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Dangote’s Tomato Factory Resumes Operation

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tomato paste
  • Dangote’s Tomato Factory Resumes Operation

Dangote Tomato Processing Plant has resumed operation after suspending production two years ago due to lack of supplies.

The plant was shut down in 2017 because of invasion of tomato pest called tomato absoluta that reportedly originated from South America.

The factory with a production capacity of 1200 metric tonnes per day and can produce 400,000 tonnes of tomato paste per year, signed an agreement with 8000 farmers to supply tomatoes at $700 a ton, twice the local price as at the time.

But the farmers quickly dumped the agreement after tomato absoluta attacked their farms and damaged tomatoes.

Lack of raw tomatoes forced Dangote to close down the plant in 2017. Barely a year after it opened.

Speaking during the official reopening of the factory on Wednesday in Kano, Abdulkarim Kaita, the Managing Director of the factory lamented that smugglers are still stmuggling imported tomato paste into the country despite government ban to encourage local production.

“Our major challenge is the importation of tomato paste. The federal government has banned the importation of tomato paste but the federal government did not enforce the ban, that is why we still see the commodity making its way into our markets. This means it is being smuggled into the country.

“Therefore, I call on the federal government to enforce the ban and ensure that the product is not smuggled into the country anymore. This would save the government billions of naira and improve local industries like ours, as well as improve the income of local farmers.

“That is why we called on the government to enforce the ban on the importation of tomato paste and its smuggling like it did on rice, ” he stressed.

The MD later revealed that the factory would now be producing 100 tonnes a day, down from the 1,200 tonnes it started with. This, he attributed to the scarcity of the commodity. Suggesting that the management may have been forced to commence operation regardless of the volume of production to reduce the cost of maintenance of the idle factory.

Kaita, however, was optimistic that the production would improve going forward, adding that they just reached another agreement with local farmers with a pegged market price per ton.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

Nigeria’s Big Oil-Refining Revamp Gets Off To A Slow Start

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Nigeria’s Big Oil-Refining Revamp Gets Off To A Slow Start

A year after shutting down all of its dilapidated refineries to figure out how to fix them, Nigeria still can’t say how much it will cost to do the work or where the money will come from.

Nigerian National Petroleum Corp. said it has finished the appraisal of its largest facility, but hasn’t completed the process at two others. Refining experts said the extended halt means the plants are at risk of rotting away and unlikely to restart on time.

“Things haven’t been looking good lately,” with Nigeria’s plants probably “completely out of action for some 18 months,” said Elitsa Georgieva, Executive Director at Citac, a consultant that specializes in African refining.

The dysfunction of its domestic refineries has long put Africa’s biggest oil producer in an ironic situation. It exports large volumes of crude to plants overseas, then pays a premium to import the fuels its customers produce.

Failed Attempts

Pledges to fix the facilities have been made and broken again and again over the years. For at least a decade, NNPC’s 445,000 barrels a day of refining capacity barely processed 20% of that amount.

The latest effort to fix the refineries was supposed to be different to the failed attempts that came before. The company had totally shut all three plants down by January 2020 to do a comprehensive appraisal, and set the ambitious target of having them all back up and running at 90% of capacity by 2023.

“The refineries have been deliberately shut down to allow for a thorough diagnosis,” said Kennie Obateru, an Abuja-based NNPC spokesman. “They can be fixed based on what the diagnosis reveals.”

The appraisal of the 210,000-barrel-a day Port Harcourt refinery has been completed and NNPC has called for bids for the necessary repairs, Obateru said. The company hasn’t determined how much the work will cost.

“It is when we close the bids, everything is analyzed and presented that we will know how much we need,” he said.

The diagnosis is underway at the 125,000-barrel-a-day Warri facility and should be complete before the end of the year, he said. After that, the study of the 110,000-barrel-a-day Kaduna plant will commence.

Major Challenge

One year into the process, refining analysts are skeptical that all this work can be done by 2023.

“I don’t think anyone has a good understanding technically of what’s wrong with those refineries,” said Alan Gelder, vice president of refining, chemicals and oil markets at Wood Mackenzie Ltd. “They’re probably corroding, which makes it a very difficult proposition.”

NNPC reaffirmed its deadline and said there’s no reason the refineries, which are at least 40 years old, can’t be restored to full operation.

“There are refineries that are over a hundred years old still running, so age is not necessarily an impediment,” Obateru said.

There are parallel efforts backed by private companies to add to Nigeria’s capacity. Aliko Dangote, Africa’s richest person, is building a state-of-the-art 650,000 barrel-a-day refinery, which Citac estimates will start production in 2023.

Bringing NNPC’s Port Harcourt refinery to the same clean-fuel standards as Dangote’s modern plant would cost about $1.3 billion for the equipment, on top of whatever other repairs are required to get the facility running, Georgieva said.

NNPC is talking to oil-trading firms about $1 billion of prepayment deals that could finance the repairs at Port Harcourt, Reuters reported last week. Obateru declined to comment on the report, but said “I don’t envisage that we will have a problem getting people to invest.”

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Economy

Food Inflation Hits Record High of 19.56 Percent in December 2020

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Inflation

Food Inflation Hits Record High of 19.56 Percent in December 2020

Food Index, which measures prices of food items, grew by 19.56 percent in the month of December 2020 amid herdsmen attacks and flooding.

In the latest report from the National Bureau of Statistics (NBS), increases were recorded on Bread and cereals, Potatoes, Yam and other
tubers, Meat, Fruits, Vegetable, Fish and Oils and fats.

On month on monthly basis, the food sub-index rose by 2.05 percent in December 2020, 0.01 percent from 2.04 percent recorded in November 2020.

The average annual rate of change of the Food sub-index for the twelve-month period ending December 2020 over the previous twelve-month average was 16.17 percent, 0.42 percent points from the average annual rate of change recorded in November 2020 (15.75) percent” the report stated.

Headline inflation number increased by 15.75 percent in the month of December 2020, up from 14.89 percent.

The report noted that increases were recorded in all COICOP divisions that yielded the Headline index.

On a month-on-month basis, “the urban index rose by 1.65 percent in December 2020, same as the rate recorded in November 2020, while the rural index also rose by 1.58 percent in December 2020, up by 0.02 percent above the rate that was recorded in November 2020 (1.56 percent).

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Economy

Nigeria’s Inflation Rate Rises to 15.75 Percent in December

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Nigeria’s Inflation Rate Rises to 15.75 Percent in December

Inflation rate in Africa’s largest economy, Nigeria, rose at the fastest pace in several months in the last month of 2020, according to the latest report from the National Bureau of Statistics (NBS).

Consumer Price Index (CPI), which measures inflation rate, increased by 15.75 percent year-on-year in December 2020, representing a 0.86 percent increment from the 14.89 percent attained in November.

On a monthly basis, headline inflation rose by 1.61 percent in the month of December, representing 0.01 percent increase from the 1,60 percent posted in the month of November.

Food gauge that measures prices of items in Africa’s largest economy increased by 19.56 percent in December from 18.30 percent in November.

NBS attributed the increase to the surge in prices of Bread and cereals, Potatoes, Yam and other tubers, Meat, Fruits, Vegetable, Fish and Oils and fats.

On a monthly basis, the food sub-index grew by 2.05 percent in December 2020, an increase of 0.01 percent points from 2.04 percent recorded in November 2020.

The more stable annual rate showed Food sub-index over the last 12 months increased by 0.42 percent points from 15.75 percent in November to 16.17 percent in December.

Herdsmen attacks, the rising cost of fuel, flooding and the wide exchange rate are some of the key factors impacting the cost of food items in Nigeria, especially in December when demands were the highest.

Still lack of enough fiscal buffer to cushion the effect of COVID-19 and ease forex scarcity also drag on raw materials necessary for the production of some import-dependent items.

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