CNBC Africa Senior Anchor Fifi Peters caught up with Oanda CEO, Wale Tinubu on the side-lines of the Africa Energy Week in Cape Town.
I am joined by Mr. Wale Tinubu. Sir, thanks so much for taking the time to talk to us today. Thank you. I mean, it's the official opening of Africa Energy Week and you addressed your stakeholders in the official ceremony as well. I suppose just surmise your key message to investors here and ultimately what the opportunity is in powering a continent that is right now quite energy poor, sir. Well, I think my message to the continent was that we need to harness our own resources. Our hydrocarbons have to be utilized. We are 20% of the world's population but only 3% of global emissions. Sure. We have a 45% of our continent has no access to energy. Sure. Energy products. And we do need to use what we have to get what we want. All right. That's my key message. And how do we achieve that? We've seen a substantial reduction in financing of the hydrocarbon sector by international banks. And I gave the example that in 2014 when we acquired ConocoPhillips for $1.8 billion, we had about $750 million package. We had 10 foreign banks. So I've actually told right now that our viewers are struggling to hear a little bit. So I'm just going to ask you to lift your mic up a bit because you're saying some important things there. You were talking about one of your latest acquisitions. Exactly. I was saying that in 2014 when we did an acquisition, we had nine foreign banks in our consortium. And we raised two tranches. One was $450 million. One was another $250 million for the acquisition. And the last deal we did 10 years later, we had no foreign bankers. And we only see foreign bankers do arrangements in Nigeria or in Africa. And they do the arrangements, but they put very little capital in. So it's important for us to build our own institutions. And so we're really excited by the fact that the African Energy Bank is launching with a capital of $5 billion. And the member states, all producing states, are putting capital behind it. And also the private sector will support it. So we have our own institutions. And then the third point I made was the indigenous companies are the ones who can really ensure that countries that have had successful production levels like Angola and Nigeria. Nigeria, we're up to 2.5 million barrels. At our peak, we're down to 1.4 million barrels of oil production, although we have probably another 300,000 barrels a day of condensate. The trick to getting back to 2 million and staying at an average of 2 million is secondary recovery techniques being done by indigenous companies. We have a vast amount of resources. Production to reserve ratio is very low. And that's what Africa needs to work on. There's over $10 trillion of wealth stuck in the ground, proven reserves that doesn't reflect on the GDP, on the balance sheets of African countries. And it's not used or considered for purposes of calculating the actual wealth. The only way we can establish that is for us to use the indigenous companies to start their exploitation of these resources. Okay, so quite the drying up of liquidity then that you have given us the picture of in the past 10 years, from when you did one of your initial deals to the latest one that you've just done right now. And let's talk about that one in terms of where are the developments and the integration process, how are things going? The integration is going very well. I mean, it's going smoother than I expected. And I think that one of the areas that we're very happy with is the quality of expertise that has been left in the company. We acquired the Italian national oil companies of onshore assets in Nigeria. So we've got very, very good. We were partners for the last 10 years. We got 24 producing fields out of 40. We've got over 2,000 kilometers of pipelines, three gas plants that have a capacity of processing as much gas as Nigeria actually consumes, which is good in joint venture with the NMBC. So we've got a very good platform to work with. Awando, you've increased your ownership in the key assets, production stations, pipelines, the Brass River oil terminal. So are there any further plans to serve for upgrades or expansions on these assets to optimize output and infrastructure resilience? Yeah, there's active work going on. We are in the process of doing several things. One, improving the quality of security across our assets. Two, getting involved in secondary existing fields that have seen a reduction. Three, we're fixing a lot of our pipelines and our flow stations. And four, we're reopening fields that have hitherto been abandoned. And really working very hard to boost our production back to 100,000 barrels a day. So I'm going to stretch things a little bit with you, sir, just given that I have you. And two last questions, just in light of some of the recent moves that your company has made. Awando, having previously mentioned plans to diversify also into sectors like your clean energy and energy infrastructure as part of your future plans, could you share more on your roadmap as a company towards the energy transition? First and foremost, we want to utilize gas. We see gas as clearly as acceptable transition fuel. We want to use gas to create electricity and in the process do something substantial for the Nigerian market. We've started out, we're doing a test run on electric vehicles and we plan to bring up to 5,000 electric vehicles and set up an electric vehicle assembly plant as well as part of our package. Because we feel that we can substantially reduce the cost of transport and start clearly where it will impact the masses. And our choice is to do it via the automotive field. In light of the just energy transition and as an indigenous player in the oil and gas space, how would you recommend that Africa charts this course? I think Africa must be courageous, strong, confident and decisive. We are the victim of global warming, we're not the cause of global warming. Accordingly, we must never have to suffer for not creating a problem and being made to carry the burden of that problem. Renewable fuels, renewable energies are good where they complement what we do. So for example, a lot of Africa has very good sun, so logically you would use solar. But we also need to understand that Africa holds a lot of gas and hydrocarbons and at the end of the day, for us to catch up, we do need to ensure that we take advantage of our natural resource, our competitive advantage. We have a lot of hydro and we have some fantastic dams and some really cheap electricity and a lot of projects that will go on. So it's really the energy mix that suits the continent. And then most of all, I think we do need to be compensated by the Western communities who created this. And what gets financed gets built. I think if they want to see us focus on renewables, then they need to give us good financial terms to fund an investment in renewables, which tends to be more expensive than conventional energy sources. I think just in closing, Wale, as I said, you are also listed on the JEC, you know that very well. You came out with your operational numbers yesterday and the market did see that revenue quite significantly in the period, although your expenses were also equally as high, eating into the bottom line. How would you describe the current operational environment right now and ultimately what this means for your plans in future? I mean, for us, we are producing results which we expected. We're not optimising as much as we want to, but we needed to get through with this acquisition. And having dealt with the acquisition of NAOK now and integration is on route, we expect to see substantially better numbers as we proceed. We're also in the process of restructuring our debts, of ensuring that we have longer payment terms, bringing down our cost of capital and also making substantial capital expenditure over the next 12 months. So we see our revenues and our free cash flows substantially improving as a result of the work we're doing today. Lastly, when you do talk about the hold-up in some of your financial metrics as a result of this acquisition, it has also been noticeable in the recent past the delays in the publication of some of your results. So maybe we can just talk about what things will look like going forward. We do know that the Stock Exchange is clamping down quite hard on companies that are delayed in publishing certain financial results as a result of the listing terms, but what will your approach to governance and complying with certain regulations be like in future, sir? Well, as we're positive, I think we've had the last of those incidents. And those are legacy issues which we had to manage. And I think we had a slight delay this time around because we had to do extensive acquisition accounting because it's a post-balance sheet item of such magnitude that we had to take some additional time and then we will be publishing our third quarter accounts pretty soon. Okay. So you plan to remain listed on the Johannesburg Stock Exchange. Does that listing still make sense for you, sir? Yes. I think we've been on the GSE for over 10 years now. We're comfortable here. Having a secondary listing was good for the company. It made us do certain things. For example, we were the first company to start to publish IFRS in Nigeria because by virtue of being listed here, it was a requirement for the GSE. We also took on the corporate governance initiatives that were the code, the King's Code, which we had in South Africa early in time. So it gave us a different governance standard initially. And we've always enjoyed the fact that it's good to have your tools close to the cause and you tend to do better. I recall when you first came to market and there was a whole lot of excitement around an optionality with another oil player on the market. It's good to hear that you do still plan to remain listed. And we look forward to seeing what the future does look like after beating down this acquisition, of course. But, sir, we'll have to leave it there for now. Nomande, that was my conversation with Wale Tinubu. Thank you very much. Thank you, sir. Wale Tinubu, he is the CEO of Owando.
Theme: The Future of Energy Infrastructure in Africa
Oando CEO, Wale Tinubu, recently shared his insights on the future of energy infrastructure in Africa at the Africa Energy Week in Cape Town. Tinubu highlighted the continent's need to harness its own resources, specifically its hydrocarbons, to address the energy poverty affecting nearly 45% of the population. He emphasized the importance of leveraging indigenous companies to maximize Africa's vast natural resources and drive economic growth. Tinubu also discussed the challenges faced by African countries in accessing financing for energy projects due to reduced support from international banks. He pointed out the significance of establishing African-led financial institutions like the African Energy Bank, with a capital of $5 billion, to support energy initiatives across the continent. The CEO outlined Owando's efforts to enhance energy production and infrastructure resilience through investments in security, field optimization, and pipeline maintenance. Additionally, he revealed the company's plans to diversify into clean energy and establish an electric vehicle assembly plant as part of its energy transition strategy. Tinubu encouraged Africa to adopt a balanced energy mix that leverages both renewable and conventional sources to meet the continent's growing energy demands. He highlighted the need for Western countries to provide favorable financing terms for renewable energy projects in Africa and urged for fair compensation for the impact of global warming on the continent. Despite facing operational challenges and delays in financial reporting, Tinubu remains optimistic about Owando's future prospects and commitment to governance and regulatory compliance. The CEO reaffirmed the company's decision to remain listed on the Johannesburg Stock Exchange, citing the benefits of governance standards and investor confidence associated with the listing. Overall, Tinubu's vision for Africa's energy future underscores the importance of local innovation, sustainable practices, and strategic partnerships to achieve energy security and economic development on the continent.
"Africa must be courageous, strong, confident, and decisive. We are the victim of global warming, we're not the cause of global warming."
Oando, Wale Tinubu, Africa, Energy Infrastructure, African Energy Week, Hydrocarbons, Energy Poverty, Financing, African Energy Bank, Clean Energy, Electric Vehicles, Energy Transition, Renewable Energy, Governance, Johannesburg Stock Exchange