‘Cheap Lake rice’ eludes Lagosians as debt stalls mill renovation

The last time a bag of rice rolled out of the Imota Rice Mill was in 2019. Two years later, and with the festive season in full swing, there has been no hope for Lagos residents to get the previously cheap Lake rice, as debts owed to the contractors stalled the project.

The facility stopped producing three years after it first milled rice from a partnership between Lagos and Kebbi states. In December 2016, BusinessDay had reported that Lagosians would have the locally produced rice for consumption during that year’s yuletide season. It was to retail for N13,000 per 50kg bag, considered cheaper than other locally produced brands which sold for an average of N16,000 while the foreign rice sold for N20,000 and more. Today, local rice sells for an average of N26,000 per 50kg bag.

Lake rice quickly became a hot cake among consumers, even beyond festive periods because of its affordability. But it soon fizzled out of circulation in 2019. The government said it was renovating the facility to upgrade the mill from 16 metric tonnes per hour to 32 metric tonnes per hour.

The Imota rice mill project, sitting on 13 hectares of land and initiated by the state government, has been undergoing construction since 2017.

The mill, dubbed the largest in the world and in sub-Saharan Africa, is projected to produce 2.5 million bags of 50kg rice annually, and also provide over 250,000 jobs in both the upstream and downstream sectors of the rice value chain. It is also equipped with 16 silos which have a combined capacity of 40,000 metric tons. Each has 2,500 metric tons.

In Dec 2020, the construction moved from between 10 to 15 percent completion rate to 85 percent. At this stage, the state’s ministry of agriculture assured Nigerians that the work would be completed by the first quarter of 2021.

By May 2021, the state had expended N20 billion on the Imota Rice Mill, out of the N25 billion initial budget for the construction. This represents an 80 percent spend, yet, the commissioning was moved to the end of 2021.

Earlier this month (December 2021), after a tour of the facility with other government officials, Babajide Sanwo-Olu, Lagos state governor, said the facility would be subjected to a pre-production test run before the end of the first quarter of 2022; making it the third reported time the government had failed to deliver the mill.

He said the project was expected to have been delivered by the end of 2020, but for the disruption occasioned by the outbreak of Coronavirus (COVID-19) pandemic.

“We are going to charge on our contractors working on site to ensure that by the end of the first quarter next year, this mill should have started operations; that is, we should start producing rice from here,” Sanwo-Olu said. While the governor attributed delay to the pandemic, there may be more to the story than just a blame on a virus.

BusinessDay’s investigation found there are contractual issues holding the project back, thereby preventing the remaining aspect of the work, especially installations, to be done.

The equipment to be installed are already at the site, but work has stopped because the government owes Henry Karll Company an undisclosed amount of money

The boiler, pre-cleaning, and other parts within the rice mill, were sections in need of installation works, when BusinessDay conducted investigations.

CIBA Construction Limited; Henry Karll Company Limited; and Bühler Holding, are the three construction companies involved in the project. While CIBA Construction Limited is the main contractor for the project, Henry Karll Company is the contractor for major installation works while Bühler Holding is in charge of the boiler installation.

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According to a source who spoke to BusinessDay anonymously, the equipment to be installed are already at the site, but work has stopped because the government owes Henry Karll Company an undisclosed amount of money.

BusinessDay learnt that workers from the company had been on strike for three months because they were owed salaries and the contractor (Henry Karll Company) said it was because the government was yet to pay it as well.

The source further explained that the installation is especially needed in the pre-cleaning section to load the paddy when operations begin, adding that Henry Karll Company still needs to run some installations to the Silos area.

While Bühler Holding has been unable to come into Nigeria due to the pandemic, the source revealed that CIBA Construction Limited is also being owed, but unlike Henry Karll Company, it has been “using its money to push the work.”

BusinessDay learnt that on the governor’s visit, release of funds had been promised to the contractors in order for the project to be completed before the end of first quarter of 2022 (the new target).

“The governor said he will be generous to them. He came here last Friday and promised that he would release money so that by the end of the first quarter next year, they will start production,” the source said.

BusinessDay’s efforts to get comments from the companies yielded no result. When contacted via email, the Henry Karll Company declined to provide answers.

“Following your email inquiring about the status of Lagos State Rice Mill Project, kindly note that Henry Karll Company Limited has not been authorized to speak to the media. Hence, we cannot provide answers to the questions,” an email from the company reads.

The company, however, directed enquiries to FAO Consulting, a firm responsible for design, project management and supervision consultant for the project. Phone calls to a number obtained for FAO yielded no response.

Similarly, CIBA Construction Limited did not respond to a mail from BusinessDay, neither was there response following several calls made to a number gotten from its website.

Still seeking answers, BusinessDay reached out to Adenike Sodipo, information officer at the Lagos State Ministry of Agriculture, who declined comments unless permitted by the commissioner.

“I cannot speak to you because information officers cannot speak to the press. I’ll get back to you. I have to speak to the commissioner. It is the commissioner that will answer,” she said in a phone conversation.

Sodipo would later call back, referring this reporter to the governor’s statement delivered after the site inspection (earlier mentioned) even though it was clear the governor did not address the issues of indebtedness raised by BusinessDay.

“Go and read all of them,” she said, when informed the governor did not reference the debts stalling the project. “Maybe you didn’t read all of them. The questions you asked are there. Because there’s a press release on that by the governor and it is widely reported.”

Lagos State has a significant food demand of N2.89 trillion to feed its ever-growing population. It produces only about 20 percent of its food needs, meaning that 80 percent of its food needs are met through local and foreign importation.

Earlier this year, Aminu Goronyo, president of Rice Farmers Association of Nigeria (RIFAN) said rice production increased from two million tonnes in 2015 to nine million tonnes in 2021. He excitedly stated that Nigeria was ready to now export the commodity.

If RIFAN’s claims are to be taken as facts, the Imota mill, when completed, could help in reducing price of rice and the pressure to purchase the commodity, at least in Lagos state. However, for now, supplies trucked from hundreds of kilometres away (and those smuggled across the borders with Benin republic), continue to meet the state’s food need.

As the countdown to yet another pledge by the government to commission the mill in about 3 months time slowly ticks, BusinessDay has found contractors are being owed, despite over 80 percent of the contract sum said to have been spent. The contractors would not confirm or deny this, and neither would the state government.