Boss Picks

Who Will Settle Dangote, Bua Rivalry?

By Eric Elezuo

The end may not have been heard about the constant altercation between the Dangote Group and Bua Group, two of Nigeria’s biggest conglomerates in commodity trading and manufacturing.

Both companies, which are in the forefront of manufacturing most of the staple edibles in Nigeria, are engaged in trade rivalries, seeking who probably will win the bulk of the country’s consumers.

Consequently, Dangote and Bua, Nigeria’s number one and three richest men, are doing everything possible to grab the market, and so have distinct refineries for diverse production.

While Dangote has its fertilizer plant as well as oil refinery at the Lekki area of Lagos, Bua has its sugar plant at the Port Harcourt axis. Both businessmen are known to deal in almost the same kind of products, and it is imperative to note that they are also natives of the same Kano State. Notwithstanding the rivalry continues necessitating the question, who will settle the rivalry between the two giants of commodity markets. Trade Ministry, Kano Governor, Abdullahi Ganduje or President Muhamadu Buhari.

The feud, according to sources, is traced to the ex-president, Olusegun Obasanjo’s administration, which was said to have favoured Dangote to the detriment of his major rivals and competitors in the business sector.

Alhaji Abdulsamad Rabiu, the Executive Chairman of BUA Group, allegedly wrote a petition to President Buhari, detailing how policies of successive governments in the last two decades have “unduly” favoured his kinsman.

But Rabiu’s surprise appearance at Dangote’s 60th birthday party, organised for him by Femi Otedola, seemed to douse the tension of enmity between the two.

Again in February 2020, Alhaji Aliko Dangote, who is unarguably the richest man in Africa with a networth of $11.3 billion paid a courtesy call on BUA Group Chairman, Alhaji Abdulsamad Rabiu, at the BUA Group Headquarters in Lagos in a move many felt will bring a reconciliation.

The visit, many had thought, will reconcile the two billionaires who have interest in cement and similar commodities across Nigeria and Africa. The BUA Group had earlier accused Dangote Group of trying to monopolise the cement market and asked the President Muhammadu Buhari to intervene.

“It was an honour for me to receive my friend and brother, Alhaji, in my office today. I share his vision and aspirations in transforming and industrializing our beloved country, Nigeria. Thank you so much, Alhaji, for the honour.” Abdulsamad Rabiu had posted after the visit.

But today, the story is different. The rivalry has been rekindled!

The duo’s rivalry has been rekindled following alleged letter written to the Minister of Industry, Trade and Investment, Mr. Niyi Adebayo, by Messrs Aliko Dangote of the Dangote Industries Limited and John Coumatarous of Floor Mills of Nigeria Plc, according to Chairman, Bua Group, Abdulsamad Rabiu.

The letter, which was co-signed by Dangote and Coumatarous, was alleged that Bua aimed to ‘circumvent the BIP of the sugar industry’ – an initiative in which it claimed it has invested billions of naira and is nearing completion.

The whole crisis came to light following a response dated February 11, 2021, and titled Re: Request for Information on Bua Sugar Refinery, Port Harcourt, and signed by Mr Rabiu himself, Bua sent to the Mr Adebayo, and made available to The Boss, where it attempted to clarify issues in response to another letter written to it by the Trade and Investment Ministry for more information and clarification.

“I received your letter dated February 10, 2021 requesting for information on the status and operations of our Bua Sugar Refinery at the Bundu Free Trade Zone in Rivers State. I am also aware your letter to us was in response to another jointly signed by two competitors – Messrs Aliko Dangote of Dangote Industries Limited and John Coumatarous of Floor Mills of Nigeria Plc – who incidentally are also interested parties and major players within the sugar industries in Nigeria,” the letter opened.

While describing Bua’s three sugar holdings in Nigeria including 720, 000mt sugar refinery in Apapa, Lagos (since 2008 and covered by the Backward Implementation Programme of the National Sugar Master Plan), as a watershed in sugar production in Nigeria, Rabiu, on behalf of Bua frowned at what he called ‘ludicrous claims by the two competitors’.

Bua maintained that considering its peer reviews with the other competitors in question in line with the dictates of the Nigerian Sugar Master Plan, it is tantamount to falsehood to claim that the Bua PH export focused refinery in an Export Zone will amount to an undermining of the NSMP.

Insisting that the project they are involve in Port Harcourt is governed under the NEPZA act and the free zone approved by Mr President, who is duly empowered by the constitution to do so, Bua said that its actions are legal and within the confines of the law, and that going against it by anyone will amount to undermining the powers of the President, who had given his approval.

“We have not done, are we doing anything wrong,” Bua said.

Still on its defence, Bua noted that “as far as the Backward Integration Programme is concerned, Bua is doing everything possible to ensure that its BIP project is on course through our 20, 000 hectares Lafiagi Sugar Project encompassing a 10, 000tpd Sugar Mill, 20, 000tpa Sugar Refinery, 20million litres Ethanol Plant and a 35MW Power Plant from Bagasse.”

The company also prides itself as ‘the only one with a plantation, a sugar mill for crushing canes, a refinery to produce white sugar, and an ethanol plant’ while indicting its competitors (Dangote and Floor Mills) ‘as having only sugar mills thus producing only brown sugar’.

It further accused Dangote and Floor Mills of paying lip service to the National Sugar Plan as a means to simply keep importing sugar, maintaining that the other two companies’ hypocrisy needs to be examined more critically.

“In the 20 years since Dangote Sugar took over this plantation, they have not added any value whatsoever to it, instead Savannah Sugar produces even less than it was producing when they took it over,” Bua added accusing Dangote of incompetency and double standard.

It further accused Dangote of trying to muscle any competitor out of business wherever they are found operating, either in Nigeria, or anywhere in the globe, saying what is playing out at the moment is one of such moments. The company wondered why Floor Mills, which Dangote had set up its chairman and his aged father leading to their arrest by the Economic and Financial Crimes Commission (EFCC).

Bua concluded that “We have our relevant approvals from Mr President which grants BUA Sugar PH the permission to export and sell locally in line with extant laws and regulations. Our Lafiagi BIP Project is also not only the most advanced of the three but also the only with sugar refinery and ethanol plant. The other two cannot produce sugar fit for human consumption and is only an avenue to keep importing whilst doing the ‘barest’ minimum. Not only that, the cost and scale of our projects is almost three times theirs.”

Bua finally assured the honorable minister, and by extension Nigerians, among many other things that the company’s “PH Export Focused Project will not affect in anyway the backward integration programme. The only way it will affect Nigerians is that Nigerians will pay lower prices for sugar.”

But in its response, Dangote Sugar Refinery PLC (DSR) has released a statement acknowledging the fact that stories abound in the media space that it is engaging in price-fixing and is not honestly engaged in any Backward Integration Programme as claimed.

Consequently, the company vehemently refuted the allegations and assertions in their entirety as false and geared towards tarnishing the good name and brand of Dangote Sugar Refinery Plc and Dangote Industries Limited.

“DSR does not engage in artificial price manipulation of its products, either during the Holy month of Ramadan or at any other time. We have never ever increased price of our food items or commodities during the Holy month of Ramadan in the history of our operations”, according to the Group Managing Director, Mr. Ravindra Singhvi.

He also added that the Company is socially responsible and considers price-fixing to be unethical. Such allegation is highly mischievous and a calculated attempt to smear the reputation of DSR. DSR can only sadly conclude that the online publication is mischievous and geared at creating some form of undue advantage to some Industry players, he said.

He said that the company began its Backward Integration Programme (BIP) with a 10-year sugar development plan, to produce 1.5 million MT per annum of sugar from locally grown sugarcane. The Project commenced with acquisition of large expanse of land in strategic locations such as Taraba State, Adamawa State and Nasarawa State. To this end, three (3) BIP sugar companies; Dangote Taraba Sugar Limited, Dangote Adamawa Sugar Limited, Nasarawa Sugar Company Limited were incorporated.

The Company had commenced rehabilitation and expansion of its Sugar Factory at Numan. Sugarcane planting has also commenced in the two other BIP locations.

DSR has a responsibility to the Government, the good people of Nigeria and the Sugar Industry and all other stakeholders to protect the integrity of the Sugar industry and wishes to assure its stakeholders as follows: It will do all that is necessary to vehemently protect the integrity of the Sugar Industry, it is not engaged in price fixing and it encourages healthy competition amongst the players.

DSR highlighted a matter (BUA’s operation of a Sugar refinery in the Free Trade Zone in Port Harcourt, exporting refined sugar into the Custom territory) which may circumvent the National Sugar Master Plan’s (NSMP) framework and jeopardize its objectives by taking advantage of the location of its Port-Harcourt Refinery in the Free Trade Zone. DSR made this notification to the Hon. Minister of Industry, Trade & Investments bona fide, via its letter to the Minister dated January 28, 2021 asking the Minister to investigate the matter.

“We believe our action is in line with our responsibility as a major stakeholder to alert the supervising Ministry on activities that would derail the plan of the Federal Government in its drive to self -sufficiency in Sugar under the NSMP.

But the way it is today, the real victims of the struggle between the two superpowers of manufacturing are the people, who may likely procure these commodities are exorbitant prices because the crisis is likely to lead to product scarcity and subsequently inflation as too much money will have to chase very few goods.

Presently, the price of a bag of cement, which happened to be an exclusive preserve of both companies, has skyrocketed to as high as N4,500 while a bag sugar sells for between N19000 and N21000.

It is believed that the  Ministry of Trade, Industries and Investment, which is presently wading in, will do a thorough job in reconciling both companies, and should that failed, President Muhammadu Buhari should as a matter of urgency call both to order. He is probably the only person the two dollar billionaires, Dangote and Rabiu, can listen to.

Below are the detailed letter and other supporting documents in PDF that backs up BUA’s claims:

CLICK TO OPEN:

DANGOTE TRYING TO STOP BUA SUGAR OPERATIONS

 

 

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