Dangote, Ibeto battle over cement market
By Remi Adelowo 16 hours 38 minutes ago


The age-long rivalry between two of Nigeria’s leading businessmen-Alhaji Aliko Dangote and Chief Cletus Ibeto over the control of the lucrative multi-billion naira cement market is yet to abate if latest reports are anything to go by. Remi Adelowo writes

A few weeks ago, a new chapter was opened in the clash of the business titans when Alhaji Aliko Dangote instituted a suit at the Federal High Court, Abuja, presided over by Justice Binta Nyako, praying the court among other things to void the payment of $40m plus a sum of over N7b by the Federal Government to Ibeto Cement Company Limited and its associate companies IBG Investment Ltd and Derima Ventures Ltd.

Genesis of the crisis

It all started in 2005 when the then President, Chief Olusegun Obasanjo ordered the closure of Ibeto Cement plant over alleged ‘misrepresentation of facts in obtaining the quota of 800,000tonnes of cement allocated to it by the Federal Government.’

Prior to the closure, the Federal Government had formulated a backward integration policy whereby licences were given to some companies to import cement in order to augment the shortfall in supply. But there was a proviso attached to this: the intended beneficiaries must have proven investments in the manufacture of cement and secondly, own and operate land-based import terminals.

However, controversy over whether Ibeto fulfilled these conditions has remained till date.

Dangote’s grouse against Ibeto

Though Dangote admitted that Ibeto completed its development of land-based terminals which was leased from the Nigeria Ports Authority (NPA) to enable it take full advantage of the backward integration policy, he alleged that Ibeto was not at any time investing in the local manufacturing of cement or had any interest to invest.

He alleged that based on this fact, the Cement Manufacturers Association of Nigeria (CMAN) petitioned Obasanjo in September and October 2005 over government violation of its cement policy, with references to the metric tonnes of cement importation license given to Ibeto, which it alleged had no plan to invest in local manufacturing.

Acting on the petition, Obasanjo revoked the license earlier given to Ibeto until the company showed proof of its investment in local production of cement. In addition, its bagging terminal was also shut down.

Ibeto, according to findings, subsequently filed a suit challenging the FG’s action but it was struck out by the court.

Ibeto fights back

Events took a dramatic turn with the coming of the Umaru Yar’Adua presidency. Cletus Ibeto, it was learnt, wrote the former president, urging him to order the reopening of his plant. That was granted.

In addition to that, Ibeto sought for and obtained Yar’Adua’s approval to import 1.5million metric tonnes of bulk cement per annum at 5 percent import duty and free VAT.

But according to Dangote, other CMAN members who complied with the government policy were not given such preferential treatment and made to pay a duty of 10 percent and 5 percent of VAT.

This development, according to sources, compelled CMAN to petition Yar’ Adua, urging him to give all players a level playing field. The late president in January 2008, later directed that all cement importers operate under the same concessions, as well as ‘pay 10 percent duty rate and 5 percent duty for VAT without exception’.

But to the consternation of Dangote and other CMAN members, they alleged that the presidential directives were not obeyed as it concerns Ibeto, as the company continued to pay 5 percent duty and zero VAT.

Moreover, in January 2009, Dangote claimed that the then president approved a reduction in tariff for bulk cement import to 5 percent, while the statuotory flat rate of 5 percent was retained for VAT. This directive according to him, like the previous one, was flouted allegedly in favour of Ibeto.

Ibeto’s defence

To all these allegations, Ibeto stated that contrary to Dangote’s claims that it has not made any investment for manufacturing of cement, it spent over N12b to construct an ultra-modern factory in Port Harcourt, Rivers State.

Stating unambiguously that it did not misrepresent any fact to obtain the quota of 800,000 tonnes of cement allocated to it, the company added that following the closure of its plant in 2005, it instituted a suit number FHC/ABJ/CS/400/06 seeking redress for the huge losses incurred.

On January 8, 2008, the company claimed it wrote Yar’Adua to reopen its factory among other reliefs it sought for. The then president, seeing the merits of its case, granted certain rights to the company, which it claims, spent several millions of naira to reactivate its plant and machinery.

But following renewed efforts by some unnamed competitors, Ibeto, which The Nation investigations revealed controls about 40 percent of the cement market in the South East and South South regions, instituted another suit against the FG on the need to protect it and its investments.

An out-of-court settlement was reached by Ibeto, FG and the Attorney-General of the Federation, which resolved that Ibeto should be paid $46m plus another sum of about N2b. The terms, it claimed, were signed by all the eight members of the inter-ministerial committee and Ibeto Company Ltd.

Further, it was also agreed that Ibeto could import the approved 1.5million metric tonnes of bulk cement per annum in the name of its two associated companies and also enjoy any concessions that may be granted it for bulk cement importation.

It also denied that it concealed any presidential directive, while denying claims by Dangote that the government compelled Dangote or any other company to establish manufacturing plants before it could benefit from the backward integration policy.

Urging the court to dismiss Dangote’s suit, Ibeto stated that its competitor was not in any way affected by the concessions granted it (Ibeto) by the FG and that it had no legal interest in the subject matter of the suit, which it stated its purely a tax issue.

Posers & questions

Within the industry circles, there are unconfirmed speculations that the current administration of President Goodluck Jonathan has allegedly paid the agreed sum of $46m and N2b to Ibeto, a development that has riled its major rival, Dangote.

Already, not a few industry players are reading meanings to this. One, has Dangote fallen out with the president, with whom he reportedly enjoys a chummy relationship?

What is likely going to be the outcome of the court case instituted by Dangote? Who would have the last laugh between Dangote and Ibeto?

manny4life: As far as I'm concerned, Dangote has no merit at all on this case. He enjoyed his allowance when OBJ was president, now he doesn't want his competitor to do the same. I'm no lawyer at all, but upholding this will set a good precedence for Nigerian business aka unfair competition isn't good. Any idea of major player will be squashed.

lbotus: I think dangote don't want the "common man' to have a house in this country.The price of cement will crash if there are competitors.I must build my house soon next year.Dangote you have Failed.

Dis Guy: Why isnt Ibeto expanding or building more cement plants, why are they so obsessed with importation only,
they are the only ones not complying

manny4life:

Did you bother to read the article or you just started mouthing off because you have the right to do so? Please READ. In case you don't find anything opposing your stance, then I'll post some excerpts.

torkaka: and why is it that ibeto wants to dodge taxes and duty?

austinsmat: dangote want to monopoly the cement market with back door the which is bad of him as a business mogul he clams the best way to fight competitor is to cut the price loose is short run and aquire the market in long run with the lower price he can force the competitor out of market because masses cheap and quality goods this fight will be advantage of poor masses

DANILSA: That guy [dangote] is a bad business tycoon, all powerful and brilliant. I pray he fails in his monopolistic endeavour, if not, am finished, when all his competitors are dead, then we will buy one bag for 5000, no option again. That guy [dangote] is a bad business tycoon, all powerful and brilliant. I pray he fails in his monopolistic endeavour, if not, am finished, when all his competitors are dead, then we will buy one bag for 5000, no option again.

austinsmat: dangote want to monopoly the cement market with back door the which is bad of him as a business mogul he clams the best way to fight competitor is to cut the price loose is short run and aquire the market in long run with the lower price he can force the competitor out of market because masses cheap and quality goods this fight will be advantage of poor masses