UPDATE 1-Nigerian Forte Oil seeks to sell an energy unit to its main investor | Energy & Oil

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By Chijioke Ohuocha

LAGOS, Jan. 17 (Reuters) – Nigerian energy group Forte Oil plans to start negotiations to sell its food unit to its main investor, billionaire Femi Otedola, after failing to secure an agreement via a public call for tenders.

Strong said in a statement that he was seeking to obtain shareholder approval during a February 7 vote to begin negotiations with Otedola.

Otedola will not participate in the vote, he added.

Forte plans to use the proceeds of the sale to expand its fuel retail unit, its primary objective.

Forte's electric subsidiary, Amperion Power Distribution Company Limited, paid $ 132 million to acquire a 414-megawatt power plant six years ago as part of a government-led privatization program to address decades of chronic power cuts.

Strong also imports fuels and lubricants for automobiles, which it resells at gas stations.

In Nigeria, the retail fuel sector operates with very tight fixed margins and therefore requires a lot of capital to grow. The sector could be deregulated because of its impact on the Nigerian currency and the import bill.

Last year, Forte decided to sell its power generation unit, upstream services business and downstream business in Ghana to focus on its fuel distribution operations at home.

The company said Thursday that Otedola had expressed interest in the generator and that its proposal would be reviewed by management and an independent advisor.

A call for public offerings for the sale of the energy badet received "surprisingly low interest," said Forte, adding that the pricing proposals received did not meet his expectations.

The shares of Forte increased by 2.55% Thursday to 30.15 naira, valuing the company 39.3 billion naira (128 million dollars).

Otedola has also agreed to sell its 75% stake in the downstream business of Forte Oil, with the deal expected to close in the first quarter.