By Sisaa Agboh<\/p>\n
With the recent inauguration of the overN50billion Sunti Golden Sugar
\nEstates in Niger State by President Muhammadu Buhari,the face of the
\nNigerian Economy is undoubtedly changing; courtesy of thereform and
\nprivatisation programme of the Federal Government of Nigeria.<\/p>\n
Located on the banks of River Niger,in Mokwa, Niger state, the Sunti
\nGolden Sugar Estate is owned by Sunti GoldenSugar Estates (SGSE) Ltd, a
\nsubsidiary of Flour Mills of Nigeria Plc.<\/p>\n
The sugar estate features 17, 000hectares of irrigable farmland and a
\nSugar mill that processes 4,500 metrictons of sugarcane per day. At full
\ncapacity, the estate is expected to produce1 Million tons of Sugarcane
\nwhich roughly translates into 100,000 metric tonsof sugar yearly.<\/p>\n
Enclosed within a 35-kilometer dyke,the production facility area is 15,100
\nhectares, with a cane area that featuresa maximum output of 10, 000
\nhectares.<\/p>\n
The dyke provides flood protectionfrom the River Niger. Over N1 billion
\nwas invested in the state-of-the-artirrigation system that will ensure the
\nefficient cultivation of sugar cane,with infrastructure that includes
\ndrain pumps, pump stations and a power grid.<\/p>\n
The estate no doubt, is the purestrepresentation of the Federal
\nGovernment’s Nigerian Sugar Master Plan (NSMP)with an ambitious backward
\nintegration program that intends to set Nigeria onthe path to
\nself-sufficient sugar production. The farm at peak production willprovide
\ndirect employment for about 10,000 people yearly, and impact up to50,000
\npeople indirectly, including 3,000 small-scale out growers who will
\nbecultivating sugarcane to feed the mill.<\/p>\n
The estate has brought infrastructurebenefits to the surrounding
\ncommunity, with 28 communities in total takingadvantage of a new
\n30-kilometer road, plus expansive road networks that providea variety of
\naccess routes to the homes of the indigenes. Drains, culverts,
\nandflood-protection walls have also been constructed. The project
\nillustrates thedesire to reduce sugar importation, save billions in
\nforeign exchange, boostlocal capacity, and reduce unemployment by putting
\nthousands of Nigerians towork.<\/p>\n
The commissioning of the sugar factoryis the first step towards a
\ncollective dream of agricultural progress for allin Nigeria; and clearly
\ndemonstrates that businesses are better handled by theprivate sector hence
\nthe need by all Nigerians to embrace privatisation.<\/p>\n
Perhaps, it is apt here to delve intothe history of the now burgeoning
\nsugar factory. Sunti SugarLimited, a government owned company was
\nestablished in 1974 as a private limited liability company, with ashare
\ncapital of N100 million and percentage ownership of 90% and 10% to
\ntheFederal Government and Niger State Government respectively.<\/p>\n
The company with a land mass of 17,000 hectaresfor sugar cane production
\nwas not cultivated to its optimal potential neitherdid it process sugar
\nsince its inception as it did not have a refinery inplace. Rather, the
\nharvested sugar cane from the farmland was transported tothe Nigerian
\nSugar Company (NISUCO) for sugar production.<\/p>\n
Then,it was a company whose liabilities weregreater thanthe assets in
\nmanifolds. Its assets weremainlyfarmlands, most of which were
\nnotcultivated, agricultural plant and machinery, motor vehicles
\nanddilapidated buildings. The companys factoryat the time was not
\ncompleted and the uncompletedfactory components were left to waste away
\ninthe openfields.<\/p>\n
While the company did not yield profit to theFederal Government, it
\nincurred debt of about N615 million, owed largely to theFederal
\nGovernment, with some amount owed local creditors.<\/p>\n
Following due diligence carried out by the Bureauof Public Enterprises
\n(BPE), the untapped potentials of the company was juxtaposed with the
\ngrowing debt profile and theburden on the governments treasury and upon
\nthis, the resolution to privatisewas reached.<\/p>\n
At the initial attempt, its privatization wasunsuccessful primarily as a
\nresult of the large debt burden the company hadincurred through the years
\nit was under-utilised. The report of the BPEsprivatisation advisers
\nrevealed that the proceeds to be realised from the salewould not be
\nsufficient to pay off creditors and settle staff liabilities. Theadvisers
\nconsequently recommended asset sale, through liquidation, as thefavourable
\nmethod of privatisation.<\/p>\n
Following the recommendation, the BPE obtainedapproval of the National
\nCouncil on Privatisation (NCP) in July 2003 toliquidate the company as
\nwell an approval from the courts in February 2005 to wind it up.
\nAsimplified bidding process duly followed the NCP approval of 2004 for a
\nguidedliquidation process which produced SupertekLimited as the preferred
\nbidder after been found to be responsive to the terms of the transactionby
\nthe Committee of Inspection (CoI) and the CoIsfindings that Supertek was
\ncapable of realising itsenvisaged investment. It was upon this that
\nSupertek emerged as the new owner of the companywith an offer price of
\nN180 million.<\/p>\n
There was transfer of ownership of thecompany to FMN. Under the new
\nmanagement, the company took the name SuntiGolden Sugar Estate, a
\nsubsidiary of FMN. It has since made a departure fromthe pre-privatisation
\ndays.<\/p>\n
Sunti Golden Sugar Estate has since embarked on developing the first
\nnewsugar project to boost local sugar production in the country. To
\nfacilitatethis, the company selected Booker Tate as its technical partner
\nto assist withspecifications for the project including factory design,
\ncontractor selectionand final negotiations. Thus far, harvesting ofthe
\nfirst sugarcane, commissioning of the factory, and processing of the
\nfirstcane into saleable sugar was achieved in 2016.<\/p>\n
The new owners have also put measures inplace in anticipation of future
\ndemands. These measures include the installation of the latest technology
\nof3,000 tons per day factory and a planned capacity expansion of 4,500
\ntons perday in cane milling and processing, as well as a system of canals
\nand dykes to provide irrigationduring the dry season and flood protection
\nduring the wet season.<\/p>\n
Recall that this is not the first time, aprivatized enterprise will be
\nmaking giant strides on the Nigerian economy.ElemePetrochemicals Company
\nLimited (EPCL), located in Port Harcourt, Rivers State,is one of such
\nshining examples.<\/p>\n
Apetrochemicals complex originally fully-owned by the Federal Government
\nof Nigeriaand commissioned in 1996, EPCL was never managed properly, at no
\ntime operatedto its potential, and was a significant loss maker and drain
\non the Statetreasury.<\/p>\n
Thecompany operated for about nine years from 1996, never operated
\neffectively,although it was technologically a state-of-the-art facility.
\nSevere managementproblems and continuing financial losses led to the
\nFederal Government’sdecision to privatise<\/p>\n
In2006, EPCL was privatised by the sale of 75% of its shares to a core
\ninvestorthrough a competitive bidding process. Little international
\ninterest wasattracted. The company was sold to Indorama Group for $225
\nmillion, withoutliabilities which were retained by the FGN. Much of the
\nacquisition cost wasfinanced with debt, with the IFC lending Indorama $150
\nmillion for theacquisition cost and the new Eleme borrowing $130 million
\nfor its turnaroundprogramme and working capital.<\/p>\n
Itis interesting to note that the available report on EPCL stated that
\n“theabsence of the two-year turnaround maintenance (TAM) of the company’s
\nplantsand facilities made it impossible for the company to
\nachieveprofitability” and “the level of the company’s indebtedness…
\nalsogreatly hampered the company’s ability to achieve profitability”,
\nwhereasafter four months of turnaround maintenance, the company was
\noperating at ahealthy profit; for the first full year of operation earned
\na net profit marginof 36.1% after tax; and in the second full year of
\noperation had increased itsnet profit margin to an astounding 43.4% after
\ntax. The company was able to payits owners a dividend of N9.5 billion
\n(approximately $74 million) after onlyone year of operation.<\/p>\n
Thatsaid, the dismal performance of public enterprises is a direct result
\nof manyfactors that make efficient operation difficult. Such factors
\ninclude lack ofadequate investment capital, slow decision making process,
\nbureaucraticbottlenecks, frequent government interference, economic
\ndecisions based onpolitical expediency and massive corruption of public
\nenterprise managers incollaboration with officials of the supervising
\nministries.<\/p>\n
Theprivatisation vision is encapsulated in the reform programme whose aim
\nis thedevelopment of the entrepreneurial abilities of Nigerians, the
\nwidening ofavailable economic opportunities and the creation of a
\njudicious economic mixand intervention mechanisms that would bring about a
\nconducive businessenvironment. The overall aim is that investors, who
\ndemonstrate capacity to addvalue through efficient provision of goods and
\nservices, have the chance to doso. This involves putting back to effective
\nuse, public enterprises that aremoribund or not providing the required
\nservices. It also entails providing theopportunity for operators to
\nparticipate competitively in the expanded businesshorizon leading to an
\nenlarged and active private sector driven economy.<\/p>\n
Sunti Golden Sugar Estates and ElemePetrochemicals Company Limited are
\nprime cases that project the positive impactof privatisation on the
\neconomy.<\/p>\n
Agbohwrites from the Bureau of Public Enterprises (BPE), Abuja<\/p>\n","protected":false},"excerpt":{"rendered":"
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