-FG may ask for refund of benefits diverted by the company


As the federal government continues to monitor the level of compliance of all companies engaged in the implementation of the backward integration policy in the sugar industry, deliberate efforts of BUA Group to violate the tenets of the agreement have been condemned.

Sources close to the National Sugar Development Council (NSDC) yesterday stated that they were very worried that BUA was simply using the acquisition of the defunct Lafiagi Sugar Estate as a ploy to reap benefits and incentive which the federal government approved for companies actually investing in integrated sugar production.

According to the source who asked not to be named because the NSDC is taking time to officially expose the fraudulent activities, BUA was believed to have been sponsoring community disturbances against its own acquisition process of the Lafiagi estate in Kwara State, in order to have an excuse for not accessing and investing in the plant from 2008 when it acquired it to 2014 when the federal government mounted pressure on the company over its nonchalance.

Also, the NSDC is considering forcing BUA to refund the incentives and other benefits, running into billion of naira, which it has received in the form of tax holidays, duty waivers among others, for the past three years, under the guise of investing these benefits in the cultivation of a massive sugarcane plantation and setting up a processing plant in Kwara.

"Unfortunately, what BUA has displayed so far is unseriousness and an outright ploy to fleece the government of its hard earned revenue without any plant to actually invest in local production of sugar from plantation to factory.
"NSDC is just watching this seeming fraudulent behaviour by the company and will exhaust all negotiation options before we bring down the hammer.

"We have three companies who signed up for this and so far the other two; Savannah Sugar in Numan, Adamawa State owned by Dangote and Golden Sugar Estate in Sunti, Niger State, owned by Flour Mills of Nigeria have invested significantly. Dangote is producing fully and Flour Mills is set to begin in May this year.

"All three companies have received incentives from government. Dangote and Flour Mills have shown the investment they made with the proceeds but all BUA has to show is some baseless excuses and blame of the Bureau of Public Enterprises. Since they had problems investing the government incentives they received why did they not asked for the incentives to be paused until the got their acts right.

"We are considering asking them to quantify all that they benefitted from government on the back of the sugar backward integration during their period of inactivity and refund same to the federal government coffers," the source lamented.

Meanwhile, after a recent inspection of the BUA sugar estate, formerly known as Lafiagi Sugar Company, Kwara State in December 2015, by the Sugar Industry Monitoring Group (SIMOG), one of the inspectors representing the federal government, disclosed that they were astonished at how thoroughly abandoned the place was.

One members the team noted that what was more annoying during that visit was the fact that BUA, instead of concentrating on developing the Lafiaji sugar estate and growing the sugar plantation, rather put up a make-belief display of hired equipment and tractors in a bid to deceive the government into believing that it was investing in the development of the estate.

According to the source: "For the past three years that the National Sugar‎ Development Council (NSDC) has been implementing the national sugar master plan, the Sugar Industry Monitoring Group (SIMOG) which comprises of Managing Directors of Sugar Refineries such as Dangote Sugar Refinery, BUA and Golden Sugar Refinery, a subsidiary of Flour Mills Nigeria, as well as government representatives, have been going around their project sites where they signed an agreement with the government in 2013 that they should be given raw sugar importation quotas in order to service their refineries and whatever profit they make will be ploughed back to Backward Integration Programme (BIP) to build local capacity."

The government official noted: "Dangote has his own BIP in Savannah Sugar Company, Numan, Adamawa State; Golden Sugar Refinery has its own BIP site in Sunti, Mokwa, while BUA has its own in Lafiaji, Kwara State, where we have contending issues.

"For the past three years, BUA has nothing to show. "This SIMOG goes round on a quarterly basis to monitor whatever raw sugar is being imported by these sugar refineries as well as the development of the BIP projects at the three sites mentioned.
The source further explained, “The meaning of this BIP agreement in essence is to say that whatever profit they are making from sugar importation and trading, they have to inject it into the development of the sugar estate in the country.
"The chief executive officers of the sugar refineries signed the agreement with the government under the then Ministry, Industry, Trade and Investment, while the council was just acting as a facilitator.


"They have all agreed and made presentations, a work plan and have signed, stating what they will be doing, with timelines attached to it.
"During our monitoring, we discovered that BUA has not been doing anything meaningful with their project site.
"It is now that they have realised that if they cannot embark on any physical development, the government will sanction them. They arranged a stage-managed site because they knew we were coming to pay an inspection visit. They brought in equipment that were not really using for the development of the estate in that particular location.
"It was on the basis of what we saw that made us stated that they should continue. We also told them to increase their tempo, saying that by the next visit, they would have gone a bit far from the backward position where they are presently, otherwise, that is when they will face the wrath of the federal government.
"What they have been doing is very discouraging, three companies have agreed to do certain things, two companies have already started, while one is yet to begin but it is enjoying the same benefit from the federal government.
"The same incentive the federal government is give to Golden Sugar and the other company is the same that is being given to BUA, whereas, they are not doing anything to benefit from the incentives from the federal government.
“To deal with the poor attitude, we are going to be paying unscheduled visits to them in an unspecified manner and I am very sure that the government will visit that site early in 2016 and I am also sure that our council will send representatives to carry out independent monitoring.
"We will not tell them of our visit because we do not want them to do another stage-managed activity. They have only 13 hectares of sugar cane on ground but they want to develop to up to about 200 hectares but out of the 200 hectares, they have only cleared 65 to plant sugar cane but they actually have ‎only 13 hectares of existing sugar cane that has been planted in Lafiaji.
"We are giving them the benefit of the doubt to see if they can develop. Our own is to monitor, watch and report back to the government.
"It is not that we are happy to push BUA out of business because it is not in the interest of the government. But government wants more serious-minded investors to come and invest, but you must follow the rules guiding the agreement to meet up with national demand.”
The official added that Dangote was trying at the Savannah factory in Adamawa, revealing that the Dangote Group subsidiary has successfully rehabilitated the existing refinery.
“But you know that the mill is of age presently this is why the efficiency needs enhancement, but they are planning to establish another new factory to replace the existing Savannah sugar refinery and also establish another one in Taraba State and we will be very happy seeing them doing that.
"The other sugar refinery in Sunti is doing very well too, in fact they are doing even more than what Dangote is doing because they have a newly set up refinery and they are almost at 85 per cent completion with plans to test run it next year.
“When you visit their site, you will see that these people are very serious about their business just like what is happening in Savannah.
“They are both doing very well. Although, when BUA took over the Lafiaji refinery as the new owner, they had to settle the host community because it was a place where people were using for farming to earn a living.
“So when government intervened by telling the host community that the land had been sold to BUA, there had to be compensation from the government and BUA, but BUA did not ‎meet the demand because the demand was very high.
“So it took the special intervention from the Kwara State government to resolve the issue, but I think that was not the main reason why they have not started anything, but a deliberate act not to do anything on the site. From the look of things now, they have seen the red card and they do not have any other option than to go and develop the project site or else face the sanction.
“Even if the government is not doing anything, I know our fellow competitors will not allow such to happen. They have agreed and have also signed, but we are concerned about is their nonchalant attitude towards the development of the project. An unscheduled visit is the only way to determine the level of work on the site,” the source said.