• Tuesday, May 28, 2024
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Dangote Fertilizer seen unlocking food production potentials

Food Prices

The importance of agriculture in Nigeria’s economy cannot be overstated. Farming and livestock rearing is the main livelihood for over 70 percent of households in a country, which has again emerged as Africa’s largest economy.

Agriculture contributed 23.38 percent to nominal Gross Domestic Product in the fourth quarter of 2019, according to the National Bureau of Statistics (NBS). This is significantly higher than the 7.32 percent derived from the oil sector within the same period.

However, the country’s promising agricultural potential has not been fully realised.

In all likelihood, low fertiliser use is still a major factor in explaining the low agricultural productivity in Nigeria.

Nigerian farmers need fertilisers to redeem the country’s impoverished farmlands and forestall a looming food crisis in the country.

The coming on stream of Dangote Granulated Urea Fertilizer plant has been regarded as a timely measure that would boost farm yield and alleviate poverty not only in Nigeria, but also for the whole of sub-Saharan Africa, and by extension Africa.

The Dangote Fertilizer plant, with a capacity of three million tons per annum, has been classified as the biggest project in the entire fertiliser industry history in the world.

Phase 1 of the project, which is estimated to cost $2.5 billion, is to manufacture 3mmtpa of urea per annum. The capacity will later be expanded to produce multi-grades of fertilisers to meet soil, crop and climate-specific requirements for the African continent.

The Dangote Fertilizer complex consists of Ammonia and Urea plants with associated facilities and infrastructure, to produce 3 MMTPA Urea. The complex comprises: 2 x 2,200 MTPD Ammonia Plants based on Halder Topsoe technology, 2 x 4,000 MTPD Melt Urea Plants based on Snamprogetti technology, and 2 x 4,000 MTPD Urea Granulation Plants based on Uhde Technology.

Already, in preparation for commissioning, the company announced recently that several critical sections of the plant are going through various stages of pre-commissioning and test-run.

“Virtually all the sections of the plant such as Central Control Room, Ammonia and Urea Bulk Storage, Cooling Tower, Power Generator Plant, Granulation Plant, have all been completed and are going through pre-testing”, the company was quoted in a statement.

Speaking during his recent tour Dangote Fertiliser Plant, Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, said the plant became imperative to enhance the country’s quest for economic diversification.

According to him, “this time that the economy is going through its own challenges, there is a need for us to diversify the Nigerian economy from oil to other areas where we have abundant resources.”

Emefiele said the fertiliser plant would stop the importation of fertilisers, as about 25 percent of its products would be used for domestic consumption to boost agriculture in the country.

According to him, the plant will also generate a minimum of $750 million through export annually.

Aliko Dangote, president of Dangote Group, said the fertiliser plant would make Nigeria the only urea exporting country in sub-Saharan Africa and the biggest producer of polypropylene and polyethylene, which is capable of generating $2.5 billion annually.

“Nigeria will soon become the biggest and only urea exporter in sub-Saharan Africa, for the first time. And we are not only exporting, but we would also be exporting big time,” Dangote said.

“We are also going to have polypropylene and polyethylene which is about 1.3 million tonnes annually. These two products would bring in about $2.5 billion annually in terms of foreign exchange. A lot of forex would now come in and that $2.5 billion is only about 10 percent of remittances.”

“It is a huge project. That is why we have built a jetty and the pipeline through which we are bringing in the crude. One of the reasons the CBN is supporting us is that by the time we become operational, we will not only be creating jobs but we will reduce the outflow of foreign exchange not only in petroleum products but in petrochemicals and fertilisers.

“We will be one of the highest foreign exchange generating companies, going forward. I must really confess that without the government’s support, there is no way we could have done what we have done so far,” Dangote said.

Devakumar Edwin, group executive director-strategy, portfolio development &capital projects, Dangote Industries Ltd, said Nigeria will be able to save $0.5 billion from import substitution and provide $0.4 billion from exports of products from the fertiliser plant.

“Thus, the supply of fertiliser from the plant will be enough for the Nigerian market and neighbouring countries,” he said.

Estimates indicate that around 5 million tons by year (tpy) of fertilisers are required in Nigeria in the next five to seven years.

“I am happy that by the time our plant is fully commissioned, the country will become self-sufficient in fertiliser production and even have the capacity to export the products to other African countries,” Edwin said.

“Right now, farmers are forced to utilise whatever fertiliser that is available as they have no choice, but we need to know that the fertiliser that will work in one State may not be suitable in another State, as they may not have the same soil type and composition. The same fertiliser you use for sorghum may not be the fertiliser you will use for sugar cane.”

He pointed out that the fertilizer complex, which is sited on 500 hectares of land, has the capacity to expand as it is only occupying a small fraction of the allotted portion.

“The management of the complex is confident that the fertiliser business will deliver reasonable profit to the company and its shareholders as it is projected that population growth and the need for food production will jack up the consumption of urea fertiliser beginning from 2020, when production of the production would have commenced in earnest,” he added.

“The current consumption of urea estimated at a dismal 700 000 tpy by Nigerian farmers is said to be due to very poor usage and is believed to be the cause of poor product yield, which threatens food security in the country.

“By 2020, the Nigerian population is projected to increase to about 207 million, which would lead to increased food production. Estimates point out that around 5 million tons of fertilisers are required per year in Nigeria in the next five to seven years bifurcated into 3.5 million tons of urea and 1.5 million tons of NPK while current production levels in Nigeria are at 1.6 million tons by 2019.”