Obajana cement factory impasse: Dangote opens up

Following its current impasse with the Kogi State government, the Dangote Group released a press statement explaining its position regarding the disputed Obajana cement factory.

The company held that it had become very important to explain its side of the story following damaging statements and physical attacks from the state government.

The statement issued by the management of Dangote Industries Limited titled ‘Obajana Cement Plant: Separating Facts from Fiction’, reads:

The conglomerate asserted that the Kogi State government has no equity interest in Obajana Cement Plc. It also stated that the company as a responsible corporate organisation has been paying relevant State taxes, levies and charges to the Kogi State government since 2007 when production commenced in the acquired cement plant.

According to the group, the statement was 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.

“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 company added.

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The company clarified that the land on which Obajana Cement Plant is built was solely acquired by Dangote Industries Limited (DIL) in 2003. “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”, the statement added.

On the issue of an Agreement between Dangote and Kogi State Government, the statement gave a summary. It noted that “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.”

On the issues of ‘Execution of the Agreement: The Plant, Taxes, Shares & Dividends’, the statement noted, “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.

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“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 for 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.

Shedding more light on the company’s engagement with Kogi State Government, the statement explained that, “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.