The establishment of a new sugar refining plant in the country, according to Alhaji Aliko Dangote, Chairman of Dangote Industries Limited, and Mr. John Coumantaros, Chairman of Flour Mills of Nigeria Plc, poses a challenge to the achievement of the National Sugar Master Plan (NSMP) as well as the sustainability of the country’s local sugar industry.
They stated that the country’s existing refining capacity was sufficient to meet national demand.
A major war has been raging in the Nigeria sugar industry for some time now and the bubbles seemed to have burst with Dangote’s decision to petition the Federal Government asking the Ministry of Trade to shut down BUA Group’s Sugar Refinery located in Port Harcourt.
In the letter dated 28th January, 2021, signed by Aliko Dangote himself as the Chairman Dangote Industries Limited, the billionaire claimed that when the BUA Sugar refinery was opened, he warned the Government and they told him that ‘no new refinery would be allowed to operate in Nigeria’.
Dangote accused BUA of operating with impunity by contravening the laws as laid down in the National sugar policy by selling its products locally instead of producing for export alone.
BUA in its own defence sent to the Honourable Minister of Trade however clarified issues by stating that the law allows it to sell inside Nigeria.
Attaching the enabling permits and approval BUA stated that the law allows it to sell locally.
The sugar makers alleged that the attack was because of the connivance of the two major sugar manufacturers to hike the price of Sugar during the Ramadan period.
BUA also warned that Dangote group and the other major player have not been involved in any backward integration project, rather they depend on 80% raw sugar allocation which is detrimental to the Nigerian economy in long term analysis.
BUA on the other hand has been involved in backward integration project with BUA’s Lafiagi Sugar BIP set to be completed in 2022.
Over 250 million dollars is believed to have been spent on the export-focused BUA sugar refinery already and it is also employing over 1,000 Nigerians.
Meanwhile, BUA also noted that at the centre of this fight to force FG to close BUA Sugar refinery down is the price war.
Last year, before Ramadan, sugar sold for around 18,000 Naira per bag. But as Ramadan fasting started the price jumped to 30,000 per bag.
The people had no choice but to buy it because they needed a lot of it during the period. So the manufacturers were smiling to the bank.
BUA group noticed the trend and decided that it had to change. There was no reason to increase the price during Ramadan simply because the demand is high.
Usually the increase happens about one month to commencement of fasting.
When the other manufacturers got across to BUA, Samad Rabiu refused. They put pressure on him, saying it was the right time to make good money but he put his feet down.
After failing to do that, they petitioned the Federal Government that he was breaking the law by selling sugar locally instead of for export.
A source however claimed that already, BUA group has dragged the Trade Minister to court to ensure that the operations of the sugar refinery is not tampered with at all because of the desperate attempt by Dangote Group to monopolize the sugar trade in Nigeria.
He said: ”To try to shut it down or stifle its operations will cost jobs and lost economic impact.”
He added that BUA remained the only company of the three dorminant players, spending serious money and seeking to complete its BIP project by 2022, stressing that,” we need to start asking firm, hard questions of the two other players”.
Consequently, in a letter issued by Adebayo, dated February 10, 2021, which was addressed to the Chairman, BUA Group, Alhaji Abdulsamad Rabiu, following the petition by Dangote, the minister had requested detailed information on the BUA Sugar Refinery in Port Harcourt, particularly the company’s plan to service the Nigerian and export markets from its refineries.
BUA, in its reaction to the minister, dated February 11, 2021, however, took “serious exception to the ludicrous claims by its two major competitors that it aims to circumvent the BIP of the sugar industry”.
The company pointed out in its five-page response, that it was unreasonable for it to be working against the backward integration policy of the industry, having invested billions of naira in the initiative which is almost nearing completion.
Rabiu, specifically assured that its sugar export focused project in Port Harcourt, will not affect in any way, the backward integration programme adding that “the only way it will affect Nigerians is that Nigerians will pay lower prices for sugar”.
He explained that though the Port Harcourt refinery is mainly for exports, BUA is allowed under the Nigeria Export Processing Zones Authority (NEPZA)
Act and current approvals/rules to intervene locally in order to stabilise sugar price, “where it is absolutely necessary- in the face of arbitrary price increases and collusion to force scarcity of the product locally”.
He said:”The same NEPZA Act upon which this project is based, gives the permission to process, add value, and export at the same time. Companies under this act are allowed to process and if they so wish, sell 100 per cent of their production in Nigeria with payment of duties based on the current raw materials tariff.
The letter, however, urged the minister to remain firm and resolute in the discharge of his duties as he had always done adding that BUA remained committed to its obligations regarding the BIP and the NSMP,. He said “we believe that time has come to call all players to true account”.