Heir Energy Limited, Africa’s largest indigenous energy company, has signed a $750 million financing agreement with the African Export-Import Bank (Afreximbank) in its pursuit of energy efficiency.
The agreement was signed by Heir Holdings Chairman Tony Elumelu and Afreximbank President Dr George Eronbi on behalf of their respective entities in Abuja over the weekend and is aimed at propelling Heir to the next stage of growth.
But Elumelu hailed the deal as “a clear demonstration of African capital working for African companies.”
He further commended Mr. Elombi for his efforts on behalf of all private sector leaders on the continent.
Elumelu chronicled Heir Energy’s commitment to the oil and gas business, highlighting the financing barriers it faced initially, but highlighted that Afreximbank’s support had a catalytic impact on financing.
He acknowledged that “this story cannot be told without mentioning Afreximbank’s catalytic growth support in collaboration with African Finance Corporation (AFC) and other partners.”
He also acknowledged that it is indeed tough to survive in business in Africa and praised Afreximbank’s unprecedented influence.
“No one can develop Africa. The most catalytic and influential financial institution in Africa is Afreximbank. They have grown in capacity and boldness to support African businesses,” Elumelu said.
He therefore called on private sector leaders to quickly repay the loans to open up more opportunities for business on the continent.
“Private sector leaders, when financial institutions support you, we ask them to meet their minimum obligations. If you perform, you will encourage financial institutions to do more for you and others. This is our belief.
“We have never missed a payment, even when there was significant oil theft during our operations. Without Afreximbank, there would be no private sector business in Africa.”
He further elaborated on the acquisition of 17 Oil Mining Lease (OML), noting that the deal suffered long delays during the administration of former President Muhammadu Buhari, in part due to concerns that the assets were too large for private sector ownership.
Elumelu also reaffirmed the role of external financiers on the continent, saying not a single dollar came from UBA to finance OML 17.
“The government at the time refused to approve it because it was considered too big for the private sector, forgetting that Shell itself is a private sector entity,” he said, adding that the delay imposed significant financial costs on the company.
Nevertheless, Elumelu also said that not a single dollar has come from UBA to finance OML 17, reaffirming the role of external financiers on the continent.
However, Elonbi revealed that Afreximbank is currently working on establishing an energy bank to handle most of its energy portfolio, reaffirming the bank’s commitment to supporting African businesses.
He said the bank was preparing billions of dollars of additional interventions to stabilize the sector.
He said: “We’re going to put a lot of money into this and make sure it’s as good and innovative as Afreximbank itself.”
Mr Elombi said the bank’s support for Heir Energy is in line with its broader commitment to strengthening Africa’s energy sector and is essential to economic stability across Africa.
“If we do not support the energy sector, about 23 African countries will face serious problems,” said Afreximbank’s president.
He added that Afreximbank’s ownership in Africa strengthens its resolve to remain a reliable partner in good times and difficult times.
Heir and Chief Financial Officer Samuel Nwanze provided further insight into the deal, saying the funding is aimed at “taking the company to its next phase of growth” by doubling production.
“We currently produce well over 50,000 barrels of oil and approximately 120 million standard cubic feet of gas per day,” he said.
“This funding is designed to take us into our next phase of growth. If you have followed our communications as a company, you will know that we believe the assets we manage have the capacity to reach approximately 100,000 barrels per day.
“What we want to do is secure the capital we need to grow the business both organically and non-organically. Therefore, this financing is aimed at positioning the company for the next stage of growth that we believe is achievable.”
“Based on the potential we see in this asset, we believe we can deliver up to 100,000 barrels of oil per day,” he said.
“We are committed to achieving that production level over the next three years while delivering approximately 250 million standard cubic feet of gas.
“This is our outlook and this funding will help us achieve these goals, not only from this particular asset, but also by allowing us to pursue other opportunities we see in the market.”
Nwanze further said today:
We are an ambitious group and are always looking for growth opportunities. The main reason we are in the oil and gas business at Heirs Energy is to promote energy sufficiency on the African continent.
“If there is an opportunity to acquire assets that align with that broader vision, we will pursue them. That said, we are not talking about specific acquisitions at this time.”
James Emejo and Peter Uzoho
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