NIGERIA – The Dangote Sugar Refinery (DSR) Plc has put a stop to its Backward Integration Project (BIP) in Niger State which was undertaken in collaboration with the state government, due to land acquisition dispute.
The joint venture, Dangote Niger Sugar Limited is one of the BIP’s established by the leading sugar miller, alongside Savannah Sugar Company in Numan Adamawa State, Tau Sugar Project in Taraba State and Tunga Sugar Project in Nasarawa State.
The initiative is a 10-year sugar development plan aimed to produce 1.5 million metric tonnes per annum of sugar from locally grown sugarcane.
However, the company has made the decision to wind up its operations in Niger state in a bid to cut down on deadweight cost, coming from restrained relation with its host community which had started accumulating negative returns for the integrated sugar business, reports Naira Metrics.
“Regrettably, due to community dispute over the land acquired in Niger State, projected activities have not commenced in Niger State. This had been a stretched situation that had started accumulating negative returns.
“In view of this, the Board of Directors took a decisive decision to wind-up the BIP Company in Niger State,” indicated Dangote Sugar Refinery.
The Dangote Niger Sugar Limited with a 12,000-tonne mill located on a 16,000ha land near Mambe, Lavun LGA of Niger State, had an estimated set-up cost of US$450million, according to Nairametrics.
The project was kick-started prior to the company’s merger with sister company Savannah Sugar which added 50,000 tonnes per annum of sugar milling capacity to its 1.44 million metric tonnes per year.
Its operational activities aside from sugar production include, the distribution of refined white sugar to consumers and industrial customers in the country, and also the exportation of its products to other West African countries.
In 2020, Dangote Sugar delivered an impressive financial performance, with the company’s revenue soaring 33% to N214.30bn (US$562.39m) from N161.09bn (US$422.75m) in 2019.
The sugar milling giant attributes the rise in earnings to an increase of 6.9% in sales volume from previous year’s 684,487 tonnes to 731,701 tonnes.
Despite the disruptions to the economy, owning majorly to coronavirus pandemic, it recorded an increase of 13.7 per cent in production volume to 743,858 tonnes from 654,071 tonnes in 2019.
However, earnings were limited by a spike in the cost of sales by 31 per cent from N122.801 billion (US$322.27m) to N160.552 billion (US$421.3m) the same way a 112 per cent leap in taxation, on the account of carrying forward deferred tax, also capped gains.
Overall, it posted a profit after tax of N29.78 billion (US$78m) in 2020, compared to N22.36 billion (US$58.6m) in 2019.
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