As Nigerians Await $400m BUA Foods Industrial Complex

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The federal government’s facilitating the commencement of operations by BUA Foods Industrial Complex in Port Harcourt has many benefits for the Nigerian economy and will validate government’s efforts to create conducive operating environment, writes Goddy Egene

The federal government has continued to restate its determination and commitment towards making the country food sufficient. This is why some of its policies are targeted at the promotion of agriculture and food manufacturing.

The government has also intensified efforts in encouraging private sector operators to play a leading role in the industrialisation and economic diversification. This, it is doing because of the realisation of the fact that private sector has the capacity to create many jobs, there reducing the unemployment level in the society.

However, despite efforts to encourage local private sector operators to establish industries, many investors are still discouraged by the challenging environment. These are challenges of poor infrastructure, high cost of finance and risk of policy reversals among others.
However, some few industrialists brave the challenges and continue to invest in the country. One of such private sector player is the BUA Group led by Alhaji Abdul Samad Rabiu.

The conglomerate is into cement and foods manufacturing. Having established a stable cement manufacturing business across the country, BUA Group is setting up a $400 million (N144 billion) Foods Industrial Complex in Port Harcourt, Rivers State.

Having the vision of ensuring that Nigerian enjoy relatively cheap products from its stable, BUA Group located the foods industrial complex close to Port Harcourt seaport, which it leased from Nigerian Ports Authority (NPA) in 2006.

The $400 million BUA Foods Industrial Complex houses a Sugar Refinery, a Flour Milling Plant, a Pasta Plant and a 24 megawatts power plant that would create over 1,300 direct job opportunities. This excludes various job and business opportunities to be created across the production and supply value chain indirectly.

Specifically, the BUA Sugar Refinery include: 720,000 metric tonnes(MT) per annum; 24megawatts multi fuel plant (jointly share with the Flour and Pasta manufacturing complexes); 60,000MT sugar dome silo.

On the other hand, the Flour Mill & Pasta Plant, the largest in Nigeria, will engage in the business of processing, milling as well as the production and supply of flour, pasta, semolina and other related products. The mill’s key features are: new 500, 000 MT per annum mill; two mills of 800 tonnes each producing Flour & Semolina; seven storage silos with a total capacity of 32,000MT.

According to the General Manager, BUA Ports & Terminals Limited, Mr. Mohammed Lile Ibrahim, the location of the food complex was strategically selected for many reasons. He said while the group was already pursuing its background integration programme to support its sugar refining and flour milling operations, the locating the complex in the ports environment would facilitate access to imported raw materials, which will lead to cheaper production process.

“The sea port terminal will give us advantage of access to raw materials, access to gas, which is presently being powered by Oando Plc. When the ships bringing our raw sugar and wheat berth at the sea ports, the materials are conveyed directly into our silos and storage facilities ready for production.

“This will reduce the cost of transporting raw materials from the Port to the factory. Just like the way we did with cement, we are beginning with importation of raw materials for refining of sugar and production of flour and manufacturing of pasta before moving to local sourcing of those materials. For instance, in sugar, we have acquired lands in Kwara and Kogi States for sugar plantation. Similarly, we have started out grower schemes for wheat production. These will assist us to get raw materials to complement what we are importing,” he said.

But while expectations are high that many jobless youths would be taken off the streets and the food sufficiency gap being bridged, when the food complex becomes operational, the action of NPA to decommission the BUA Ports and Terminal, is posing a major threat.

According to Ibrahim, the action by the government agency was not only undermining concessioning agreements and internationally acceptable judicial/dispute resolution procedures but also contradicts federal government’s claims of creating conducive environment for businesses to thrive.

“While NPA’s action has affected some jobs and activities of our customers who use the jetty, what Nigerians should know and must not allow to happen is the loss of more jobs and the stoppage of $400 million sugar and pasta factories project. That project, which has already provided employment for over 1,000 works is meant to commissioned at the end of this month. But the shutdown of the port terminal is threatening the take-off of the project.

“As I talk to you now, dock workers have not been earning income since the port was shut, government is losing revenue as the charges we ought to pay for cargos handled through the port have stopped and our customers who use the jetty to bring products are also affected and their businesses are suffering,” he said.

The BUA chief added that tank farm owners and those engage in fish farm businesses, who rely on port terminal are losing money, as oil and gas are transported from ships at the jetties into the drums.

“Also, Crown Flour Mills take their materials and products from BUA terminal. We have so many customers that bring in fish through our terminal, all of them now are in big problem because the four berths available can only take four ships at a time and when one berths cargo vessel, others have to wait for days,” he said.

Ibrahim lamented that the wheat meant for the commencement of the pasta factory is already in the sea and the truck to bring the material to the factory are already at the jetty but there is no place for the ships to berth and discharge the cargo due to NPA’s action.
Ibrahim therefore called on the federal government to prevail on NPA to rethink its action and stop the losses being suffered by stakeholders using the port terminal.

The NPA had said the reason for the decommissioning of BUA Jetty was a result of the unsafe operational environment of the jetty which needed urgent repairs and reconstruction.

However, BUA explained that it had on different occasions written the NPA seeking approval to perform remedial works on the terminal and wondered why the NPA refused to grant approval but rather hurriedly decommissioned the terminal despite the repair works required for the part of the Jetty in question not requiring a decommissioning or closure of the entire terminal.

Besides, BUA accused the NPA of failing to meet with its obligations regarding the lease agreement and of disregarding the Federal High Court, Lagos Division injunction restraining NPA from terminating or giving effect to the Notice of Termination pending the referral of the issues in dispute to arbitration as provided under the lease Agreement. Also, BUA group questioned why the NPA will jettison the pending arbitral processes of the Court Of Arbitration of International Chamber of Commerce in Paris and take laws into its hands by de taking physical possession of the Terminal.

“Under the agreement between the parties, NPA has an obligation, among others, to dredge the port and repair the quay apron of the Terminal which responsibility it has failed to perform till date. The Lease Agreement provides for mutual rights and obligations and makes provision for dispute resolution mechanism which explicitly states that dispute shall be resolved by arbitration.

“The question is why did NPA refuse to give approval to carry out necessary remedial repair works as requested in BUA’s letter of 16th May, 2019 and as confirmed by NPA letter of 17th June, 2019, as the substance of our letter?

“The simple answer is that NPA management is determined at all cost to terminate the Lease Agreement notwithstanding the terms of the agreement which provides that parties should continue with their respective obligations under the Agreement pending the resolution of the disputes, the order of injunction and the pendency of the arbitration proceedings between the parties,” the company said.

BUA said in clear breach of the contractual provisions, NPA by a letter dated 11th November, 2016 terminated the Lease Agreement.

“BUA Ports and Terminals as a law abiding corporate citizen approached the Federal High Court, Lagos Division in Suit No. FHC/L/CS/633/17 between BUA Ports and Terminal Ltd v. NPA contesting the purported termination of the Lease and obtained an order of injunction restraining NPA from terminating or giving effect to the Notice of Termination pending the referral of the issues in dispute to arbitration as provided under the Agreement. The Order granting injunction is dated 18th January, 2018.

“By the terms of the Agreement, the parties are enjoined to continue with the observance of the terms and performance of their respective obligations under the Agreement even while disputes are being resolved by either court or arbitration.

“As a result of the injunction and the terms of the contract, BUA Ports and Terminals continues to carry out its obligations under the contract pending the resolution of the dispute. It is important to state that subsequent to the order of injunction, BUA Ports and Terminals wrote several letters and made overtures to the management of NPA for an amicable resolution of the dispute. NPA did not respond to the request for amicable settlement or the overtures made as the management of NPA appears bent and determined to give effect to the Notice of Termination by several measures including but not limited to decommissioning the Terminal.

“Consistent with the terms of the agreement, BUA wrote a letter dated 16th May, 2019 to notify the NPA of the state of the jetty and the need for immediate remedial works. BUA Ports and Terminals specifically in that letter requested the approval of NPA for it to carry out the necessary repairs and reconstruction to avert imminent collapse and danger to human lives. However, NPA instead of giving the requisite approval as requested in our letter and consistent with the terms of the Agreement, in its determination to give effect to the purported Notice of Termination took laws into its hand by directing the decommissioning of the jetty and immediate closure of the Terminal,” it added.

BUA stressed that the repairs NPA was talking about was as a result of the nefarious activities of hoodlums and vandals who had over a period of time cut the pipes and steel beam of the berths thereby affecting their stability, among others.

“ The activities of these hoodlums and vandals were at various times reported to the NPA who had the responsibility and obligation under the Agreement to provide security for the ports. The NPA did nothing. Indeed BUA in its determined effort to tackle these issues caused some arrests to be made and some of the suspects prosecuted, but NPA as owners of the Ports showed little or no interest in the prosecution and the case was lost. Obviously, if the NPA had been alive to its responsibilities and provided the required security, the activities of the vandals would have been prevented.

“It is important to stress that the repair and reconstruction required for the part of the Jetty in question does not require a decommissioning or closure of the entire Terminal. The carrying out of the remedial works if approved by the management of NPA would have remedied the defects stated in our letter to NPA and averted any risk of loss of property and lives. It is apparent that NPA is using the said letter by BUA Ports and Terminals as a subterfuge for an effective termination and closure of the Terminal in violation of the order of the court restraining NPA from carrying into effect the purported Notice of Termination,” it said.

BUA explained that under the Lease Agreement, NPA had an obligation, among others, to dredge the port and repair the quay walls and apron of the Terminal which responsibility it has failed to perform till date.

“For the avoidance of doubt, we should state that subsequent to the letter of NPA dated 17th June ordering the decommissioning of the Jetty and closure of the Terminal, NPA upon our representation and after extracting an indemnity and undertaking from us, reopened the Jetty and the Terminal and we were in operation for three weeks only for the management of NPA to direct the Port Manager orally to close the Terminal. The question is what is the purport of extracting an undertaking and indemnity from us if NPA would still close the Terminal?

“The general public may wish to note that subsequent to the order of closure, NPA has since referred the matter to arbitration at the Court of Arbitration of the International Chamber of Commerce, Paris. BUA has responded to the claims of NPA and also counterclaimed. But rather than allow the arbitral process to proceed and await the determination of the issues, NPA has not only taken laws into its hands by taking physical possession of the Terminal by force and engaged in campaign of calumny against us in its bid to justify the unlawful and extra-legal measures taken by the Authority,” BUA stated.