Nigeria’s sugar industry since the beginning of the year has experienced series of back and forth, as major industry players are contending on market ownership and industry operations.
Aliko Dangote, chairman, Dangote Group of Companies, and John Coumantaros, chairman, Flour Mills of Nigeria, had on January 28, 2021, jointly written a letter to Niyi Adebayo, minister, industry, trade and investment, in which they accused BUA of sabotaging the provisions of the National Sugar Master Plan (NSMP). This is coming after BUA commissioned its Port Harcourt sugar refinery in the Bundu Free Trade Zone.
The letter stated that BUA had failed to invest in backward integration practices for sugar production and aims to import and refine raw sugar for sale. As such, they urged the Federal Government and other regulatory agencies to enforce the provisions of the NSMP. Adding that an investigation be conducted to determine the quality of raw sugar imported by the BUA refinery while appropriate penalty in terms of 60 percent duty and 10 percent levy payment be imposed on the company.
The letter also added that in 2019 the sugar producers were promised that no new refinery will be allowed to operate in Nigeria.
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In response to the petition, the ministry wrote to Abdulsamad Rabiu, chairman, BUA Group, on February 10 and requested that the company provide detailed information on how its refinery planned to service local and global demand.
On February 11, Rabiu replied the minister giving detailed information about the group’s three sugar refineries in Lagos, Kwara and Port Harcourt, noting that the last one particularly was governed by the National Export Processing Zones Authority (NEPZA) Act and the free zone approved by the president after a two-year process.
The five-page letter also noted that the Port Harcourt refinery was more export-focused; adding that Dangote and FMN tend to increase the prices of their goods unrestrainedly in the local market, a move BUA stands to counter.
The letter also revealed that BUA was the only sugar producer with a plantation, a sugar mill, a refinery to produce white sugar, and an Ethanol plant while the other players have only sugar mills and can produce brown sugar alone without refining.
According to the National Sugar Development Council (NSDC), Nigeria’s sugar producers can only supply about 2 percent of the country’s demand, which has watered down the numerous benefits of a vibrant sugar industry, especially in terms of export, job creation, and adequate local supply.
The Federal Government in its efforts to boost sugar production ordered the establishment of a roadmap to achieve this, which birthed the Nigeria Sugar Master Plan (NSMP).
The plan estimates that the demand for sugar in Nigeria will breach the 1.7 million MT by 2020, and to boost sugar production in a way that meets demand, it is necessary that some 28 sugar factories of varying capacities bring about 250,000 hectares of land into sugarcane cultivation over the next 10 years.
However, the bulk of the investment capital will come from private investors and will be operated in line with the backward integration policy.
