Dangote Versus Rabiu

A Thread

1. After hailing the two largest Manufacturing titans in Nigeria over their latest rankings in Forbes 2021 World Billionaires List, it is sad to discover that Alhaji Aliko Dangote is set to undermine Abdul Rabiu of BUA Group.

2. It is shocking to say the least. Dangote is worth $11.5 Billion according to the latest Forbes World Billionaires List as at April 6, 2021. He is #191 on the list of 2,755 Billionaires with new entrants such as Tyler Perry and Kim Kardashian West.

3. This valuation is excluding the current investment in the Dangote Refinery project - a 650,000 barrels per day refinery estimated to have cost $15 Billion. It will be the largest single train refinery in the world once completed.

4. He has been the wealthiest person in Africa for the last decade. The bulk of his wealth is his shareholding in Dangote Cement which has a market capitalization of $12 Billion. Annual Sales is around $2.5 Billion.

5. The subsidiary produces 45.6 million metric tons of cement every year and operates in 10 African countries. Aliko Dangote owns 85% of the public traded Dangote Cement through a holding company.

6. The Dangote Group interest spans Cement Manufacturing, Sugar Refining, Salt & Seasoning, Fertilizer, Infrastructure, Rice Farming, Energy, Petrochemicals, Poly Sacks, Oil Refinery, Real Estate, Mining, Maritime, Logistics, Automotive and Tomato Farming.

7. Dangote Group earnings tops out at $4.3 Billion with 15 subsidiaries and 3 Public Listed Companies.

8. As we all know, the Dangote Group enjoys some of the largest tax breaks, concessions, and waivers on import duty in the country. The Conglomerate also impacts the real sector of the Nigerian economy.

9. Some of these concessions were heavily enjoyed during Obasanjo’s term as a civilian president which gave Dangote exclusive import rights to cement, sugar and rice. He has been a heavy contributor to various presidential campaigns including that of Obasanjo’s 2003 campaign.

10. Suffice to say the concrete road project btw Gbagada & Cele Bus stop on the Apapa - Oworonshoki Expressway in Lagos is one of such concession under the Road Trust Fund Policy. Dangote was incentivized to fund such a project to further reduce their tax liability to the FG.

11. Prior to this, Dangote Cement has enjoyed Pioneer Status, thus exempted from taxes as it commissions or extends its production lines across the country from 2009 up until 2019 as depicted in its annual reports.

12.With the assistance of Obasanjo, Dangote crippled the business of his archrival in the cement business, Ibeto. Dropped price of cement a couple of times that impacted Lafarge, one of his major competitors in the cement business.

13. The Cement business in the country is presently dominated by two Northern Oligarchs with Dangote controlling 65% of the market with profits around 40% annually.

14. Cement is a product of no particular significance in any other country in the world except Nigeria. Cement companies all over the world return profits of no more than 5% annually. Not in Nigeria.

15.The focus of this thread is the brewing war between BUA Sugar and Dangote Sugar in tow with Flour Mills of Nigeria (FMN) Sugar subsidiary, Golden Sugar Company.

16. The National Sugar Development Council (NSDC) developed a roadmap for the development of the sugar sub-sector in 2008. The Federal Executive Council (FEC) approved the Nigerian Sugar Master Plan (NSMP) in 2012.

17. Nigeria was ranked as the 4th biggest importer of Sugar in the world, producing only 30,000MT of 1,994,175MT demand. Sugar is the third most important commodity after Rice and Wheat as considered by the Federal Government.

18. The Nigerian Sugar Master Plan objectives is to raise the local production of sugar to self-sufficiency, stem the tide of unbridled importation, create job opportunities, and contribute to the production of Ethanol & Electricity Generation.

19. The Bua Group has recently completed its 2nd Sugar Refining Plant in Port Harcourt which has a production capacity of 0.85 Million Metric Tonnes per annum.

20. This has led to a petition from Aliko Dangote and the Chairman of FMN, John Coumantaros to the Honorable Minister of Industry, Trade, and Investment in January 2021.

21. The petition was based on allegations that BUA Group has not been actively involved in the Backward Integration Programme (BIP) which is the fulcrum of the National Sugar Master Plan for the country’s self sufficiency in local sugar production.

22. And as such, the investment in the 850,000MT Export focused Sugar refinery in Port Harcourt Export Processing Zone estimated to have cost $250 Million was to undermine the National Sugar Master Plan.

23. However, the word on the street is that BUA Group intends to lower the price of Sugar which could adversely affect Dangote Group which is monopolistic in nature with great Government patronage.

24. BUA broke the monopoly with its entrance into the sugar sub-sector with its 720,000MT Sugar Refinery at Apapa, Lagos in 2008.

25. Dangote’s petition seeks for no additional quotas given to BUA as a result of the Refinery in PH, compels the Nigeria Customs to comply strictly with administering levies and duties to BUA. The CBN should monitor the registration of Form M in line with Sugar Quota allocation.

26. The petition compels to the Ministry to commence investigation on BUA's PH Refinery to determine the volume of raw sugar imported and compute the penalty in terms of import duty and levy on the company.

27. This is outrageous to say the least and buttresses the fact of Dangote's historical penchant to stifle competition is his modus operandi. No innovation whatsoever.

It was further shocking to see the letter written by the Minister of Industry and Trade to BUA Group Chairman dated February 10, 2021 to give detailed information on the company’s plan to service Nigeria and export market, failing which remedial action would be taken.  

BUA Chairman responded in a lengthy letter on February 11, 2021 about its Backward Integration Investments, taking exception to the ludicrous claims by its competitors of its aim to circumvent the Backward Integration Programme (BIP) of the sector.

Abdul Rabiu countered most of the allegations made by Dangote and his co-conspirator.

BUA’s BIP project in Lafiagi when completed in 2022 includes a 20,000 hectare Sugar Plantation, a 10,000MT Sugar Mill, a 200,000MT Sugar Refinery, a 20 Million Litres Ethanol Plant and a 35MW Power Plant, the only one of its kind and in sync with the National Sugar Master Plan.

32. Abdul Rabiu stated that it is a well-known fact that Dangote always seeks to muscle competition through any means necessary. He detailed how the Chairman of FMN was once a victim of Dangote in the Cement space which led to the sale of UNICEM.

33. He further revealed that the Flour Mills of Nigeria (FMN), a foreign owned entity was fully funded by Nigerian Intervention Funds and that both Dangote and FMN feel threatened by the magnitude of BUA’s investments which would inevitably lead to a drop in sugar prices.

34. It is sad to say the least that Dangote would still exhibit such antics considering that his Oil Refinery is almost complete.

35. However, Nigerians also need to be wary of his intent as it has been revealed that Dangote has indicated that only owners of oil refineries in the country should be allocated petrol import licenses which is monopolistic in nature. Since there seems to be no other.

36. This will inevitably lead to a monopoly preventing the laws of demand and supply to dictate the price of petrol once the Dangote Refinery comes onstream.

37.Considering this realization, Nigerians can be at peace to give one's blessing towards NNPC’s $1.5 Billion Rehabilitation project for the 210,000 Barrels per day Port Harcourt Refinery.

38. Nigerians should be more optimistic of BUA Group’s proposed 2000,000 bpd Oil refinery to be built by French Hydrocarbon Company Axens in Akwa Ibom State. This should be completed in 2024.

39. It seems Samad Rabiu has the cojones to go toe to toe with Dangote in each of the sectors he plays in – Cement, Sugar and Oil Refining.

40. End of Thread.