Nigerian fertilizer factory to be revived, faces many challenges

During the oil boom days, the then military government conceived the idea of a Green Revolution. One of the planks of that policy was the setting up of a viable fertiliser company in Nigeria to produce urea, the most important nitrogen fertiliser globally and the product of choice in the sub-region. The Green Revolution was orchestrated in the pages of newspapers, TV tubs, radio jingles and then faded away.

The National Fertiliser Company of Nigeria (NAFCON) which was set up to feed the policy wobbled, fumbled and eventually like many of its kind in Nigeria, became a failed project. It accumulated huge debts and the government under liquidated its privatisation programme and sold its carcass to a group of investors. Not willing to be bugged with the past, the enterprise has been re branded with the name Notore.

Notore took the financial sector by storm when it presented a financial proposal to some Nigerian banks. Taking its place in the queue to liberate the Nigerian economy and people from the vicissitude of poverty and launch Nigeria into the league of 20 industrialised nations in the world by the year 2020, Notore Chemical Industries, an integrated fertiliser-producing company signed a $222 million syndicated credit facility agreement with 12 financial institutions in Nigeria.

The financial institutions involved in the deal include Union Bank,United Bank for Africa, Oceanic Bank, Afribank, Access Bank, and Ecobank . Others are FCMB, FBN Capital, First Securities Discount Houses, UBA Capital Market and Express Discount.

The managing director of Notore, Jite Okoloko, said that the company which bought over the assets of the NAFCON, located in Rivers State, is owned by a core team of seasoned businessmen committed to helping Nigeria and the African continent become self-reliant in food production. He said it is planned to produce 1,100 tonnes per day of ammonia and 1,723 tonnes per day of urea in the first year of operation, providing enough fertiliser for Nigerians and much more for export. The enterprise will earn and save Nigeria foreign as well provide employment to thousands, he said.

“The company’s five-year strategic plan includes the development of two further trains of fertiliser production facilities bringing Notore’s total capacity to about 6,500 tonnes per day. Notore is therefore positioned to become the major supplier of fertiliser in Africa and to champion the African cause on food security,” Okoloko said.

"The demand for fertiliser in Nigeria and in Africa is huge and agriculture is taking off in Nigeria in a rapid way. So if we work together to lift agriculture high through Notore, I believe we will all share in reaping the benefits of the dividends," said the CEO of Oceanic Bank, Cecelia Ibru. The potential Nigeria fertilizer market size is estimated at 2.5/3 m MT per annum while current supply is put at 550,000 MT per annum.

Nigeria ranks among the lowest users of fertilisers in the world, with a rate of 10kg/ha compared to the FAO recommendation of 200kg/ha. One of the reasons for this low fertiliser usage is said to be the non-availability of the product and past governments' involvement in the industry. Agriculture accounts for 40 per cent of Nigeria’s GDP and it engages more than 70 per cent of the labour force. If by coming into operation Notore can unleash the potential of agriculture in the economy, it will revive ailing industries through the provision of raw materials for agro-allied industries. The Notore initiative is therefore of strategic importance in supporting the transition from subsistence farming to a sophisticated agro-based economy and serve as a catalyst in revolutionising the entire agricultural sector.

Okoloko believes that for Nigeria to move its agriculture forward, it must adopt the use of fertiliser in order to improve currently very low farm yields. According to him, 50 per cent of incremental crop output globally in the last five decades is attributable to fertiliser usage. Nigerian farmers have traditionally applied only a tenth of the amount of fertiliser used by farmers in other parts of the world, limiting output. As a result of the non-availability of the product and the general lack of education on the usefulness of fertilisers, Nigeria ranks among the lowest users in the world.

Sadly, in a country with abounding natural resources, oil still accounts for 80 per cent of government revenue and yet only contributes 10 per cent to GDP. Agriculture which contributes 40 per cent of GDP provides employment to 60 per cent of Nigerians. It is the realisation of the need to change the situation that led to Nigeria hosting the Africa Fertiliser Summit in June 2006 which was chaired by president Olusegun Obasanjo with 25 African heads of state in attendance.

Nigeria has an abundance of natural gas with proven gas reserves of 180 trillion cubit feet, representing about 30 per cent of the total gas reserves for Africa. Gas is the major raw material for fertiliser production; in this respect, the company is assured of a regular supply of raw materials. the company has finalised a 20-year gas contract with NGC.

But Notore has several challenges to contend with. First and foremost, it must ensure that every regional government in the country buys into the scheme, ensuring a ready market for its product in the first few years as federal, state and local government are the major buyers of fertilizer.

Most Nigerians depended in the past on government subsidised supplies as local farmers can hardly pay the market value for fertiliser. Notore in its bid to pay off the huge loans it took to revive the moribund NAFCON may be tempted to set high prices for its products. Some farmers are so poor that asking them to buy fertilizer market prices will not yield the desired result. Notore's survival in this respect will depend on its entry price to the market.

The second challenge that Notore must be ready to face is regular gas supply. With increasing militancy in the Niger-Delta, Notore must cultivate the friendship of the local communities to ensure security of its personnel, raw material sources and installation. It must have an excellent community relations unit.

Education of the farmers across the country is yet another challenge facing the young company. Many of those left in Nigeria farms today are the oldies, the less educated and too poor to want to learn new ways. They have stuck to subsistence farming too long to change. Notore must invest in education and training of farmers, extension farm workers and experimental farms to be able to make any impact in a short time.

The Vanguard