Functional smelter, steel plants to reduce FX pressure
The availability of functional petrochemical plants in Nigeria, the resolution of crisis surrounding Aluminium Smelter Company of Nigeria (ALSCON) and the resuscitation of the Ajaokuta Steel Complex will provide major inputs needed by factories and thus reduce pressure on the foreign exchange market from manufacturers, say industry stakeholders.
Nigerian manufacturers are hurt by foreign exchange scarcity because many of their inputs are not locally available in the right state and quantity and need to be imported.
A petrochemical plant produces and supplies essential inputs such as excipients, ammonia, hydrosol, polyethylene and packaging materials to manufacturers of drugs, chemicals, paints and plastics. Nigeria currently has a petrochemical plant known as Indorama Eleme Petrochemicals Limited, located in Port Harcourt, but needs more to meet the needs of the industrial community.
Aluminium Smelter Company of Nigeria (ALSCON), from where aluminium producers get ingots locally, is under lock and key, owing to the legal tussle between Bancorp Financial Investment Group Divino Corporation (BFIG), a consortium of U.S.-based Nigerian investors led by Reuben Jaja, and the United Company RUSAL, a Russian firm.
The Ajaokuta Steel Complex is yet to be privatised, which is one key complaint of companies interested in local vehicle manufacture as well as several steel firms that are consistently chasing FX to import some of their inputs that are in the CBN Prohibited List or not locally available.
According to Frank Udemba Jacobs, president, Manufacturers Association of Nigeria (MAN), over 85 percent of manufacturing equipment are developed from iron and steel industry, adding that over $5 billion had been sunk the Ajaokuta Complex without results.
Ajaokuta Complex has the capacity to produce one million metric tonnes of steel, one million metric tonnes of coal , manganese and limestone, among others. However, the Federal Government is yet to find a concessionaire.
Africa’s richest man Aliko Dangote has set aside $9 billion for the construction of a petrochemical plant, which is expected to come on stream in 2018. This is expected to support paint makers that are hard hit by FX shortage needed to import inputs.
“A greater portion of the paint industry high value raw materials comes from petrochemical industry,” said Rotimi Aluko, chairman, Paint Manufacturers Association of Nigeria in Lagos.
“The second phase of the petrochemical industry that is supposed to produce about 40 per cent of the raw materials needs of the paints industry is yet to be completed three decades after it was started,” Aluko said.
Oluyinka Kufile, chairman, Basic Metal, Iron and Steel Group of the Manufacturers Association of Nigeria (MAN), and chairman, Qualitec Industries Limited, had earlier said that lack of a smelter plant is frustrating aluminium producers and is preventing them from getting ingots, a basic raw material, locally.
“We need a resolution of this problem. Aluminium Smelter Company needs to be re-started so that we can get ingots for local roofing sheets manufacturers,” Kufile told BusinessDay earlier in an interview.
ODINAKA ANUDU