Kogi State Government

Obajana (Dangote) plant invasion: Implications for public-private partnerships in Nigeria (I)

By Tordue Simon Targema

Last week, the Obajana Cement Plant came under siege by armed vigilante groups from the Kogi State Government, acting on the orders of the State House of Assembly who stormed the Company to seal it and ground its operations.

This was followed by war of words between the Kogi State Government and Dangote Industries Ltd. on the establishment, acquisition, ownership and legal rights of operations of the company.

The House of Assembly premised its decision to seal the Company over its management’s refusal to appear before a public hearing on petitions bothering on the acquisition of the Company by Dangote Industries Ltd. This, the House considered arrogant and hence, had to wield its sledge hammer on the Company to serve as deterrent to it, and indeed, other investors in the State.

Reports also indicate that the Company’s management had earlier shunned a Commission of Inquiry set up by the State Government to investigate petitions bothering on its acquisition and operations by Dangote Industries Ltd.

This scenario is unfortunate and regrettable, especially as Nigeria grapples with untold economic hardships and paucity of vibrant private companies that will provide adequate buffers to the nose-diving economy, create job opportunities and mop up the teaming jobless youth that have littered her streets today.

But the fundamental questions lingering on several minds since this crisis erupts, however, are: why did Dangote Industries Ltd. snub the Kogi State Government and House of Assembly, giving rise to this preventable misfortune? If Dangote Industries Ltd. is innocent of the allegations, why evade a Commission of Inquiry and a House of Assembly public hearing that would have provided the best platforms for the Company to exonerate itself?

Again, Why allow the crisis to degenerate to this level, despite the numerous warning signals? Does it mean that the Company operates without a proactive conflict management strategy to arrest this sort of obvious conflict prompters and nib them in the bud?

These questions continue to beg for answers, and have caused many to accuse the operators of Dangote Industries Ltd. of arrogance and blatant disregard to constituted authorities within their operational domains.

Beyond these, however, the behaviour of the Kogi State Government and its operatives suggest that someone somewhere wants to “cash out” from the Company, and has decided to use this brute invasion as the best means of actualising the selfish ambition. Yes, available records have provided sufficient proofs to this effect.

To start with, most of the claims contained in the report of the Commission of Inquiry chaired by the Head of Service to the State Government, Mrs. Folashade Ayoade are utterly mischievous and amusing.

The Committee, for instance, could neither interact with any of the four government representatives that interfaced with Dangote Industries Ltd. to transfer ownership of the Company from the State Government to Dangote in 2002, nor interact with the Company’s management team; yet, concluded its report and made damning recommendations based on selective documentary evidence!

Curiously, the agreement that facilitated transfer of the Company which was duly signed by the then Executive Governor of Kogi State, late Prince Abubakar Audu has been “invalidated” by the Committee on the grounds that it lacks “consideration” 20 years later!

To claim in 2022 that an agreement signed and implemented since 2002 lack consideration is funny, given that the same agreement has been guiding operations of the Company all this while.

Notably, this agreement which the Committee invalidates is explicit in its terms regarding ownership of the Company when it states that: “the State, being the sole owner of the Company hereby offers, and DIL (Dangote Industries Limited), accepts the transfer of 90% of the total shareholding in the Company.”

This transfer was made in the light of the State Government’s apparent inability to adequately exploit the huge mineral deposits.

The agreement notes categorically in this regard that: “in order to actualise the aspiration of the State and its people to exploit and utilize the abundant minerals for establishment in the State of cement manufacturing plant, the State has invited DIL to consider equity participation in the project.”

Clearly, Dangote Industries Ltd. was not an intruder in Kogi State on cement exploration tour ab-initio, but was duly invited by the State Government to help actualize the goal of adequately exploring and mining mineral deposits in the State under a well-articulated equity regime.

So far, the Company has done well on several fronts such as its enormous contribution to the country’s GDP and provision of employment opportunities. The huge financial investment of Dangote Industries Ltd. into the Company gave it life in 2008 when it finally commenced operations after about 20years of its conception in 1992.

At the moment, Obajana Cement Company is the biggest cement plant in Sub-Saharan Africa, with a nameplate production capacity of about 16.5 million metric tonnes per annum across its five production lines.

With sufficient fuel- gas, coal and diesel- the five cement mills are expected to produce 7000, 000kg of cement each per day. When one considers maintenance and circumstantial stoppage of five days per month, the loss of even a day of production is such a huge pain that management of the Company could not afford to risk.

Presently, due to gas and coal shortage that is being experienced across the country occasioned by flooding, only two to three out of the five production lines can run simultaneously. In this circumstances, a shutdown of the Company by the State Government is least envisaged, and is capable of wrecking untold hardships on the Company’s investments.

It is worthy to note that Obajana Cement Plant provides gainful employment to over 3,000 staff. This is apart from casual workers, cleaners and other private individuals who have business dealings with the Company.

With this manpower capacity, the rippling effect that the Company portends to the economies of both Kogi State and Nigeria at large can be best imagined. Yet, even with this production capacity, the cost of cement in Nigeria is excessively high and continues to rise at an alarming rate given the economic uncertainties of the time.

At the moment, a 50kg bag of cement costs around 3,500 to 4,200. One wonders what the implications of shutting down the largest production plant would be on the supply and price of the product within the shortest possible time, not to mention the thousands of people that are most likely to lose their decent means of livelihoods should the unfortunate crisis linger on.

To be continued

Tordue Simon Targema writes from the department of Journalism and Media Studies, Taraba State University, Jalingo. Email: torduesimon@gmail.com