Business
Obajana: We Followed Due Process – Dangote
*Says Kogi has no equity interest in firm
By Edozie Obasi-Eze
The battle for the soul of Obajana Cement Plc between the Kogi State Government and Dangote Industries Limited, which has seen interventions by the legislature, armed vigilante and other stakeholders is still unravelling.
The management of Dangote, on Tuesday night released a statement in which it claimed that it followed due process in its dealing on the cement company, while it has been fulfilling its tax obligations to the KSG.
The corporate communications department of the conglomerate in the statement titled, ‘Obajana Cement Plant: Separating Facts from Fiction.’ That the “Kogi State government has no equity interest in Obajana Cement Plc.”
It also averred it has been paying relevant taxes, levies and charges to the KSG since 2007, when production commenced in the acquired cement plant.
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The statement read, “This is a statement issued for the sole purpose of addressing the concerns and apprehensions of the stakeholders of Dangote Cement Plc (DCP) especially the over twenty-two thousand people it employs directly, and more indirectly, as well as thousands of contractors, wholesalers, users of our products, our financiers and shareholders.
“At a time of significant economic challenges that we face as a nation, we believe all must be done to keep our economy running effectively, our people employed, businesses that depend on us thriving and not discourage those who take the risks of needed, lawful and significant investments in our economy. The shutdown of our plant has materially jeopardised the economic wellbeing of our country without any regard for its significant consequences.
“Whilst reserving our rights to proceed to arbitration in accordance with the extant agreement, we have reported the unlawful invasion by KSG and the consequential adverse effects of same to all the relevant authorities, including the Federal Government of Nigeria who has now intervened in the matter. It is hoped that the dispute resolution process we have initiated will quickly resolve the disputes and allow us to focus on our business without distraction and continue our significant contribution to our national economy. It is in this context that we state in brief as follows.
“The Obajana Cement Plant is one of the most critical components of economic activity in the nation, being one of the highest taxpayers, and vehicle for one of the largest companies invested in by thousands of Nigerian and foreign investors. Its most important assets are (1) its land, the plant and machinery thereon, and (2) the vast limestone deposit covered by mining leases issued under licence by the Federal Government of Nigeria (FGN).”
“The land on which the Obajana Cement Plant is built was acquired solely by Dangote Industries Limited (DIL) in 2003, well after it had acquired the shares in Obajana Cement Company in 2002, following the legally binding agreement it entered into with KSG to invest in Kogi State. DIL was issued three Certificates of Occupancy in its name after payment of necessary fees and compensation to landowners.
“The plant and machinery were conceived, designed, procured, built, and paid for solely by DIL, again, well after it acquired the shares in Obajana Cement Company. The limestone and other minerals used by the Obajana Cement Plant, by the provisions of the Nigerian Constitution belonged to the Federation, with authority only in the FGN and not the State in which the minerals are situated, to grant licences to extract and mine the resources”, the company explained.
“After the agreement with the KSG, DIL applied for and obtained mining leases over the said limestone from FGN, at its cost and has complied with the terms of the leases since inception. The Government of Kogi State had no minerals to give, had no assets to give, and only invited DIL as most responsible governments do to come into the State and invest in a manner that will create employment, develop the State, and earn it taxes.
“In 1992, the Kogi State Government incorporated Obajana Cement PLC (OCP) as a public limited liability company. Sometime in early 2002, about 10 years after the incorporation of the OCP (which still had no assets or operations as of that time), KSG invited Dangote Industries Limited (DIL) to take the opportunity of the significant limestone deposit in the State by establishing a cement plant in the State.
“Following several engagements and assessment of the viability of the proposed opportunity, DIL agreed that it would establish a cement plant in Kogi State and provide the entirety of the substantial capital required for the investment.
“DIL also agreed, following a specific request by KSG, to use the OCP name (albeit only existing on paper as of that time, and without any assets or operations) for the time being, as the vehicle for this investment. On 30 July 2002, KSG and DIL entered into a binding agreement to document their understanding. The agreement was amended in 2003 and remains binding on, and legally enforceable by, the parties to same.
”It was agreed, inter alia, that: DIL would establish a cement plant with a capacity of 3,500,000 metric tonnes per annum; DIL shall hold 100% of the shareholding in OCP, and source for all the funds required to develop the cement plant; KSG shall have the option to acquire 5% equity shareholding in OCP within 5 years; and KSG shall grant tax relief and exemption from levies and other charges by KSG for a period of seven (7) years from the date of commencement of production.
“Consistent with the terms of agreement, DIL sourced for 100% of the funds that was used to develop the plant without any contribution from KSG. In line with its rights, ensuring alignment with the Dangote Brand, as part of internal restructuring and for better market recognition the name of OCP was changed to Dangote Cement Plc in 2010, and a number of other significant cement companies (such as the Benue Cement Company) owned by DIL were merged with OCP to become the enlarged Dangote Cement Plc.
“DIL assiduously and at significant cost met all the terms of the agreement between it and KSG in relation to OCP. It built the cement factory, much bigger and better than envisaged.
“KSG could not meet its financial obligations of contributing to the funding the plant in any form; neither could KSG fund acquisition of 5% equity shares in OCP when it was asked on a number of occasions to exercise the purchase option.
“KSG also did not meet its obligations to grant waiver of taxes, charges and levies that it could charge the operations, affairs and activities of OCP. Rather despite being entitled (under the terms of the agreement with KSG) to tax relief and exemption from charges and levies by KSG for a period of seven (7) years from the date of commencement of production, OCP (and now DCP) has paid all due sub-sovereign taxes, levies and charges to KSG since it commenced production in 2007.
“KSG does not have any form of investment or equity stake in OCP, so no dividend or other economic and/or shareholding rights whatsoever could have accrued to it from the operations of the company.
“After the agreement between DIL and KSG in 2002, DIL in 2003, applied to KSG for the acquisition of land for the plant site, and this application was granted with the issuance of three Certificates of Occupancy to DIL. DIL to the knowledge of KSG, paid substantive compensation to Obajana Farmland Owners located within the two (2) square kilometres plant site.
“Subsequently, in September 2004, DIL, in good faith, applied to the State Governor for the statutory consent for DIL to assign the plant site to OCP being DIL’s investment vehicle. This consent request was granted by the State Governor and the appropriate consent fees were paid by DIL.
“The investment of DIL in Kogi State through OCP was at the instance of the duly constituted government of Kogi State, done in accordance with the law of the State and all enabling laws in that regard, and the transaction documents were effectively, lawfully and duly executed by the Governor and Attorney General of the State (at the time), after internal approvals were obtained within the government.
“Since the inception of Alhaji Yahaya Bello’s administration in 2016, and regardless that government is a continuum, we have had series of enquiries about the ownership structure of the Dangote Cement PLC as it relates to the alleged interest of KSG; and had several engagements with the officers of the State government including Governor Yahaya Bello. At all of these engagements we have provided all the details and information supported by relevant documents, required by the Government and the State House of Assembly to confirm our lawful investment.
“For instance, in 2017, we were invited by the Judicial Commission of Inquiry, and we made our submission to the commission with relevant documents to support our position. We are yet to receive any feedback from the Judicial Commission of Inquiry. While still waiting to hear of the report of the Inquiry, we were invited by the State House of Assembly on the same matter earlier this year, and again, we provided evidence in support of our position that KSG does not have any equity or other interest in OCP or DCP.
“On Wednesday 5 October 2022, hundreds of dangerously armed men, other than law enforcement officers, attacked our cement plant in Obajana, Kogi State, destroyed our property, inflicted grievous injuries on many of our employees, and shutdown operations at the plant. KSG has admitted that the armed invaders acted on its instructions, and in furtherance of the recent enquiry by the Kogi State House of Assembly in connection with the ownership of the Obajana Cement Plant.
“Curiously, on 6 October 2022, a day after the shutdown of our facility in Obajana on the orders of KSG, Governor Bello addressed the public and announced that a Specialised Technical Committee which was set up as part of the recommendations of the Judicial Commission of Inquiry had just presented its recommendations, which have been accepted by KSG. This statement makes it abundantly clear that the shutdown of DCP’s plant occurred regardless of the Governor’s own confirmation that implementation of the recommendations of the Specialised Technical Committee was still pending.
“Whilst we do not want to speculate on the motivation for the spurious claims being made by KSG in relation to the ownership of the Company, which have resulted in the unfortunate unlawful forcible closure and damage of our plant, and injury of several people, we condemn in strongest possible terms, the unlawful shutdown of our plant by KSG sponsored armed-thugs, the damage to our property (including the looting of large sum of money kept in the office), and grievous injury inflicted on our employees by them.
“This disruption of operations at the plant has caused loss of revenue not only to our company and its customers but has also adversely impacted revenue due to both the Federal and State governments. It has also occasioned loss of jobs for the teeming youths who are daily paid workers that throng our plant for their daily sustenance.
“We implore all our stakeholders, namely shareholders, customers, suppliers, employees, and the entire community of Obajana and Kogi State at large to remain calm while we follow the legitimate and lawful process to resolve this matter. We shall keep our stakeholders duly updated whilst we remain confident that the statutory and contractual rights of DIL shall be upheld by these legal processes which we have initiated.”
Dangote Cement Plc, a leading cement manufacturer, has donated multi-million Naira educational support projects to secondary schools in Lagos as part of its social investment initiatives.
The company in a statement explained that the move is aimed at complementing the government’s efforts in providing quality and sustainable education in the state.
It was gathered that the projects were commissioned and handed over to various schools in the Ikoyi-Obalende Local Council Development Area, align with the Sustainable Development Goals (SDGs) on education. These goals focus on ensuring inclusive, equitable, and quality education, as well as promoting lifelong learning opportunities for all.
The projects, warmly received by both teachers and students, include 100 dual school desks for Ilado Community Junior High School and Wahab Folawiyo Senior High School, alongside a refurbished and fully equipped Chemistry Laboratory at the Government Senior Secondary School, Ikoyi.
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Also donated were reading tables, chairs, and bookshelves for the library at Government Junior Secondary School, Ikoyi.
A celebration also took place at Falomo Junior High School and Ireti Senior Grammar School, both in Ikoyi, where the company donated 20 brand-new desktop computers to the ICT departments of the schools.
At the event at Government Junior College, Ikoyi, the Group Managing Director of Dangote Cement Plc, Arvind Pathak, explained that social investment is a key part of Dangote Cement’s operations.
He said the company is dedicated to giving back to society and supporting the sustainable development of local communities, especially in areas where it operates.
Pathak’s address was delivered by Wakeel Olayiwola, the Head of Social Performance at Dangote Cement Plc.
He said, “education holds a pivotal role in the development and empowerment of the youths in the country. As a cornerstone for societal advancement, it serves as a critical tool for personal growth, economic development, and national progress. An educated youth population not only fosters individual success but also contributes significantly to the nation’s overall wellbeing.
“At Dangote Cement, we believe that providing quality education to our youth is vital and should not be left solely as the government’s responsibility. Thus, we aim to partner with the government to enhance educational development in this regard.
“The projects we are handing over today are part of our 2024 Corporate Social Responsibility (CSR) programme for selected schools within the neighbourhood of Dangote Cement Plc’s Head Office in Ikoyi, Lagos. These projects were selected based on need assessments in collaboration with the schools.”
As a responsible corporate entity, Pathak noted that Dangote Cement’s commitment to societal wellbeing, with investments in four key areas: Education, Healthcare, Infrastructure, and Economic Empowerment programmes.
“This year, our plants in Ibese, Ogun State; Obajana, Kogi State; Gboko, Benue State; Okpella, Edo State; and our Pan-African operations have launched several social investment projects. These efforts contribute to the quality of life in our host communities and support sustainable national development,” he added.
Pathak thanked the Lagos State Government, the Tutor General/Permanent Secretary, and the school management teams for their collaboration in identifying the schools’ needs and ensuring the timely completion of the projects.
Dr. Idowu Olufunke Oyetola, Tutor General and Permanent Secretary of Education District 3, Lagos State Ministry of Education, who was represented by Bolaji Rotimi Ajayi, Director of School Administration, praised the long-standing partnership with Dangote Cement, noting that the schools selected for the donations were fortunate beneficiaries. “We hope for more collaborations that will positively impact education,” she added.
The principals of the recipient schools expressed their gratitude after the formal handover of the projects.
Odunlami Olubunmi, Principal of Ilado Community Junior High School, Ikoyi, thanked Dangote Cement for the new desks, stating that the donation would significantly improve the learning environment for the students, helping to prepare them for a brighter future.
Bamidele Ayotunde, Principal of the school with the refurbished laboratory, urged other businesses to follow Dangote Cement’s example in supporting local schools, pointing out the positive impact of the laboratory’s renovation on the school’s learning environment.
The Principal of Ireti Senior Grammar School, Ikoyi, whose school received the new desktop computers, described the donation as a positive development and expressed hope for more support in the future.
Pupils also shared their appreciation for the contributions. Abiola Jamaudeen, a lab prefect at Government Senior College, Ikoyi, promised that the laboratory would be used to its fullest potential and well-maintained.
Lawal Rumayzo Abdulsalam, a student at the school, said the new library equipment would foster better reading habits and create a more conducive environment for learning, ultimately preparing them for success. Some students even performed special songs to welcome the Dangote team to their schools.
Osun State Governor, Senator Ademola Adeleke has celebrated the local content achievements of his administration, claiming it has transformed the state’s economy and strengthened local businesses.
The Governor, represented by his Deputy, Prince Kola Adewusi, made this declaration at the 2024 Trade Fair of the Osun State Chamber of Commerce and Industry held at the Trade Fair Complex, Osogbo.
This year’s fair is themed “Developing Osun Local Content Value Chain for Shared Prosperity”.
Gov Adeleke, reviewing his records on local content in the last two years, expressed pride to announce that his administration had set an unrivaled record in the promotion and commitment to local content development.
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According to Gov Adeleke, “our major infrastructural projects are being handled by local contractors. We are building up our indigenous companies to handle major jobs outside the state. Our local engineers are fully engaged in all facets of the construction processes. Our supply chain feeding the construction processes is also locally focussed and sourced.
“As local content is a tool for economic development, our multi billion naira infra plan has a focus beyond Osun money revolving within the Osun economy. We seek to stop capital flights, thereby ensuring a financially vibrant local economy that contributes to the fight against poverty and underdevelopment.
“Beyond a solvent grassroots economy, our policy ensures skill transfer. Local workers are empowered with requisite skills which they subsequently deploy as skilled service providers. We are building a pool of skilled citizens across all sectors.
“Additionally, our local content agenda is a strategy for employment creation. By adopting direct labour in many project executions, we provide jobs for the artisans and the unemployed. Osun is indeed a huge construction site with increasing job opportunities for the unemployed.
“Local content as a state strategy also drives our focus on infra growth and development. We are eager to bridge the infrastructure deficit to enhance trade and investment. We have recorded huge progress in that respect.
“Our administration is also removing possible bottlenecks in business operations in Osun state. The processing of Certificates of Occupancy is now within a 45-day window. This is billed to enhance business capacity to attract financial transactions and support within the business ecosystem.
“The era of multiple taxation is coming to an end as Osun state has now introduced a harmonized tax system. Our tax agency has become truly business friendly.
“To facilitate investment, we revive and strengthen the Osun State Investment Promotion Agency (OSIPA). The agency puts under one roof all regulatory and certification agencies of the Government.
“To accelerate the pace of industrialization, we revive the Free Trade Zone to provide over one million direct and indirect jobs for the people. We establish Markets with modern facilities, set up farm produce aggregation centres, and put life into moribund industries among others.
“The State Government recently hosted an Industrial Investment Summit. The event attracted local and international investors. While the current industrial policy is being vigorously implemented, we plan to review the policy to accommodate new realities occasioned by modern innovations and Artificial Intelligence.”
While restating his administration’s readiness to partner with the organized private sector, Gov Adeleke urged the business chamber to expand its scope, calling on the business leaders to reach out within and outside Nigeria for the development of businesses in Osun state.
“As the voice of Osun business, you are not a government agency. You represent the private sector. Your task is to expand your scope and mobilize businesses to grow as an umbrella body. I task you to interact with all sectors of the state economy. You have a duty to shake off bureaucratic burden and truly act like a private sector body”, the Governor charged the chamber.
The Commissioner for Commerce and Industry, Rev Bunmi Jenyo listed out several programmes and policies of the state government designed to support growth and development of businesses in Osun state, declaring that Osun is open for business.
According to the Commissioner, the recent industrial investment summit showcased the huge potentials of the state and expressed delight at the huge number of investors who showed up and expressed interest to tap into the investment potentials of Osun State.
President Bola Ahmed Tinubu has approached the National Assembly for approval of a fresh external borrowing plan totaling ₦1.767 trillion.
The loan, if approved, will help finance the ₦9.7 trillion deficit in the 2024 budget.
The request was presented during Tuesday’s plenary by the Speaker of the House of Representatives.
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Alongside the loan request, the president also submitted the Medium-Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) for 2025–2027.
Additionally, Tinubu proposed amendments to the National Social Investment Programme (NSIP) establishment bill, aiming to make the national social register the central tool for delivering federal welfare programs.
Debt Servicing Costs Skyrocket in 2024
Nigeria’s rising debt obligations have been brought into sharp focus with new data from the Central Bank of Nigeria (CBN).
The country spent $3.58 billion servicing foreign debt in the first nine months of 2024, marking a 39.77% increase from the $2.56 billion recorded during the same period in 2023.
May 2024 saw the highest monthly debt servicing payment at $854.37 million, a staggering 286.52% increase compared to May 2023.
The surge in debt servicing costs reflects a sharp depreciation of the naira, which weakened from ₦899.39/$1 in December 2023 to ₦1,470.19/$1 by June 2024.
Experts warn that the rising exchange rate and escalating international debt obligations place significant pressure on Nigeria’s fiscal sustainability.
State Debts Climb to ₦11.47tn by Mid-2024
The debt profiles of Nigeria’s 36 states and the Federal Capital Territory (FCT) have continued to rise, reaching ₦11.47 trillion as of June 30, 2024.
This marks a 14.57% increase from ₦10.01 trillion in December 2023, according to data from the Debt Management Office (DMO).
External debt for states and the FCT climbed from $4.61 billion to $4.89 billion during this period.
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However, domestic debt decreased from ₦5.86 trillion to ₦4.27 trillion. Lagos State remained the most indebted in foreign currency terms, holding 26.9% of the total external debt, valued at $1.24 billion.
In naira terms, state debts rose by 73.46%, reflecting the impact of the naira’s devaluation on repayment obligations.
States Overly Dependent on Federal Allocations
A BudgIT report on fiscal sustainability has revealed that 32 out of 36 states relied on Federation Account Allocation Committee (FAAC) transfers for at least 55% of their revenue in 2023.
Fourteen states were even more dependent, deriving over 70% of their revenue from FAAC allocations.
FAAC disbursements increased by 33.19% in 2023, reaching ₦5.4 trillion, contributing significantly to the total combined state revenue of ₦8.66 trillion for the year.
However, analysts have raised concerns over this heavy dependence on oil-driven federal allocations, warning of the financial risks posed by crude oil price shocks.
Lagos and Ogun States were exceptions, generating significant revenue internally and relying less on federal transfers.
Economic Implications
The federal and state governments’ growing reliance on borrowing and federal allocations signals deep fiscal challenges.
Analysts caution that President Tinubu’s proposed borrowing plan, combined with rising debt servicing costs and exchange rate pressures, may exacerbate Nigeria’s economic vulnerability.
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