, he wanted to be his own boss. He longed for bigger challenges, and relished the idea of having international business partners- travelling the world to seal deals in multiple time zones.
He couldn’t achieve those things if he kept on working for his father; so he quit his job and set out to start his own company.
Since he didn’t have the money to rent office space, the young Tinubu set up his office in his father’s garage. He borrowed office supplies from his father’s firm, and installed a telephone, borrowed from the family house.
For the first few months, Tinubu handled corporate assignments for small companies. It was a modestly successful business, and it paid the bills. In fact, within a year, Tinubu was able to save up enough money from his small legal operation to rent an impressive office very close to his family’s residence. Although he was generating a decent income from his small business, the young lawyer was actively on the lookout for bigger challenges and opportunities.
One day, a friend of his, Jite Okoloko approached Tinubu with a small problem. Okoloko, who had extensive contacts at the federal government had been contracted by Unipetrol, a government-owned oil company to transport diesel from the Port Harcourt refinery in Niger Delta to fill up a few fishing trawlers in Lagos. Okoloko was desperately in need of a vessel to transport the fuel.
Coincidentally, Tinubu had a close friend, Omamofe Boyo, who as a lawyer at FRA Williams Chambers- one of Nigeria’s most senior law firms, represented an oil service firm, which owned a weather-beaten 1945 World War II tanker called The Carolina. Excited and realising that The Carolina could fulfil Unipetrol’s requirements; Tinubu immediately contacted Boyo and informed him of the opportunity.
Boyo led Tinubu to inspect the ship, which was docked at Bonny Island, at the south-south region of Nigeria, and Tinubu realised the ship was just what he needed.
He immediately chartered the tanker, informing Okoloko that he now had a ship to transport the fuel. He was in business. It was the genesis of his foray into oil business, but he probably didn’t’ even realise it then. For a while he kept transporting diesel for Unipetrol.
With time, Tinubu acquired The Carolina from its initial owners and transcended from selling fuels to mere fishing trawlers to independently selling to indigenous oil companies. Tinubu’s oil trading company, which he called Ocean and Oil, earned a reputation for effective delivery of service and soon became a favourite among the indigenous oil firms. His two friends, Mofe Boyo and Jite Okoloko, joined Tinubu at the company and together they subsequently increased their fleet from one ship to seven. By the time he was 30, Ocean and Oil had become the market leader in the supply and trading of fuel products.
The birth of Oando
In 2000, Tinubu stumbled across an even bigger opportunity. The Nigerian government had decided to sell off its equity in Unipetrol. The government owned 40% of the company, and was looking to sell off 10% to the investing public, and 30% to a private investor.
Tinubu was interested in that 30% stake, and he submitted his bid. Along with his team, he went to work on developing a solid business plan and a blueprint for the strategic direction of the company. Their bid was successful, and even though various labour unions and employees of the company were initially opposed to the sale as a result of their youthful age (they were all less than 33 at the time), Tinubu eventually won the confidence of all the varying factions- the investing public, labour unions, and the government. He focused squarely on rejuvenating the ailing petroleum marketer. He renamed the company Oando PLC, and hired fresh, new dynamic managers to support his dream of building an energy company of international standards.
It is now twelve years since Tinubu took over the oil company and Oando is currently 30 times larger than its early days. Even more impressive, Oando is no longer a mere fuels retailer; it is the only Nigerian energy company that is actively involved in all sectors of the petroleum economy. Aside being the first Nigerian company to achieve a dual listing on the Johannesburg Stock Exchange, in 2011 Oando announced that it was eyeing a listing on the Toronto Stock Exchange.
The company has become an African success story. It now has six subsidiaries; Oando Production and Development Company; Oando Refinery; Oando Trading Company; Oando Marketing; Oando Power Company; and Oando Energy Services. It has over 500 petrol stations in Nigeria, Ghana, Togo, Republic of Benin and Sierra Leone. In 2008, Oando paid $197 million for 15 percent equity in two deep offshore oil mining leases. Last year, the company announced it generated about $49 million in revenue from one of the rigs and has now acquired three more drilling rights. Between drilling and production, Oando has interest in at least 11 oil blocks in Nigeria valued at around $600 million. Additional revenue comes from their 12.15MW independent power plant in southwest Nigeria, which serves the Lagos State government. A natural gas pipeline project, embarked on in 2007, hopes to expand their power generation revenue even further.
Tinubu has always reinforced his belief that businesses must give back to the societies in which they do business. In the 4th quarter of 2011, he pledged to donate 1.5% of Oando’s pre-tax profits to fund education initiatives across West Africa.
Already, Oando PLC through its Adopt-A-School program, has adopted close to 30 government-owned primary schools in Nigeria. As part of the adoption program, these schools have been renovated, provided with water and sanitation facilities and Oando has sponsored key academic and non-academic events in the schools. The company has also given away scholarships to thousands of indigenous students in its host communities.
“We are passionate about increasing access to education because we believe that knowledge is the bedrock of world-class aspirations,” he once said.
In all, Tinubu has exceeded expectations. When he acquired Unipetrol’s assets in 2000, very few competitors and contemporaries gave him any chance of success. Now, they take him very seriously. He’s stated that someday,Oando is going to be Africa’s first oil major. It seems like an unrealistic ambition, but when it is Wale Tinubu speaking, just believe.