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Indorama’s investment in Eleme Petrochem to hit $4.2b – BPE (August 1st, 2016)

THE NATION Newspaper, Nigeria

Indorama Group, the core investor in the Eleme Petrochemicals is to increase its investment in the firm from $2 billion to $4.2billion. This was contained in a statement by the spokesman of the Bureau of Public Enterprises (BPE), Alex Okoh. The BPE also said the sale of Eleme Petrochemicals to Indorama followed due process, with the nod of the National Council on Privatisation (NCP).

Okoh quoted the BPE’s Acting Director-General, Dr. Vincent Onome Akpotaire, as saying this at the Investigative Hearing on the Privatisation Process and performance of Eleme Petrochemicals by the House of Representatives Committee on Privatisation.

Akpotaire, who was represented by the Director, Mines & Steel Development Department, Mallam Abdullahi Muhammad Dikko, described the transaction as one of the success stories of the Federal Government’s privatisation programme in terms of compliance to the executed Share Purchase Agreement (SPA)/Post Acquisition Plan (PAP), contribution to the Gross Domestic Product (GDP) and the creation of employment in the country.

He noted that four firms were pre-qualified for the bidding at the close of the deadline in May 2005 for the submission of Expression of Interests (EOIs), upon which after evaluation, only Dangote Chemicals Co. Consortium, Indorama Group and LG Chem were shortlisted.

He said LG Chem pulled out on the grounds that it intended to participate as an Operations and Management (O & M) contractor and not to acquire controlling interest in EPCL, which left the contest between Dangote Company Consortium and Indorama Group and, in the end, the latter won at the cost of $225 million from the earlier $215,088,888 it bidded, with a commitment to invest $150 million to be sourced from the International Finance Corporation (IFC) to revamp the company’s plants and facilities.

The BPE chief said because of the impressive performance and compliance of the Core Investor to the obligations in the Post-Acquisition Plan (PAP)/Shares Sale Purchase Agreement (SSPA) signed with the government, the National Council on Privatisation (NCP), at its meeting on December 18, 2014, approved the ‘discharge’ of the company from the five-year monitoring programme of BPE.

Consequently, the company would no longer be monitored as provided for in part b of section 8.4 of the SSPA except for occasional performance assessment purpose (s), he added.

He listed the success story of Eleme Petrochemicals as “Implementing world largest single train Urea plant of 1.5 million tons capacity along with associated infrastructure with total investment of $1.4 billion, making total hit $4.2 billion by 2020; high-quality products, excellent public-private partnership, high corporate social responsibility and community development; and staff of 5300 as at February 29, this year.

According to him, in 11 years after take over, the company has recorded many milestones in its vision of building Africa’s largest petrochemicals hub in Nigeria as it operates at over 100 per cent capacity, meeting the need of the plastics industry, which uses polymer resins as its raw materials, adding surplus supplies are exported to about 20 countries in Europe, Asia, US and parts of Africa.

The Bureau’s Post-Privatisation Monitoring (PPM) Director, Mr. Chigbo Anichebe, listed the achievements of the new investor as investment of $470 million or 75 per cent EPCL equity; having one of the highest Foreign Direct Investment (FDI) in the downstream non-oil & gas sector till date; conversion of dead assets through world-class technical support and commitment to expansion; and to build the largest petrochemicals in Nigeria, among others.