They want to push out competition: BUA
A battle for the soul of Nigerian sugar industry has broken out among giants in the industry.
The war was this time sparked Dangote’s decision to petition the Federal Government asking the Ministry of Trade to shut down BUA Group’s Sugar Refinery located in Port Harcourt.
In the letter jointly written with John Coumantaros of Flour Mills Nigeria Plc, Aliko Dangote of Dangote Industries Limited, reported what it called key developments in the Nigeria Sugar Industry to the Minister of Industry Trade and Investment, Niyi Adebayo.
The two giants in the indsustry in the letter dated January 28, 2021, pointed out how BUA’s new sugar refinery in Port Harcourt might lead to a spike above the import quota as stipulated in the National Sugar Master Plan (NSMP), and how BUA’s investment in the sugar industry via the new refinery wasnon-compliant to the undertakings under its Backward Integration Programme, in line with local production.
DSR in the letter also stressed that BUA’s Sugar refinery in the Free Trade Zone in Port Harcourt, may circumvent the National Sugar Master Plan’s (NSMP) framework and jeopardize its objectives by taking advantage of the location of its Port-Harcourt Refinery in the Free Trade Zone.
In the letter, signed by Aliko Dangote himself as the Chairman Dangote Industries Limited, the Dangote claimed that when the BUA Sugar refinery was opened, he warned the Government and they told him that no new refinery would be allowed to operate in Nigeria’.
Dangote accused BUA of operating with impunity by contravening the laws as laid down in the National sugar policy by selling its products locally instead of producing for export alone.
But BUA Sugar Refinery sees the action of the duo in another light. The company’s deduction from the action of the Dangote Group is that DSR is conniving with Flour Mills of Nigeria to push out competition in the Sugar industry and create a situation of perfect monopoly for themselves.
Put succinctly, BUA Sugar Refinery said the allegations made against it to the Minister of Trade and Investment by DSR and FMN were born out of the desire to create sugar scarcity and drive up the price of sugar by weeding out competition in the sugar industry.
BUA in its defence sent to the Honourable Minister of Trade however contended that the law allows it to sell inside Nigeria.
Attaching the enabling permits and approval BUA stated that because of the connivance of the two major sugar manufacturers to hike the price of Sugar during the Ramadan period, the law allows it to sell locally.
BUA also warned that the DANGOTE group and the other major player have not been involved in any backward integration project, rather they depend on 80% raw sugar allocation which is detrimental to the Nigerian economy in long-term analysis. BUA on the other hand has been involved in a backward integration project with BUA’s Lafiagi Sugar BIP set to be completed in 2022.
Over $250million is believed to have been spent on the export-focused BUA sugar refinery already and it is also employing over 1,000 Nigerians.
BUA, according to reports, also noted that at the center of this fight to force FG to close the BUA Sugar refinery down is the price war.
According to the reports, BUA is contending that before Ramadan last year, the sugar sold for around 18,000 Naira per bag. But as Ramadan fasting started the price jumped to 30,000 per bag. The people had no choice but to buy it because they needed a lot of it during the period. So the manufacturers were smiling at the bank. BUA group noticed the trend and decided that it had to change. There was no reason to increase the price during Ramadan simply because the demand is high.
