Apapa gridlock forces Dangote’s firm to move operations

A subsidiary of Dangote Industries Limited, NASCON Allied Industries Plc, said it had shifted some of its operations away from Apapa to Oregun and Port Harcourt, in response to the gridlock in Apapa.

The company is a refiner and distributor of household, food processing and industrial salt, with an installed production capacity of 567,000 metric tonnes per annum.

The Managing Director, NASCON, Paul Farrer, described the Apapa gridlock as one of the key risks in the company’s business last year.

He said the Apapa gridlock affected the movement of raw materials to Oregun , timely delivery of finished goods to customers and increased turn-around time of the company’s trucks.

“We relocated 60 per cent of our Apapa Plant production capacity to our Oregun and Port Harcourt Plants to reduce the effects of the gridlock. We also engaged third-party transporters to ensure timely delivery of our finished goods,” Farrer told shareholders at the company’s Annual General Meeting in Lagos on Thursday.

The Apapa refinery, located in the Apapa port of Lagos, was inaugurated in 2001 with an installed capacity of 275,000MT per annum, the company said in its 2018 annual report.

The Port Harcourt refinery was inaugurated in 2003 with an installed capacity of 210,000MT per annum, while the Oregun plant was inaugurated in 2004 with an installed capacity to refine 82,000MT of salt per annum.

Farrer said the increase in global oil prices led to increased global freight prices and diesel costs, which increased the company’s cost of production.

The company’s plants are primarily powered through the national grid with generators fuelled by gas or diesel, with a combined capacity to generate 6.1 megawatts of power, according to the annual report.

“The porous borders allowed the proliferation of substandard seasoning products into the market,” Farrer added.

The company’s Chief Financial Officer, Aderemi Saka, in her review of 2018, said the 2015 foreign exchange policy of the Central Bank of Nigeria continued to stall the importation of the necessary raw materials for both tomato paste and vegetable oil.

“We continue to remain focused on sourcing both raw materials locally. Towards the end of 2018, we started acquiring crude palm oil, which will be produced and sold in 2019,” she added.

In June 2015, the CBN announced that it had excluded importers of some 41 items, including tomato paste and vegetable oil, from accessing forex at the Nigerian forex markets in order to encourage local production of the items. Punch