Dangote, request for FG flour mill, oppose new sugar refinery by BUA

* The project is legal, it will checkmate arbitrary price increases and create new jobs, says Rabiu

James Emejo in Abuja

The chairman, Dangote Industries Limited, Alhaji Aliko Dangote, along with the president of Nigeria’s Plur Mills Plc, Mr. John Coumantaros, said setting up a new sugar refinery plant in the country poses a threat to achieving the National Sugar Master Plan. (NSMP), as well as the sustainability of the local sugar industry in the country.

They argued that the country currently has enough processing capacity to meet national demand.
In a joint petition to the Minister of Industry, Trade and Investment, Mr. Niyi Adebayou, on January 28, 2021, the duo protested the recent commissioning of a sugar refinery in Port-Harcourt, Rivers State, which is reportedly owned by BUA International, one of the operators in the sugar industry.

However, in the next conflict among major players in the industry, BUA Group President Alhaji Abdulsamad Rabiu said his investment in Port Harcourt in no way poses a threat to the country’s sugar policy, adding that he would rather checkmate arbitrary price increases by major players among other benefits for the country.

Adebayo, on Thursday, confirmed the rancor among the operators, reacting to THIS DAY.
But he declined to comment further on the issue, which is already in court.
The Minister said: “Unfortunately, I cannot comment, because the matter has already been taken for granted. Thank you very much for your understanding. ”

However, in a letter to the minister, Dangote and his colleague from Flour Millis claimed that they had warned in 2019 of the risk of setting up a new refinery, adding that they had received assurances that it was in line with the federal government’s BIP policy. the new refinery will not be allowed to operate in Nigeria. “

They also pointed out that all stakeholders needed a huge amount of work to achieve the goal behind sugar policy, which is, among other things, encouraging backward integration to ultimately achieve self-sufficiency in local sugar production.

The applicants stated that with the new refinery the processing capacity in the country had increased to 3.4 million metric tons per year from 2.75 million metric tons per year.
The applicants further sought a level playing field that allowed fair competition in the local sugar market in order for the country to achieve the master plan for sugar.

They specifically called on Adebayo to prevail over the Nigerian Customs Service (NCS) and the Central Bank of Nigeria (CBN) to ensure that the provisions of the NSMP are enforced and that no additional quota is allowed for raw, VHP or refined sugar for the refinery sugar in Port Harcourt for production in the local market.

Among other recommendations, they said that no allocation should be issued or requests for a quota intended for the re-export of sugar should be considered, as this would be difficult to monitor and could be open to abuse.
The applicants added that “an investigation should be carried out to determine the amount of raw sugar introduced by the Port Harcourt refinery and an appropriate penalty in terms of customs duties (60 per cent) and levies (10 per cent) should be imposed on the company”.

He added that customs should have a mandate to strictly adhere to the approved quota allocations for customs clearance of goods and administration of duties and customs and to ask CBN to supervise the registration of “Form Ms” in accordance with the allocation of quotas.

They recalled that according to revised guidelines published by the National Sugar Development Council (NSDC), it has been made quite clear that quota allocation will henceforth be made on quantitative and verifiable improvements in the BIP of industry operators.

The applicants argued that the NSDC’s mid-term assessment concluded that BUA “did not make significant investments in local production or did not comply with its obligations under the BIP.
“Even before its secret investment in additional processing capacity, Nigeria already has enough processing capacity to meet demand today and in the future.”

The applicants argued that the business logic behind the investment in the new refinery was clearly incorrect, adding that, “BUA intends only to import and process raw sugar, while claiming that it is investing in the development of sugar plantations to qualify for raw sugar imports. “.
They further argued that the Port Harcourt refinery was apparently taken to deliberately undermine the federal government’s sugar policy.

“We are particularly surprised by the audacity because we believe that the choice of location and the promotional campaign behind the investment were deliberately made to provoke public sentiment and oppose the federal government to its people,” the petition added.

It was said that unless the Ministry of Industry, Trade and Investment played an effective policing role for the NSMP, the country’s dream of becoming self-sufficient and a truly net sugar exporter would be defeated.

“The impunity with which the BUA violated the provisions of the NSMP has led other non-compliant players to a significant disadvantage, but has discouraged them from making huge investments that would achieve the desired goal of 100 percent local sugar production, unless, of course, the ministry it does not fail and does not solve the situation “, it is added.

Consequently, in a letter issued by Adebayo on 10 February 2021 to BUA Group President Alhaja Abdulsamad Rabiu, following Dangote’s petition, the Minister requested detailed information on the BUA sugar refinery in Port Harcourt, in particular the company’s plan to service Nigerian and export market from its refineries.

However, BUA has been reacting to the minister since 11.2021. took a “serious exception to the ridiculous claims of its two main competitors that it wants to bypass the BIP sugar industry.”
In its five-page response, the company said it was unreasonable to work against the industry’s backward integration policies, investing billions of naira in an initiative that is nearing completion.

Rabiu, particularly convinced that his project aimed at exporting sugar to Port Harcourt will not be affected in any way, lags behind the integration program adding that “the only way this will affect Nigerians is that Nigerians will pay lower sugar prices”.
He explained that although the Port Harcourt refinery is mainly for export, BUA is allowed under the jurisdiction of the Nigerian Export Processing Area (NEPZA)

Law and current approvals / rules for intervening locally to stabilize the price of sugar, “where absolutely necessary – faced with arbitrary price increases and an agreement to force local shortages of products”.
He said: “The same NEPZA law on which this project is based gives permission to process, add value and export at the same time. Companies under this law can process and if they wish, sell 100 percent of their production in Nigeria with payment of customs duties based on the current raw material tariff.

“In fact, Aliko Dangote of Dangote Industries, one of the complainants who cites and attacks this approval, also applied for and received the same approval for his Lekki refinery project, Lagos, where he currently enjoys the same benefits of staying in the export processing zone ( EPZ). “
He added: “What BUA Sugar does is legal and within the bounds of the law. We have not done, nor are we doing anything wrong. ”

Rabiu further explained that the EPZ under which his Sugar Port project is located underwent a rigorous two-year review process before being forwarded to the ministry for approval by President Muhammad Buhari, adding that only the president himself is constitutionally authorized to approve the EPZ license. “
According to the chairman of the BUA group: “Anything done to attack this project in any way, in any form or in any form, attacks the approval of Mr. President and we will do everything to ensure that our rights are not violated.”
He said that BIA’s Lafiagi BIP is on track to be completed by the end of the year, as well as to start production by the end of 2022.

Rabiu also warned that any action that undermines the current approval could erode investor confidence in the EPZ.
He found that the company has spent more than $ 250 million on the Port Harcourt project, which currently employs over 1,000 Nigerians and has significant economic impact.

He said, “Attempting to close or stifle business will cost the business and lose economic impact.”
He added that BUA remained the only company of three dorminant players, spending serious money and trying to complete its BIP project by 2022, stressing that “we need to start asking firm, tough questions to two more players”.

The letter, however, urges the minister to remain firm and determined in carrying out his duties, as he has always done, adding that the BUA remains committed to its obligations regarding the BIP and NSMP. Ssid said “we believe the time has come for all players to be called to the right account”.