AFRICA, Nigeria: Nigercem: Time To Roar Factory Engines

Nigercem: Time To Roar Factory Engines To Life Again

IN THE HEAT OF THE CONTROVERSY STALLING THE COMMENCEMENT OF PRODUCTION AT THE NIGERIAN CEMENT COMPANY PLC BASED IN EBONYI STATE COMES THE WARNING THAT THE CONTINUED CLOSURE OF THE CEMENT FACTORY MAY ROB THE STATE ADDITIONAL REVENUE IN TERMS OF TAXES AND DIVIDEND WHICH WILL WORSEN ITS CURRENT FINANCIAL SITUATION. THE STANDOFF WILL ALSO CONTINUE TO DENY THOUSANDS OF JOB SEEKERS PLACEMENT IN WHAT WOULD HAVE BEEN A JOB-SPINNING INDUSTRY, REPORTS FESTUS AKANBI

As Nigeria continues to flaunt its economic potentials to other members of the international community in a bid to attract foreign investors, economic affairs commentators have warned that unless conscious efforts are put in place to defend the sanctity of the previous investment decisions undertaken by the successive administrations, various road shows put in place to attract new investors will amount to playing to the gallery.

For instance, it is argued that as important as the various attempts being put in place to assure foreign investors of the readiness of the Nigerian government to offer some of the public enterprises for sale for better management, it will be difficult for the country to secure the commitment of the kind of investors needed to make the desired difference unless previous arrangements are tidied up.

For obvious reasons, privatisation in Nigeria has not been a popular reform. It has received so much criticism from labour, academia, and individuals. There have been numerous strikes against proposed sell-offs by unions fearing loss of jobs. While proponents of privatisation see that aspect of economic reform as an instrument of efficient resource management for rapid economic development and poverty reduction, some indigenes of the host communities often fear the loss of what they regarded as their share of the federal government assets. The ensuing controversies often stall the take off the projects, a development which is said to have forced some foreign investors to lose enthusiasm in Nigerian projects.

That is the scenario playing out in Ebonyi where the state government is locked in a protracted ownership crisis over the Nigerian Cement Company Plc (Nigercem).

It would be recalled that at a point, the federal government formulated a policy of gradually phasing out of cement importation. Consequent upon this, licences were granted for Greenfield plants while moribund cement plants were sold to investors that would redevelop them. It was this arrangement that placed Edo Cement Company Okpila in the hands of Bua Cement; Eastern Bulkcem took over Nigercem Nkalagu while Dangote group bought Benue Cement Company Gboko.

The federal government’s privatisation agenda especially in the cement industry appeared to be on course as Bua and Dangote group were able to turn around Edo Cement and BCC Gboko respectively. Dangote went ahead to develop two other green field plants at Obajana in Kogi State and Ibeshe in Ogun State as well as in other African countries like Zambia, Senegal etc. Curiously, Dangote avoided the South-east in the siting of his plants.

Frustrated by the failure of Bulkcem to meet its own part of the bargain, the state government was said to have resorted to extra-judicial means by shutting down the plant, revoking Nigercem’s certificate of occupancy and set up a Judicial Commission of Inquiry to investigate the state of affairs in the company.

Sanctity of Privatisation

However, with the crisis rocking the privatisation of The Nigerian Cement Company Plc (Nigercem), economic watchers said there is need for the federal government to defend the sanctity of its privatisation programme in order to restore confidence in investors and to give a lift to the economy of the state where the company is sited.

Today, Ebonyi State government is calling for a review of the privatisation process as it seeks the control of a greater chunk of the company’s shares, a move being contested by the new majority shareholders of the company, Ibeto Cement Company Limited.

The current wave of crisis was triggered off by a controversial advertorial signed by eight members of the National Assembly from Ebonyi State where issues bordering on the ownership of the embattled cement firm were raised. The advertorial, which justified the closure of the factory by the state government, also questioned the existing shareholding structure of the company.

The Posers

However, in a dramatic twist, another member of the National Assembly from the state, Peter Edeh, representing Ezza North/Ishielu Federal Constituency of the state dissociated himself from the current offensive against Ibeto Cement company.

According to Edeh, “if the Ebonyi State government were to successfully oust the Ibeto Group from Nigercem, what would be the implication for other investors including those in oil/gas industry in other parts of the country? Could the governors of Rivers, Bayelsa, and Akwa Ibom etc ask the oil majors to surrender their drilling sites and/or investments?”

Watchers of the unfolding scenario had expected a cessation of hostility on the part of the state with the coming on board of a new investor –Ibeto Cement Company Limited. Unfortunately, the controversy is yet to abate. THISDAY gathered that since Ibeto Cement Company Ltd acquired majority shares in Nigercem through its acquisition of Eastern Bulkcem Co. Ltd., none of its officials have been allowed entry into Nigercem premises.

An advertorial signed by Executive Director (Strategy, Projects and Public Affairs)Ibeto Cement Company Limited, Dr. Ben U. C. Aghazu explained that the Ebonyi State Government recognises the acquisition of Eastern Bulkcem by Ibeto Cement and the resulting restructuring of the board of Nigercem to reflect the new reality.

He explained that “The Ebonyi State Government nominated its representative to this new board. The Ebonyi State government also requested the issuance of its share certificate from this new board. The board complied by promptly delivering to the state government the share certificate duly signed by the new Chairman of Nigercem, Dr. Cletus M. Ibeto, and the new Company Secretary, Messsrs Udeh and Associates.”

Paying the Price

Some wondered whether Ebonyi which was listed among the seven highly indebted states could risk the bad publicity which the current standoff on Nigercem is generating.

Edeh believed the continued closure of the cement factory is robbing the state potential revenue capable of improving its financial position. He asked, “Who does the present stand-off which has prevented Nigercem from returning to production benefit? In a state with the highest unemployment rate, lowest IGR profile, and a generally falling economy, shouldn’t the revival of the only major factory be a noble goal for everyone to pursue?”

On the allegation that the government took over the factory because of stealing and fraud in the company, the management of Ibeto said if in fact there was fraud and exploitation going on at Nigercem under the management of the old Eastern Bulkcem, it was not only against the people of Ebonyi State; it must also be against over 28 thousand other Nigerians and organisations who are minority shareholders.

“The Companies and Allied Matters Act makes ample provision for the protection of minority shareholders against exploitation by the majority. If the Ebonyi State Government believed in the rule of law, it should have sought protection under the law and not resort to self-help by setting up a Judicial Commission of Inquiry and physically taking control of the factory, simply because it was located on its territory. Owing to the fact that Ebonyi State is part of the Federal Republic of Nigeria, the laws of the Federation must apply within its territory.

Owing to its inability to access the cement factory and the revocation of its certificate of occupancy, Eastern Bulkcem sued the Ebonyi State Government and obtained a ruling from the federal high court declaring the judicial commission set up by the state as illegal. The same court however ruled that Nigercem, as a party to the suit, which had prayed to have the revocation of its certificate of occupancy nullified, could only be determined by a court of jurisdiction on land matters; in other words, the state high court.

This was the sorry state of affairs at the plant when Ibeto Cement Company Limited in 2012 acquired Eastern Bulkcem. With the change of ownership, Ibeto Cement now controls 60 per cent of the shares in Nigercem, Ebonyi State Government, 10 per cent, while the public comprising institutions such as NICON Insurance Plc and the public own 30 per cent. But despite all efforts by the new owners – Ibeto Cement – to take possession of the plant and recover the certificate of occupancy, the state government has remained adamant and rejected all entreaties to reach an out of court settlement on the issue.

State Government’s Response

Chief Press Secretary to Ebonyi Governor, Dr. Onyekachi Eni, in a response to THISDAY enquiries last week, insisted  that the Ibeto Group has waged  sustained public attacks on the person of the Governor of Ebonyi State Chief Martin Elechi and the state government. “Ebonyi State Government wants Ibeto Group to handsoff Nigercem which it acquired through the back door. Ibeto Group treats Ebonyi people with contempt and believes that it can take over Nigercem by simply bribing some villagers and ignoring the state goverment which is incidentally a strategic equity holder in Nigercem. Ibeto Group is not interested in revamping Nigercem but it is desperate to acquire the company in order to ensure the renewal of its import licence by the federal government for cement becos its current licence will expire by 2017. Ebonyi State Governmentt is determined to assert is right over Nigercem.

“Going by the antecedents of Ibeto Group, it does not like to do business with anybody in line with due process. It prefers to operate through the backdoor. Apart from its current attempt to fraudulently acquire Nigercem, the Company had earlier created problems in two other communities in Ebonyi State where limestone is found in commercial quantities: Azuinyaba and Effium in Ishielu and Ohaukwu LGAs respectively. At those places, Ibeto played some villagers against others leading to violence and communal strife. The Company was later chased out of the communities by the locals. From our experience, Ibeto Group is a serial trouble maker which instigates strife as a means of acquiring people’s resources. It wants to repeat its usual tricks at Nigercem.”