Dangote invests $20b in pipeline infrastructure, fertilizer, petrochemicals

By Ikenga Chronicles April 12, 2016

Dangote invests $20b in pipeline infrastructure, fertilizer, petrochemicals

—- Roseline Okere and Femi Adekoya*Cement production capacity to hit 41 million tonnes

Dangote Group is investing about $20 billion into gas pipeline infrastructure, power generation, petrochemical, fertilizer, sugar refinery and petroleum refinery in the country.

The Executive Director, Dangote Group, Devakumar Edwin, in a chat with The Guardian, disclosed taht Dangote’s fertilizer plant, which will be operational next year, and the petrochemical plant and refinery, is expected to meet local consumption of petroleum and chemical products in the country.

He noted that the gas pipeline is capable of handling two to three billion standard cubic feet of gas per day.

This, he said, will be a good input for power generation, which he said, was being starved of gas. “Today in our cement plants, we are importing N2 billion worth of Low pour fuel oil (LPFO) and N1 billion worth of diesel every month to support our operations due to lack of gas. It will be difficult for any industry spending so much on electricity generation to reduce the cost of production with inadequate gas.

“If gas is available, production will increase and the cost of production will reduce. So, this attempt is going to give a major boost in employment figure. Farmers are not being able produce very well because the fertilizers that are being imported, which is handled by the state governments, does not come on time and lack basic nutrients required for the country’s type of soil. So, people do not really get the right benefits. Soil and the nutrient required are not being analyzed before they are produced”, he added.

Edwin disclosed that the company is also making huge investment in fertilizer production, describing the plant as one of the largest in the world.

“Then, we are going into petrochemicals. Almost everything you see comes in plastic and all are being imported. If we can make the materials available, the country can then again be self-sufficient in terms of petrochemicals. We are also looking at solar energy, renewable energy and green energy.

“With the huge gas we are bringing to the shore, we will improve power generation. When we start manufacturing most of these things locally, the problem of unemployment will be solved. This will also curb the social problem and crimes. We are also going through a lot of pains. But we don’t want to look at the negative side we are looking at the positive sides”, he said.

He said that the current declining crude oil prices, call for the need for the country to diversify into manufacturing and become self-sufficient in consumable goods.

He noted that Dangote is investing more on agriculture due to its desire to make the country self-sufficient in food production.

He stated: “I think the current situation will make everybody to focus on local production and on the long run, there will be sufficiency. Sufficiency can come in two phases, for instance, we can focus on agriculture and attain food sufficiency and we stop importation and focus on exporting.”

Meanwhile, to further enhance its local capacity in the country, Dangote Cement Plc has commenced the construction of a $1billion cement plant in Okpella, Edo state.

Indeed, the new cement plant with potential capacity for expansion is expected to further aid the country’s import substitution agenda, while generating at least 6000 jobs in the cement industry.

The new six million metric tonnes yearly capacity cement plant is coming on the heels of similar arrangement for another six million mtpa cement plant in Itori, in Ogun state where the company is currently running a 12million mtpa cement plants at Ibese, in Yewa division of the state.

By this investment, Dangote’s production capacity will go up further to 41m mtpa, in Nigeria alone.

Commending Dangote on the investment, the Federal government said the gains of the backward integration in the cement sector of the construction industry, as championed by the Dangote group is saving the nation some foreign exchange.

The Minister for Solid Mineral Development, Dr. Kayode Fayemi and his counterpart in Trade and Investments, Dr. Okechukwu Enelamah, expressed government’s delight with the exploits of the Dangote Cement in ensuring that the nation freed itself from the shackles of endless importation and becoming net exporter.

This development, they stated, tallied with the change agenda of the present government that all hands must be on deck to substitute importation with local production and consume only products that are produced locally.

They stated that the volatility in the international oil market and the excessive dependent on importation have both combined to put pressure on the Naira, adding that the government is putting in place strategies to free the Naira from such pressure.

The Ministers while speaking at the commissioning of the construction of the plant, commended the President of Dangote Group, Aliko Dangote for believing so much in the nation’s economy and has continued to invest even where others have contrary opinion.

They therefore, called on other investors to take a cue from Dangote’s firm commitment and support to turn the nation’s economy around through active production.

Aliko Dangote said he would never shy away from investing in Nigeria saying Nigeria still remains the best place to invest in the world.

According to him, “a key factor that drives investments in an economy is the presence of an investor-friendly business climate. Indeed, Edo State today is one of the most attractive investment destinations in Nigeria.

“The economic reforms in Edo State especially in the area of tax, innovations in rural finance and investment on infrastructure, have produced an enabling environment that has further provided a platform for future growth. All these factors made us consider investing in the state.

“Nigeria is a growing economy. Our developmental challenges are quite enormous and will require the combined efforts of government and private sector to overcome them. It is in this light that we are here to contribute our own quota to transforming the economy of Edo State as we have done elsewhere.

“This project is only one of our several successful projects presently ongoing in parts of the country and outside in more than 15 other locations in African countries, in line with our Pan African investment strategy. Last year June, we commissioned our cement plant in Ethiopia, and in August of same year in Zambia and Cameroon. We commissioned our plant in Tanzania in October. We plan to commission very soon, some of our other African plants in Senegal and South Africa.

“Also last year, in Lagos, we signed a deal valued at $4.34billion, with Sinoma International Engineering Company Limited, for the construction of 10 additional new cement plants across Africa, with one in Nepal in Asia. The combined capacity of these new projects will be 25 million metric tons per annum”.

“By the time all these new projects are completed in the next few years, we will have a total capacity of 81 million metric tons per annum. This will make us one of the Top Six cement companies in the world. We are currently consolidating our cement businesses across Africa in order to reap the benefits of scale. As a matter of fact, our operational offshore cement plants have started to make substantial contributions to our Group revenue.

“In addition to manufacturing, we are also investing heavily in agriculture for massive employment generation. Recently, we have commenced multi-billion dollar rice projects in some states in the North and we recently flagged off a rice out-grower scheme, with the distribution of rice seedling to farmers in Jigawa State, to reduce our dependence on imported rice, create massive jobs for the people and provide good returns to the famers.

“We envisage producing a milling up to one million tons of white rice with the cultivation of 200,000 hectares of land. This will lead to a conservation of about $11 billion presently spent on importation of food items that could otherwise be produced locally. It is gratifying to know that the Federal Government has recently announced that it is putting in place strategies that will make farmers have greater access to implements and other inputs.”


Credit: The Guardian

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