United Kingdom’s development finance institution CDC has provided a $40 million loan to Indorama Eleme Fertiliser & Chemical Limited Nigeria (IEFCL) to build and operate a fertilizer production facility near Port Harcourt, Nigeria, along with an 84km pipeline to transport gas to the plant.
The loan is part of a wider financing package to create what will be the world’s largest urea fertilizer manufacturer. The project would allow Nigeria, which is currently heavily dependent on imported fertiliser, to become self-sufficient and eventually a net exporter.
In addition to creating jobs, the investment would contribute to improved farm yields and agricultural productivity, which are critical to Nigeria’s long-term food security.
The new plant, which will be built on the existing site of Indorama Eleme’s petrochemicals complex, will produce up to 1.4 million tonnes a year of granulated urea, for sales to international and domestic markets. The investment will also back the development of a pipeline that supplies the feedstock (gas) required for fertiliser production, which is currently flared. As much as 5 percent of Nigeria’s flared gas could instead be used by IEFCL in its production process.
The project’s total cost is $1.2 billion and is being financed with loans totalling $800 million from a consortium of international finance institutions, including the International Finance Corporation and the African Development Bank as well as other European development finance institutions.
The investment is the first direct long term loan made by CDC to support growth and job generation since the launch of its new strategy in September 2012; the new strategy enables the organisation to provide new ways of investing in businesses in Africa and South Asia, as well as continuing to act as a fund-of-funds investor.
“This investment will have a significant impact by creating one of the world’s most competitive producers of fertilizer. The business will create some 360 direct jobs and 250 indirect ones, as well as a further 3500 during the construction phase. More importantly still, with a growing population and limited available arable land, the project can have a powerful impact on food security in Nigeria by bringing affordable fertilizers to the market that can boost crop productivity and land yields,” Holger Rothenbusch, CDC’s Managing Director for Debt & Structured Finance, said in a statement released last Friday.