Only 10% of privatised companies in Nigeria are functional

For 11 years, it was alive as though a living dead. The decision to privatise it changed the fortune of Eleme Petrochemicals Limited. Ten years after its acquisition, a $1.4b fertiliser plant and a $130 million export terminal have been added to the once-moribund empire. OLUKOREDE YISHAU writes on the transformation , which has shown that if well done, the benefits of transforamtion are numerous. In the beginning was a community called Eleme. And it was composed of 10 villages with a population of approximately 51,000 people on 140-square kilometre land.

And it was unknown to many outside of Rivers State. And in the early 80s, government began acquiring its land. Six villages, Njuru, Agbonchia, Agbata (Okerewa), Aleto, Akpajo, and Chekwas (Elenewo), gave up land for compensations many still feel was not commensurate. Some 900 hectares of land were taken by the Nigerian National Petroleum Corporation (NNPC), which started a subsidiary known as the Eleme Petrochemicals Limited. Its inauguration in 1995 thrilled people. But, 11 years after, only the first phase of the project, sitting on 361 hectares of land had been implemented.

Bogged down by bureaucracy, it could only utilise 20 per cent of its installed capacity. Leadership changes were rampant. Important decisions were not taken as and when due. And some 10 years after, when no Turn Around Maintenance (TAM) was done, things fell apart. The plant was moribund for a year. By then, the government felt it had no business running businesses. The Federal Government, through the Bureau of Public Enterprises (BPE) and the National Council on Privatisation (NCP), listed Eleme Petrochemicals as one of the over 120 government-owned businesses to be privatised. Dangote Group and Indorama Group, an Indonesian company with expertise in running petrochemicals plants, showed interest.

Indorama Group, which is a leading manufacturer of petrochemicals and associated downstream products, export products to over 100 countries and employs over 21,600 personnel, and has 40 manufacturing sites in 20 countries. It is wholly controlled by Mr. S. P. Lohia and his family. Dangote offered $135 million and Indorama $215 million. During the bidding which was streamed live on television, Indorama increased raised its offer by $100 million. It won. It took over the company in 2006 after International Finance Corporation (IFC), an arm of the World Bank, helped it to pay. Former President Olusegun Obasanjo inaugurated it after the first TAM was done. Its operations were monitored by the government for five years and the company was subsequently left to run the show alone. In its first six months, the production of poly propylene and polyethylene began at the EPCL for both local and foreign markets.

The company soon began the exportation of its high density polyethylene to France, Spain, Italy, Belgium, Portugal, Turkey, India, China, Pakistan, Sri Lanka, Napal, Vietnam, Ghana, Tanzania, Togo, Kenya, South Africa, Egypt, Algeria, Morocco and Ivory Coast. The exports are said to account for 10 per cent of Nigeria’s non-oil exports. Investigation shows that EPCL contributes $80 million to the Gross Domestic Products (GDP) through its export earnings. The company has also created more than 1,000 direct and indirect jobs for Nigerians, especially in the Niger Delta. And now the news: It is set to contribute more to the country’s GDP, create more jobs and do more through the Indorama Eleme Fertiliser and Chemicals Limited (IEFCL), Port Harcourt, a sister company of Indorama Eleme Petrochemicals. There is also the $130-million Port terminal at the Onne Port meant for fertiliser export and there is also a gas pipeline project.

A company that was unable to function well for eleven years has in 10 years invested $1.5 billion, given more than $600 million dividends to the federal and state governments and remitted between $200 and $300 million in taxes. The viability of the project has signified better days ahead for Indorama Group (owners of 65 per cent shares); NNPC (10 per cent); Rivers State government, (10 per cent), the host communities (7.5 per cent); the Federal Government (five per cent) and employees (2.5 per cent). Good and bad privatisation Interestingly, the same process that threw up Indorama as the owner of Eleme Petrochemicals Limited also threw up other players as owners of some 120 hitherto government-owned enterprises. But, sadly, only a few can be pointed at as the success story of the much-taunted exercise. By the admission of the BPE before the Senate ad-Hoc Committee on the Privatisation of Public Enterprises, only 10 per cent of the 120 government companies sold are functioning.

The rest have been finding it difficult to remain in business. A recent BPE in-house stock-taking found a huge chunk of them in bad shapes. Huge debts, energy crisis, infrastructure collapse, escalating production costs and unfriendly government policies are some of the problems that have hindered the private-sector to turn around these companies. The Anambra Motor Manufacturing Company Limited (ANAMMCO), VolksWagen of Nigeria (VON) Automobiles Limited, Leyland Nigerian Limited, Steyr Nigeria Limited and National Trucks Manufacturers Limited are yet to meet the aims behind their privatisation. The BPE frowned at the performance of privatised enterprises in the iron and steel sector, such as the Jos Steel Rolling Mill.

Messrs Jardin Holding BV of Ukraine and Nigerian Zuma Steel Company, which invested 75 and 25 per cent stakes, were locked in war of ownership that stifled the resuscitation process of the plant. Also, the Osogbo Steel Rolling Mill, sold to Kaura Holding, is still moribund. No production has taken place since it was concessioned a decade ago. The case of the Delta Steel Company, Aladja, is still a subject of litigation till date. The Osogbo Machine Tools has not fared better. It is yet to commence production. But like EPCL, the Aluminum Smelter Company of Nigeria (ALSCON), the Savannah Sugar Company Limited, National Trucks Manufacturers, Kano, Katsina Rolling Mill and the National Fertiliser Company of Nigeria (NAFCON) have shown what getting privatisation right can do to public enterprises. The making of the fertiliser plant The IEFCL was completed in 36 months. The ground breaking ceremony for the fertilizer plant was performed by the Chairman of Indorama Corporation, Mr. S. P. Lohia on April 11, 2013. When The Nation visited the site at the weekend, finishing touches were being put to the plant. Some critical sections of the plant have gone through various stages of pre-inauguration and test-run, preparatory to the plant’s inauguration in the first quarter of this year.

Those already completed include the central control room, Ammonia and Urea Cooling Towers, Utility Boiler, Air Compressor. They have all been inaugurated and functional. Others, including the Primary Reformer, Secondary Reformer, Granulation, Material Handling System among others are at advance stages of construction and completion. To ensure a hitch-free operation, an 83-kilometre gas pipeline, billed to supply Natural Gas Liquid (NGL) feedstock, has also been completed. “The fertiliser plant”, said its managing director, Manish Mundra, “has world scale capacity of Urea 4000 metric tones per day (MT/day) or 1.4 million MT per annum. The project components include 2,300 MTPD Ammonia Plant, 4,000 MTPD Urea granulation plant with associated offsite and utilities.

“It is energy-efficient and has state-of-art technology, indeed, the latest technologies from world class process licensors – KBR of United States of America and Toyo Engineering of Japan.” The project director, Mr. Uptal Chatterjee, explained that “for the Ammonia, KBR’s Purifier Ammonia Process Technology is used. KBR is the leading global engineering, construction and technology service provider. For the Urea plant, Toyo’s Urea Synthesis Process Technology, i.e. ACES 21 Technology, is used. For Urea Granulation, Spout Bed Fluidising Technology is used.

Introduction of these technologies makes the Indorama’s Fertiliser project a world class plant.” Chatterjee added that the plant also adopted state-of-the-art construction methodologies, using latest construction equipment, high capacity cranes, committed and skilled manpower and supervision. Mundra believes the project will boost the nation’s agricultural sector, provide fertiliser for farmers across the country, improve crop yield, fight hunger and poverty and create numerous employment opportunities. It will also put the country on the global fertiliser map as a producer and exporter of fertilisers, Mundra said. The $1.4 billion used for this project, which is the world’s largest gas-based single stream Urea plant, came largely from the IFC, and some local banks. The construction is being handled by a consortium of Toyo Engineering and Daewoo Nigeria Limited. And with the external natural gas facilities and all associated off sites and utilities necessary to make the fertilizer plant self-supporting taken care of, a new dawn is here.

Benefits of fertiliser plant The new fertiliser plant, occupying a 38-hectare land, is according to Indorama, expected to offer these benefits: “(i) Food Security: Contribution to the development of the agricultural sector and unlocking its potential, thereby reducing Nigeria’s dependence on imports. The project will increase fertiliser production which promotes intensive agricultural production, and will improve crop yields. “(ii) Economic Diversification: Increased value addition to a natural resource in Nigeria (i.e. natural gas), and advancement of the downstream chemicals sector. The project supports regional fertiliser capacity in Sub-Saharan Africa, which is a growing market heavily reliant on imports. “(iii) Employment: Creation of significant direct and indirect employment opportunities. “(iv) SME Development: Removal of obstacles that prevent farmers with small land holds from efficiently optimizing their crop yields and maximizing their incomes. “(v) Current Account Impact: Foreign exchange savings by import substitution. “(vi) Demonstration Effect:

The project is expected to have a positive signal for other foreign investors on the government’s commitment for economic diversification and agricultural transformation project.” The ports project The world-class port terminal complex at Onne Port is a partnership between Indorama and Messrs OIS. The land on which the terminal now sits was a mere wasteland cleared and reclaimed. Mundra believes the project would be a major boost to Nigeria’s industrialisation process and economic development. “This investment shows our deep commitment in fostering socio-economic prosperity of Nigeria,” he said. Mundra added that the port terminal was designed by reputed international engineering companies. Construction was handled by local reputed companies working in collaboration with expatriate engineers and other technical experts. He said: “In the tradition of Indorama, the port terminal would have state-of-the art facilities and equipment to enhance efficient operations.” The port complex is for exporting of dry bulk Urea fertiliser from Indorama’s fertiliser plant. It will also serve for import and export of various types of break-bulk and containerised cargo for the partnering company Messrs OIS. A fleet of specially designed 40-numbers dump trucks have been provided by Indorama to transport Urea from the factory warehouse to the port terminal warehouse. Why build a new terminal There is no facility at the Onne Port which can handle dry bulk Urea fertiliser. It is built in such a way that it can handle vessels ranging from 5000 dwt (dead weight) to 35000 dwt.

The terminal comprises marine facility of 320 meters quay and 6.20 hectares of land terminal facility. Indorama said: “The terminal is self-contained with facilities such as power generation, water, waste water treatment & disposal and other utilities like fuel storage, water bunkering, firefighting, workshop, administration, amenities and security, etc. “Apart from all the above, the terminal also comprises facility for 12,000 TEU (twenty feet equivalent units) per annum of containerised cargo. “Operators and stakeholders in the maritime and ports sector are excited about this investment that would create a new value chain, facilitate operations in Onne Port, create more employment opportunities, increase revenue for the Nigerian Ports Authority (NPA) and the related government agencies and empower host communities.” Bottlenecks to investors The absence of constant power supply, insecurity, dry dock facility, well-apportioned pipeline facility and others have made Indorama’s task more difficult. But, with a $1.5 billion investment, it has been able to surmount the challenges. It gets uninterrupted power supply from gas-turbine plant; its new port terminal will ensure prompt export of its fertilisers; and its dedicated pipelines will ensure constant supply of gas for the production of fertilisers. It relies on riot policemen and soldiers for its security and this arrangement has shielded its top executives from abduction.

But, life for Mundra and other expatriates in Indorama could have been better if only government can make Port Harcourt safe. Until that is done, they have to watch where they go.For 11 years, it was alive as though a living dead. The decision to privatise it changed the fortune of Eleme Petrochemicals Limited. Ten years after its acquisition, a $1.4b fertiliser plant and a $130 million export terminal have been added to the once-moribund empire. OLUKOREDE YISHAU writes on the transformation , which has shown that if well done, the benefits of transforamtion are numerous. In the beginning was a community called Eleme. And it was composed of 10 villages with a population of approximately 51,000 people on 140-square kilometre land.

And it was unknown to many outside of Rivers State. And in the early 80s, government began acquiring its land. Six villages, Njuru, Agbonchia, Agbata (Okerewa), Aleto, Akpajo, and Chekwas (Elenewo), gave up land for compensations many still feel was not commensurate. Some 900 hectares of land were taken by the Nigerian National Petroleum Corporation (NNPC), which started a subsidiary known as the Eleme Petrochemicals Limited. Its inauguration in 1995 thrilled people. But, 11 years after, only the first phase of the project, sitting on 361 hectares of land had been implemented. Bogged down by bureaucracy, it could only utilise 20 per cent of its installed capacity. Leadership changes were rampant. Important decisions were not taken as and when due. And some 10 years after, when no Turn Around Maintenance (TAM) was done, things fell apart.

The plant was moribund for a year. By then, the government felt it had no business running businesses. The Federal Government, through the Bureau of Public Enterprises (BPE) and the National Council on Privatisation (NCP), listed Eleme Petrochemicals as one of the over 120 government-owned businesses to be privatised. Dangote Group and Indorama Group, an Indonesian company with expertise in running petrochemicals plants, showed interest. Indorama Group, which is a leading manufacturer of petrochemicals and associated downstream products, export products to over 100 countries and employs over 21,600 personnel, and has 40 manufacturing sites in 20 countries. It is wholly controlled by Mr. S. P. Lohia and his family. Dangote offered $135 million and Indorama $215 million. During the bidding which was streamed live on television, Indorama increased raised its offer by $100 million. It won. It took over the company in 2006 after International Finance Corporation (IFC), an arm of the World Bank, helped it to pay. Former President Olusegun Obasanjo inaugurated it after the first TAM was done. Its operations were monitored by the government for five years and the company was subsequently left to run the show alone. In its first six months, the production of poly propylene and polyethylene began at the EPCL for both local and foreign markets.

The company soon began the exportation of its high density polyethylene to France, Spain, Italy, Belgium, Portugal, Turkey, India, China, Pakistan, Sri Lanka, Napal, Vietnam, Ghana, Tanzania, Togo, Kenya, South Africa, Egypt, Algeria, Morocco and Ivory Coast. The exports are said to account for 10 per cent of Nigeria’s non-oil exports. Investigation shows that EPCL contributes $80 million to the Gross Domestic Products (GDP) through its export earnings. The company has also created more than 1,000 direct and indirect jobs for Nigerians, especially in the Niger Delta. And now the news: It is set to contribute more to the country’s GDP, create more jobs and do more through the Indorama Eleme Fertiliser and Chemicals Limited (IEFCL), Port Harcourt, a sister company of Indorama Eleme Petrochemicals. There is also the $130-million Port terminal at the Onne Port meant for fertiliser export and there is also a gas pipeline project.

A company that was unable to function well for eleven years has in 10 years invested $1.5 billion, given more than $600 million dividends to the federal and state governments and remitted between $200 and $300 million in taxes. The viability of the project has signified better days ahead for Indorama Group (owners of 65 per cent shares); NNPC (10 per cent); Rivers State government, (10 per cent), the host communities (7.5 per cent); the Federal Government (five per cent) and employees (2.5 per cent). Good and bad privatisation Interestingly, the same process that threw up Indorama as the owner of Eleme Petrochemicals Limited also threw up other players as owners of some 120 hitherto government-owned enterprises. But, sadly, only a few can be pointed at as the success story of the much-taunted exercise. By the admission of the BPE before the Senate ad-Hoc Committee on the Privatisation of Public Enterprises, only 10 per cent of the 120 government companies sold are functioning. The rest have been finding it difficult to remain in business.

A recent BPE in-house stock-taking found a huge chunk of them in bad shapes. Huge debts, energy crisis, infrastructure collapse, escalating production costs and unfriendly government policies are some of the problems that have hindered the private-sector to turn around these companies. The Anambra Motor Manufacturing Company Limited (ANAMMCO), VolksWagen of Nigeria (VON) Automobiles Limited, Leyland Nigerian Limited, Steyr Nigeria Limited and National Trucks Manufacturers Limited are yet to meet the aims behind their privatisation. The BPE frowned at the performance of privatised enterprises in the iron and steel sector, such as the Jos Steel Rolling Mill. Messrs Jardin Holding BV of Ukraine and Nigerian Zuma Steel Company, which invested 75 and 25 per cent stakes, were locked in war of ownership that stifled the resuscitation process of the plant. Also, the Osogbo Steel Rolling Mill, sold to Kaura Holding, is still moribund. No production has taken place since it was concessioned a decade ago. The case of the Delta Steel Company, Aladja, is still a subject of litigation till date. The Osogbo Machine

Tools has not fared better. It is yet to commence production. But like EPCL, the Aluminum Smelter Company of Nigeria (ALSCON), the Savannah Sugar Company Limited, National Trucks Manufacturers, Kano, Katsina Rolling Mill and the National Fertiliser Company of Nigeria (NAFCON) have shown what getting privatisation right can do to public enterprises. The making of the fertiliser plant The IEFCL was completed in 36 months. The ground breaking ceremony for the fertilizer plant was performed by the Chairman of Indorama Corporation, Mr. S. P. Lohia on April 11, 2013. When The Nation visited the site at the weekend, finishing touches were being put to the plant. Some critical sections of the plant have gone through various stages of pre-inauguration and test-run, preparatory to the plant’s inauguration in the first quarter of this year. Those already completed include the central control room, Ammonia and Urea Cooling Towers, Utility Boiler, Air Compressor. They have all been inaugurated and functional. Others, including the Primary Reformer, Secondary Reformer, Granulation, Material Handling System among others are at advance stages of construction and completion. To ensure a hitch-free operation, an 83-kilometre gas pipeline, billed to supply Natural Gas Liquid (NGL) feedstock, has also been completed.

“The fertiliser plant”, said its managing director, Manish Mundra, “has world scale capacity of Urea 4000 metric tones per day (MT/day) or 1.4 million MT per annum. The project components include 2,300 MTPD Ammonia Plant, 4,000 MTPD Urea granulation plant with associated offsite and utilities. “It is energy-efficient and has state-of-art technology, indeed, the latest technologies from world class process licensors – KBR of United States of America and Toyo Engineering of Japan.” The project director, Mr. Uptal Chatterjee, explained that “for the Ammonia, KBR’s Purifier Ammonia Process Technology is used. KBR is the leading global engineering, construction and technology service provider. For the Urea plant, Toyo’s Urea Synthesis Process Technology, i.e. ACES 21 Technology, is used.

For Urea Granulation, Spout Bed Fluidising Technology is used. Introduction of these technologies makes the Indorama’s Fertiliser project a world class plant.” Chatterjee added that the plant also adopted state-of-the-art construction methodologies, using latest construction equipment, high capacity cranes, committed and skilled manpower and supervision. Mundra believes the project will boost the nation’s agricultural sector, provide fertiliser for farmers across the country, improve crop yield, fight hunger and poverty and create numerous employment opportunities. It will also put the country on the global fertiliser map as a producer and exporter of fertilisers, Mundra said. The $1.4 billion used for this project, which is the world’s largest gas-based single stream Urea plant, came largely from the IFC, and some local banks.

The construction is being handled by a consortium of Toyo Engineering and Daewoo Nigeria Limited. And with the external natural gas facilities and all associated off sites and utilities necessary to make the fertilizer plant self-supporting taken care of, a new dawn is here. Benefits of fertiliser plant The new fertiliser plant, occupying a 38-hectare land, is according to Indorama, expected to offer these benefits: “(i) Food Security: Contribution to the development of the agricultural sector and unlocking its potential, thereby reducing Nigeria’s dependence on imports. The project will increase fertiliser production which promotes intensive agricultural production, and will improve crop yields. “(ii) Economic Diversification: Increased value addition to a natural resource in Nigeria (i.e. natural gas), and advancement of the downstream chemicals sector.

The project supports regional fertiliser capacity in Sub-Saharan Africa, which is a growing market heavily reliant on imports. “(iii) Employment: Creation of significant direct and indirect employment opportunities. “(iv) SME Development: Removal of obstacles that prevent farmers with small land holds from efficiently optimizing their crop yields and maximizing their incomes. “(v) Current Account Impact: Foreign exchange savings by import substitution. “(vi) Demonstration Effect: The project is expected to have a positive signal for other foreign investors on the government’s commitment for economic diversification and agricultural transformation project.” The ports project The world-class port terminal complex at Onne Port is a partnership between Indorama and Messrs OIS. The land on which the terminal now sits was a mere wasteland cleared and reclaimed. Mundra believes the project would be a major boost to Nigeria’s industrialisation process and economic development. “This investment shows our deep commitment in fostering socio-economic prosperity of Nigeria,” he said. Mundra added that the port terminal was designed by reputed international engineering companies.
Construction was handled by local reputed companies working in collaboration with expatriate engineers and other technical experts. He said: “In the tradition of Indorama, the port terminal would have state-of-the art facilities and equipment to enhance efficient operations.” The port complex is for exporting of dry bulk Urea fertiliser from Indorama’s fertiliser plant. It will also serve for import and export of various types of break-bulk and containerised cargo for the partnering company Messrs OIS. A fleet of specially designed 40-numbers dump trucks have been provided by Indorama to transport Urea from the factory warehouse to the port terminal warehouse.

Why build a new terminal There is no facility at the Onne Port which can handle dry bulk Urea fertiliser. It is built in such a way that it can handle vessels ranging from 5000 dwt (dead weight) to 35000 dwt. The terminal comprises marine facility of 320 meters quay and 6.20 hectares of land terminal facility. Indorama said: “The terminal is self-contained with facilities such as power generation, water, waste water treatment & disposal and other utilities like fuel storage, water bunkering, firefighting, workshop, administration, amenities and security, etc.

“Apart from all the above, the terminal also comprises facility for 12,000 TEU (twenty feet equivalent units) per annum of containerised cargo. “Operators and stakeholders in the maritime and ports sector are excited about this investment that would create a new value chain, facilitate operations in Onne Port, create more employment opportunities, increase revenue for the Nigerian Ports Authority (NPA) and the related government agencies and empower host communities.” Bottlenecks to investors

The absence of constant power supply, insecurity, dry dock facility, well-apportioned pipeline facility and others have made Indorama’s task more difficult. But, with a $1.5 billion investment, it has been able to surmount the challenges. It gets uninterrupted power supply from gas-turbine plant; its new port terminal will ensure prompt export of its fertilisers; and its dedicated pipelines will ensure constant supply of gas for the production of fertilisers. It relies on riot policemen and soldiers for its security and this arrangement has shielded its top executives from abduction. But, life for Mundra and other expatriates in Indorama could have been better if only government can make Port Harcourt safe. Until that is done, they have to watch where they go.

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