OVH Acquisition: Nigerian man seeks to halt merger

A Nigerian citizen, Targema Steve, has filed a lawsuit at the Federal High Court in Lagos, requesting the court to dissolve the merger between NNPC Retail Limited, Nueoil Energy Limited, and OVH Energy Marketing Limited.

Mr Steve argued that the deal violates regulatory laws and undermines national interest.

In August, PREMIUM TIMES reported how a court ruling had effectively dissolved the downstream arm of the Nigerian National Petroleum Company Limited (NNPC Retail) and transferred its ownership to OVH Energy Marketing Limited.

The NNPC Retail officially no longer exists after it asked a court to transfer its ownership and properties to a firm it claimed to have bought.

This newspaper also reported that the NNPC Retail, with registration number 826223, incorporated on 21 June 2009, and Nueoil Energy with registration number 1902885, incorporated on 8 March 2022, have been dissolved by the Corporate Affairs Commission (CAC), while the OVH Energy Marketing Limited with registration number 655791, incorporated on 5 June 2006 remained active.

Last month, an official search by this newspaper showed that the OVH Energy Marketing Limited, with registration number 655791, incorporated on 5 June 2006, has been renamed as NNPC Retail Limited.

The renaming took effect from 2 September 2024 and a certificate signed by Hussaini Magaji, a Senior Advocate of Nigeria (SAN) and the Registrar General of the Corporate Affairs Commission was issued to that effect.

In a sworn affidavit obtained by PREMIUM TIMES, Mr Steve claimed the merger was carried out in contravention of existing legal frameworks.

He called on the court to reverse all prior approvals of the merger, citing concerns about public interest and the potential for private entities to seize control of state-owned assets.

He further demanded that the Federal Competition and Consumer Protection Commission (FCCPC) investigate the merger, alleging that it may have been engineered to benefit private interests over the public good.

He also asked the court to order the FCCPC to publish its findings in at least two national newspapers and submit the report to the court.

The suit, filed under the case number FHC/L/CS/921/2024, raises several claims challenging the validity of the merger.

Allegations of legal violations

Mr Steve argued that the merger between NNPC Retail Limited, Nueoil Energy Limited, and OVH Energy Marketing Limited was executed per incuriam—in violation of the law.

Specifically, he pointed to Section 6(2) and the Second Schedule of the Public Enterprises (Privatisation & Commercialisation) Act, which outline the rules governing the privatisation of government-owned enterprises.

He contended that the merger cannot be legally upheld without evidence of full compliance with these regulatory and statutory provisions. In his view, the transaction prioritises private, sectional interests at the expense of the public.

Additionally, Mr Steve accused the NNPC Retail Limited, Nueoil Energy Limited, and OVH Energy Marketing Limited of bypassing the minister for trade matters, which made the merger process invalid.

Citing the Federal Competition and Consumer Protection Act (FCCPA) of 2018, Mr Steve alleged that the failure of NNPC Retail Limited, Nueoil Energy Limited, and OVH Energy Marketing Limited to notify and obtain approval from the FCCPC renders the entire transaction void.

Concerns over national interest

In his affidavit, Mr Steve pointed out that all three companies involved in the merger—NNPC Retail Limited, Nueoil Energy Limited, and OVH Energy Marketing Limited—are subsidiaries of the Nigerian National Petroleum Company (NNPC) Ltd, which is owned by the state.

He argued that it is against national interest for the newly formed company to bear the name OVH Energy Marketing Ltd, a name he said has no apparent connection to the Nigerian state.

“That it is an anomaly that NNPC Retail Ltd is not the enlarged entity in the purported scheme of merger as NNPC Retail Ltd shares the same national name (NNPC)as the parent company – NNPC Ltd who the petition presented as the sole owner of the three petitioners.

“That it is in the public and national interest to set aside the orders of merger and order the investigation of the scheme of merger to prevent any underhand takeover of the national company by private vested interests.

“That the scheme of merger breached fundamental condition precedent and violated statutory provisions,” Mr Steve said.

PREMIUM TIMES reported NNPC Ltd’s controversial purchase of OVH Energy Marketing Limited and how the purchased company essentially took over the management of the buyer, which an NNPC insider described as “the most ridiculous business acquisition in the world.”

NNPC Ltd bought OVH from Nueoil Energy Limited a month after Nueoil Energy acquired OVH in September 2022.

However, in June, the three firms – NNPC Retail, OVH and Nueoil – jointly filed a petition at the Federal High Court in Lagos. In it, they asked the court to grant eight orders, including an order that NNPC Retail “be dissolved without being wound up” and that “the resultant company from the scheme shall be” OVH.

The petitioners further asked that all tax attributes, unutilised capital allowances, tax losses, withholding tax credits and other refunds available, but excluding the Nueoil Energy shares in the OVH Energy Marketing Limited, liabilities and business undertakings, including real property and intellectual property rights of the NNPC Retail and Nueoil Energy Limited be transferred to the OVH Energy Marketing Limited subject to the terms and conditions set out in the scheme without any further act or deed.

The court granted all eight orders, ordering that the merger be effective from 1 January. The court also mandated that all necessary incidental, consequential, and supplemental orders be made to ensure the full and effective implementation of the merger.

In his reaction to PREMIUM TIMES report, the presidential candidate of the Peoples Democratic Party (PDP) in the last election and former vice president of Nigeria, Atiku Abubakar, expressed astonishment at the operations of the NNPC Ltd and how the government-owned oil company had put its retail arm under the control of OVH, which he claimed was owned by Wale Tinubu, a relative of President Bola Tinubu.

Atiku regretted that his intention to privatise the NNPC and increase its transparency has been overshadowed by what he described as the “criminal hijack of the NNPC by corporate cabals around the current president,” according to the statement signed by his Media Adviser, Paul Ibe, said.

However, the NNPC, in its response to Atiku, said at the time it acquired OVH in 2022, Oando (in which Wale Tinubu has equity interest) had fully divested its equity in OVH to the two other partners, Vitol and Helios.

The NNPC explained that Oando began its divestment in 2016, with Vitol and Helios coming in as equity partners, leading to the change of name from Oando to OVH.

In 2019, according to NNPC Ltd, Oando fully divested its equity interest in OVH resulting in Vitol and Helios holding 50 per cent equity interests respectively.

PREMIUM TIMES reported the divestment by Vitol and Helios from OVH which they sold to Nueoil in 2022. NNPC then bought OVH from Nueoil.

Background

NNPC Ltd. announced in October 2022 the acquisition of OVH Energy Marketing Limited’s downstream assets. This acquisition would merge OVH Energy with NNPC Retail, a subsidiary of NNPC Ltd.

The assets acquired from the company, which operated Oando filling stations, also include a reception jetty with 240,000 metric tonnes monthly capacity and eight liquefied petroleum gas plants, three lube blending plants, three aviation depots, and 12 warehouses.

But in June 2023, PREMIUM TIMES’ investigation on the acquisition exposed the secret deals and the complicated ownership structure that left managerial control of NNPC Retail in the hands of OVH Energy Marketing.

The report also exposed that OVH Energy Marketing may not have owned as many filling stations as it claimed during the merger talks.

In addition, the report highlighted how Huub Stokman, an expatriate and former Chief Executive Officer of OVH Energy, emerged as the new Managing Director of NNPC Retail, a development that further compounded the structure of NNPC Retail.

This newspaper also found out that the acquisition of OVH Energy had turned NNPC Retail into a toxic workspace, with officials of the former taking over the latter’s running.

“Did we acquire them, or did they acquire us? How come they are now the ones in the management,” one NNPC Retail staffer told this newspaper.

In July 2023, the House of Representatives, following the adoption of a motion move by Miriam Onuoha (APC, Imo), directed NNPC Ltd to suspend the acquisition pending an investigation by its committee.

Consequently, the House set up an ad-hoc committee with Hassan Nalabraba (APC, Nasarawa) as the Chairperson and commenced an investigation into the controversial deal in September 2023.

The ad-hoc committee requested the NNPC Ltd to furnish it with information about “registration documents/history from CAC for OVH, Nueoil, and NNPC Retail Limited (NRL), Board Resolution of NNPC Ltd on purchase of OVH, Audited Financial Statement and Management Accounts from 2015 to Date OVH, Nueoil, NRL and NNPC Ltd” and the “payroll from 2015 to date for NRL and OVH, Board Resolution of NRL/CHQ for movement of head office to Lagos and evidence of Tax Payments for NRL and OVH from 2015 to date.”

The committee also requested documents on all financial transactions associated with the acquisition, including payment records and fund transfers.

In September 2023, the Group Chief Executive Officer of NNPC Ltd, Mele Kyari, while appearing before the committee investigating the acquisition, said NNPC Ltd operated like a private limited liability company and entered the commercial relationship with OVH to take over market shares in the downstream petroleum market shares. He said NNPC Ltd did nothing wrong in the acquisition.

Meanwhile, some NNPC Retail ‘concerned staff’, in a letter dated 25 September 2023, addressed to the Chairperson of the House Committee, and signed on their behalf by Mohammed Muazuo, noted that the request by the committee was not met.

In October 2023, Mr Nalabraba presented a report on the investigation.

In February, the House of Representatives dissolved the committee investigating the controversial acquisition after the panel presented a report many lawmakers described as “suspicious and shabby.” The task was subsequently transferred to the House Committee on Petroleum Resources (Downstream) for a fresh investigation.

In January, NNPC Ltd announced that it was unable to complete the OVH acquisition. It said it intended to apply for operating licences for the facilities under OVH Energy Marketing Limited.