|
17th
June 2007
MONOPOLISTIC
OPERATION IN THE CEMENT INDUSTRY IS BAD FOR
NIGERIA
Public Statement Issued by Ibeto Cement
Company Limited.
The Ibeto Cement Company Limited has
noted a series of misleading press reports and comments being orchestrated for
the purpose of negating the very compelling reasons for which the Federal
Government made the decision to reopen our cement bagging plant in Port-Harcourt
and recreating adverse conditions that will frustrate the restoration of work on
the plant.
These press reports mostly trade on
sophistry and guile, in order to obfuscate the truth and confuse the very same
Nigerians for whose benefit our plant is being reopened.
Quite obviously this calumnious press
campaign is being orchestrated by the same monopolistic cartel that first
contrived the closure of the plant but their statements of deception are easily
exposed. We wish to refer specifically to the following newspaper publications:
a. This Day newspaper of Wednesday July 25; a
front page report titled “Cement prices set to crash”.
b. Punch newspaper of Monday July 30; a back
page report titled “Cement Importation;
Nigeria
May lose $647 million.”
c. Independent newspaper of August 5; on page
C1 titled “High Expectations, Cautious Optimism as Ibeto Cement Returns.”
d. Punch newspaper of Friday August 10; on
page 17, under the Business and Economy review, titled “Why Cement Prices
Remain High.”
The above publications quoted copiously
from statements issued by certain representatives of certain members of the
Nigerian cement cartel, namely, Mr. Akin Adesokan, Managing Director, Dangote
Cement; Mr. Joseph Okonmah, Corporate Affairs Manager, Dangote Group; Mr. George
Lourandos, Managing Director, WAPCO of the Lafarge Group (Elephant and Atlas Cement) and Chief Emmanuel Ukpabi, Managing
Director, Flour Mills of Nigeria (Burham
Cement).
In response to the numerous untruths and contrived disinformation that are
credited to the above-named persons and the organizations that they represent,
for the benefit of the Nigerian public, it is necessary to present the
incontrovertible facts. These are:
1. The Ibeto Cement Company Limited has not
been favoured with an exclusive right to import bulk cement into
Nigeria
. The
truth is that about 80% of all the cement currently consumed in
Nigeria
is imported. It is also pertinent to note that there
are only six (6) organisations in
Nigeria
with the capacity to import or manufacture
cement. These are; the Lafarge Group, Dangote Cement, Flour Mills of Nigeria,
Eastern Bulkcem (Eagle Cement), Ibeto Cement Company and the Cement Company of Northern Nigeria.
Among these, Dangote has
been and remains the biggest importer of bulk cement into
Nigeria
, thanks to the Federal Government yearly
allocation that favours Dangote with a quota of 6.5 million - 9 million MT per
annum, against 3.2 million MT per annum shared out among the rest of the other
four companies, excluding Ibeto Cement.
2. The essential information regarding the
operation of these organisations are
as follows:
a) The Lafarge
Group, comprising Ashaka Cement in
Gombe
State
currently producing a mere 700,000 MT per
annum; Ewekoro and Sagamu (WAPCO) in
Ogun
State
with a combined production capacity of
just 1.4 million MT per annum. This means that the total output of all three
cement factories owned by the Lafarge Group in
Nigeria
is only 2.1 million MT per annum. The
Lafarge Group also has a floating plant in Port-Harcourt (Atlas Cement), for
bagging imported bulk cement which has a production capacity of 2 million MT per
annum.
Lafarge, a French company,
had entered
Nigeria
some ten years ago, promising to invest
heavily in the Nigerian cement industry. A grateful Nigerian government threw
our doors open, enabling the company to pick up some very rich assets at
rock-bottom prices. These included Ewekoro, Ashaka and Sagamu cement factories.
Since these concessionary acquisitions, Lafarge has largely been reaping without
sowing. Practically none of the expected expansions promised by the company in
these plants have been realized. Instead Lafarge manoeuvred itself into becoming
the Lease Manager of the Onigbolo Cement Factory, owned by the governments of
the
Benin
Republic
(51%) and
Nigeria
(43%).
Lafarge, which has no single share in this partnership, has become the
main beneficiary of that investment. This is achieved through manipulating the
loophole that allows Lafarge to import cement duty-free from
Benin
Republic
, which is an ECOWAS member country. The
Onigbolo plant has become a clever conduit for cement to be brought in from
overseas and laundered through the Onigbolo plant and then pushed into
Nigeria
, duty free, under cover of the ECOWAS
protocol. This is why Lafarge is able to
import so much cement into
Nigeria
from this tiny
Benin
plant with the
claim that the plant is producing at full capacity. The question should be
asked, why is it that La Farge cannot perform the same miracle in its Nigerian
factories which are all struggling on at very low capacity utilisation?
The truth is that there is
no be miracle being performed by La Farge at Onigbolo that is in any way
beneficial to Nigerians and the Nigerian economy. What is going on there is that
La Farge is engaged in trickery utilizing that plant to smuggle imported cement
into
Nigeria
. Money lost to
Nigeria
and gained by this foreign company,
Lafarge, through its many ploys is in excess of $500 million U.S. dollars per
annum. This situation requires to be fully investigated by the appropriate
agencies of our government, especially, the Economic and Financial Crimes
Commission (EFCC) and Nigerian Customs Service. This is especially important
because of the fact that there is no evidence that the duty waiver so far
enjoyed by Lafarge has translated into lower prices for the Nigerian consumer or
substantially the improved welfare for the company’s Nigerian workers. It is
noteworthy that just before he left office, President Obasanjo directed the
Bureau of Public Enterprises to transfer to the Dangote group the Federal
Government’s shareholding in this tiny Benin Republic Cement plant. Could it
be that the La Farge and Dangote monopoly-promoting and strategically mutually
beneficial relationship in
Nigeria
is being exported to the cement plant in
the
Benin
Republic
?
Meanwhile Mr. George
Lourandos, the Greek Managing Director of Lafarge’s WAPCO subsidiary, prefers
to be cunningly economical with the truth. He appears to take delight in deceit
and influence peddling by manipulating public opinion and government policy with
false statistics. Mr. Lourandos may want to explain to Nigerians by what magic
he intends to produce 5.7 million MT of cement in one year, from the figure of
2.1 million MT that his three plants (Ashaka, Ewekoro and Sagamu) are actually
producing. A good example of this foreign company’s manipulative ways was, in
the recent past, manifested in their success at contriving with President
Obasanjo to shut down Ibeto Cement – a setup by the vicious cement cartel of
which Lafarge is an important arrowhead.
b) Dangote Cement, comprising Benue Cement purchased from
the Bureau of Public Enterprises in 2001
and still struggling at a meagre production level of 350,000 MT per annum;
Obajana new cement plant hurriedly commissioned by President Obasanjo with a
claimed capacity of 5 million MT per annum which in reality is producing less
than 500,000 MT per annum. Dangote Cement has been in the business of bagging
bulk cement since 1995, over 12 years ago, using Nigerian Ports Authority
infrastructure and buildings. It was only this year, in May 2007, that Dangote
finally commissioned a cement manufacturing plant of its own initiative.
Dangote,
Nigeria’s largest importer of bulk cement, has four bagging plants in the
country:
the
Lagos Cement Terminal at Apapa Port, the
Aliko Inland Terminal at Lagos, one in Onne/Port Harcourt and one in NPA Area 1
Port Harcourt with a combined
production of 3 million MT per annum. With its overriding influence on the
Obasanjo regime, Dangote Cement always managed to seize cement import quotas of
between 6.5 and 9 million MT per annum. Keeping hold of so much import quota
enabled Dangote to limit what was available to other operators. Dangote
regulated how much of their cement import quota to use and when to use it and so
has successfully been manipulating market prices.
Dangote Cement did not only
tyrannize other producers but also succeeded in frightening away would-be new
entrants into the cement industry with bogus claims. These claims included wild
production and expansion figures that were never met but were accepted by the
Obasanjo government as a basis for the issuance of import quotas.
One wonders at the reasons
for the company to put the cost of its 5 million MT capacity plant at Obajana at
One Billion US dollars, when Ibeto cement is building its own plant of the same
capacity for less than 300 million U.S. Dollars. We believe that the only
discernible reason is that Dangote is acting to frighten away prospective
investors and thereby reduce competition. More ominously, one would want to know
if these claims on plant costs and investment costs would be accepted by the
Securities and Exchange Commission without question in giving value to the
company’s shares if and when the company decides to go public. We
believe that the most viable strategy for achieving cement security for our dear
country via local manufacture lies in implementing public policies that
encourage more investors to enter the cement industry with plants of all sizes,
some costing just about 20 million U.S. Dollars, as is the case in China which
has over 120 cement factories.
Numerous Chinese businessmen
have approached Nigerian investors with offers for turnkey cement projects, at
the above-mentioned price and even lower, but the monopolistic trends in the
industry have proved too discouraging for these Nigerian investors. Recent
efforts by the Yar’Adua government to create a level playing field in the
country are most commendable and should be supported by all true patriots.
c) Flour Mills of
Nigeria Plc (Burham), the
nation’s second largest importer of bulk cement has only facilities for
bagging imported bulk cement, which they have been operating for over
twenty-five years without any known operational cement factory in place in
Nigeria
. This company owns four 55,000 MT DWT
ships dedicated to bringing bulk cement into
Nigeria
for the past 25 years. The plant has a
production capacity for bagging 2 million MT per annum. All the claims the
company makes about developing a cement factory in Calabar are based on the
existence of a company called UNICEM in which it is a minority shareholder in
partnership with the following companies; Dangote (22%), Holcium and Orascom. So
much for the claims of its Managing Director, Chief Emmanuel Ukpabi of having
invested the sum of $800 million on cement production facilities. All these
false claims are just to keep Ibeto Cement, a bona fide competitor, out of
business.
d) Eastern Bulkcem (Eagle Cement) which has a bagging plant
in Port-Harcourt with a capacity of 600,000 MT per annum. The company purchased
Nigercem Nkalagu from the BPE and is working hard to reactivate it, despite
problems with shareholders and labour. This company also suffered victimization
during the Obasanjo era for failing to join in the plot against Ibeto Cement. It
was shut down for 9 months and three of its cement vessels were prevented from
discharging their cargoes.
e) Ibeto Cement
Company Limited, operating a
bagging plant in Port-Harcourt with a production capacity of 1.5 million MT per
annum commissioned in July 2005. This plant, erected on virgin mangrove swamp in
downstream
Port Harcourt
reclaimed by Ibeto Cement, was certified by the
Federal Ministry of Industry as the best bagging plant in the country. Other
operators of bagging plants are utilizing developed NPA facilities. The company
is also developing a 5 million MT per annum cement factory in
Ebonyi
State
, in partnership with the government of
that state. These two projects were grounded in November 2005 after only four
months of the operation of the bagging plant, by the order of the former
President, Chief Olusegun Obasanjo, applying an executive fiat that was not
supported by any discernible rationale, except for the spurious claim by a
foreign company, La Farge, that Ibeto Cement was not supporting government
industrialisation efforts by not instantaneously
completing a local cement manufacturing factory prior to operating the
bagging plant which the Federal Government had given it permission to erect.
This charge was duly
debunked by investigations carried out by the Federal Ministry of Industry which
found that Ibeto Cement was very seriously engaged in establishing a cement
manufacturing plant in
Ebonyi
State
. Based on the findings of the
Inter-ministerial Committee (made up of Ministry of Industry, Ministry of
Finance, Ministry of Solid Minerals Development, all cement manufacturers and
bagging plant operators, Standards Organization of Nigeria), the former Minister
of Industry recommended to the President to reopen the Ibeto Cement factory. To
the consternation of most operators in the industry, except of course, the
monopolists who had instigated President Obasanjo’s earlier decision to close
down the factory, this recommendation was turned down by the former President.
f) Cement Company
of Northern
Nigeria
, manufacturing 300,000 MT per annum in
Sokoto
State
. This company is the only producer that is
fully dedicated to manufacturing as it does not engage in importation of bulk
cement for bagging.
3. Concluding
Remarks
With all the facts and figures on the
ground especially when all cement plants in
Nigeria
are still importing bulk cement, it is
obvious that the closure of the Ibeto Cement plant was ill-motivated and unjust.
It was definitely not in the best interest of the generality of Nigerians.
We believe that it was
grossly unfair, malicious and wicked of those who had enjoyed the right to
import and bag bulk cement for 10 to 30 years before venturing into
manufacturing, to insist that Ibeto Cement must first build a cement
manufacturing factory, before being allowed to
operate its own bagging plant. We believe that there is no justification
whatsoever in shutting down a 12 billion Naira factory after just four months of
operation on the basis of pressure from monopolists, especially
when, with all the records available to the Federal government
that approved all the applications to set up that bagging plant by Ibeto
Cement before the company commenced the project Moreover the Federal Government,
through its relevant officials (including the person of the Head of that
Government, Chief Olusegun Obasanjo), was constantly briefed on progress of work
as the plant was erected on that very challenging virgin mangrove swamp.
For the same people who
contrived to shut down Ibeto Cement plant to continue in the same vein in an
effort to frustrate the wise decision
of President Yar’Adua, made after due process of consultation with all
relevant government ministries and agencies, to reopen the plant, is simply
unpatriotic and selfish. They are all better advised to desist from their
efforts at eliminating competition by all means and concentrate on making their
operations more efficient. This is the sure way to survive competition in
Nigeria
’s emerging democracy.
Finally, we wish to assure
the Federal Government and all Nigerians that, while running our bagging plant
in Port Harcourt, we will assiduously and relentlessly continue with the
realization of our green field cement manufacturing project in Ebonyi State and
will do everything possible to fast-track its completion and commissioning.
Dr.
Ben U.C. Aghazu,
Director ( Projects and
Public Affairs),Ibeto Cement Company Limited,
17th
June 2007
***********************************************************************
Open Letter to President Umaru Musa
Yar’Adua
 by
Warrior1
on Fri Jul 27, 2007 10:14 pm
Joseph Inyang
Nigerians for Super Energy
2026 N. Oakland Ave
Milwaukee, WI 53202
414-272-1656
http://www.nigeriansforsuperenergy.com
joe@nigeriansforsuperenergy.com
FOR IMMEDIATE RELEASE
MILWAUKEE, WISCONSIN - JULY 28, 2007 Nigerians
for Super Energy a grassroots campaign for energy sends an open letter to
President Umaru Musa Yar’Adua of Nigeria.
Open Letter to President Umaru Musa Yar’Adua
Dear Mr. President:
We are writing in support of your Energy goals for Nigeria. We believe that
Nigeria should become energy “Super Energy Power”. You rightly said so on
June 11, 2007 and we quote “As I keep saying, we cannot begin to address, in
a fundamental manner, the problems of the economy, until we successfully
tackle the power and energy issue. It is critical to all my plans. So I am
more interested in how much gas we can tap for domestic use than what we can
get for export. We must power this economy,” Mr. President as you know, we
have a very sick patient, "Nigerian Energy"; we need world class
surgeons to lead this effort no more nurses. No disrespect to my mom she was a
nurse for over 40 years!! And when you sign the FOI (Freedom of Information)
bill you will have about 100m + eyes helping to monitor the progress of the
projects. Mr. President below is our humble suggestions for radically changing
our energy strategy.
Fuel Plan
24 Refineries in a National/Publicly traded oil company with global reach is
what we need!!!
They say imitation is a form of flattery. If so, Nigeria needs to look to
Venezuelans to reform its fuel sector. Due to the policies of Venezuelan oil
company, PDVSA, the Venezuelans are able to enjoy $0.19 per gallon or N6.12.
The Venezuelan oil company, PDVSA, had decided that it was not the crude oil
export business but in the global petroleum and chemical business. So they
invested in refining and retail business in Venezuela and almost all their
export markets. Today PDVSA processes 3.3m barrels per day through 24
refineries: six complexes in Venezuela, one in the Caribbean, eight in the
United States and nine in Europe. The Brazilian Oil company, Petrobras is
another example. This company is renowned for its leadership in development of
advanced technology from deep-water and ultra-deep water oil production. With
55.7% of Petrobras' Common Shares (with vote right) is owned by the Brazilian
government, however privately held portions are traded on Bovespa stock market
.On April 21st of 2006, President Luiz Inácio Lula da Silva announced
Brazil's self-sufficiency in petroleum. Mr. President please seek counsel of
the architects of PDVSA, Mr. Putin and/or Silva to see what they are doing. We
recommend three strategic steps to revolutionize our oil sector.
1. NNPC should be come a government/public firm with part of it shares
allocated for Nigerians. This will provide the company with a new direction
and ownership need for the global challenges.
2. NNPC should go on a buying spree with the aid of government funds to buy
(outright or major) shares in refineries in Africa, China and United States.
This will provide us with immediate source of refined products, opportunities
to train our people and hard currency. Best of all this does not need the 18
to 24 months to build a refinery. This will also provide us a stop gag measure
until we build more refineries. It is all about add value and we need to start
doing that.
3. Start building 4 refineries and retail outlets to take care of the local
demand as estimated for 2010. This will help put to rest the fuel challenges
that we face as a Nation.
Electrical Plan
50,000 megawatts in a well planned power grid is what we need!!!
Why 50,000 Megawatts? Given our population, the goals (15,000MW, 20,000MW, and
30,000MW) currently proposed in different political and business circles does
not take care of latent electrical demand. In 1999 we estimated a goal of
4,000mw and 5,600mw, we have reached those goals but still not able to survive
disruptions to the power grid. South Africa with a population of 47M generates
36,000MW, Brazil population 188M generates 90,000MW and South Korea population
49M generates 43,833MW. Nigeria with a population of 140M would need to
generate 67,021MW to be at par with Brazil the lowest per capita among the
three countries. Based on the current estimates of 10,000mw in current or in
progress, we will need 40, 000mw to complete our goal. This translates in
1,100mw per state and Abuja. Yes we know some states may not be able to
generate this amount due to logistic or cost can join with other states to
meet their goal. Some states like Lagos will need double or triple that
amount. Using current estimates we believe that we need $29 billion for
completion of the goal which about $15 billion should come from the Federal
government.
1. The plan would call for part of excess revenue funds to be invested in
power generation and transmission.
2. All sates, Abuja and Local governments must contribute a percentage of
their net worth to the projects. Land for projects will be provided by state
and local governments.
3. All banks must invest a percentage of their net worth. Corporations and
individual investors will be encouraged to invest in the projects with a
strong push for public stock participation.
4. All companies must provide free electricity and cooking gas to local
communities.
5. Alternate sources must be encouraged, At least one coal power station in
Enugu with similar capacity of Tutuka, South Africa 6x609 MW. This should be
part of the sale of 13 mining titles belonging to the Nigerian Mining
Corporation.
6. Gas and oil pipeline should have backup points. We must be able to ship gas
or oil to Lagos; after all we ship it to the ends of the world. Our pipe line
should be like a Hydra (multi-head monster) that will allow for maintenance
without totally shorting down the country.
7. Implement widespread adoption of CFLs (Compact Fluorescent Lights) and
other energy saving programs. CFLs save about four times more energy compare
to regular lights.
8. Last but not least, industries using gas for energy will be given gas for
free or token price.
We are calling on all Nigerians to wear copper colored ribbon (similar to the
AIDS ribbon) and March for a Global NNPC with 24 refineries and a 50,000
megawatts power grid. Mr. President since you understand the challenge, we are
ready to give you 100% support to make these changes. If the energy issues in
Nigeria are solved, a lot of Nigerian lives will be astronomically improved.
We call upon all religious, traditional and civic leaders to join Mr.
President and 40 days pray and fasting for success.
God Bless Nigeria!!!!
###
Nigerians for Super Energy is a grassroots campaign aimed at supporting the
need for energy in Nigeria and the sub region. 35% of all black people in the
world need energy to improve their daily lives.
| 
