Contrary to the Kogi State government’s claim, the management of Dangote Industries Limited says its acquisition of the Obajana Cement Plc in 2002 followed due process.
In a statement issued to newsmen, the group said the Kogi State government has no equity interest in Obajana Cement Plc, adding the company as a responsible corporate organisation has been paying relevant state-based taxes, levies and charges since 2007 when production commenced at the site.
The statement titled ‘Obajana Cement Plant: Separating Facts from Fiction’ read this:
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“This is a statement issued for the sole purpose of addressing the concerns and apprehensions of the stakeholders of Dangote Cement Plc (DCP) especially the over twenty-two thousand people it employs directly, and more indirectly, as well as thousands of contractors, wholesalers, users of our products, our financiers and shareholders.
“At a time of significant economic challenges that we face as a nation, we believe all must be done to keep our economy running effectively, our people employed, businesses that depend on us thriving and not discourage those who take the risks of needed, lawful and significant investments in our economy. The shutdown of our plant has materially jeopardised the economic wellbeing of our country without any regard for its significant consequences.
“Whilst reserving our rights to proceed to arbitration in accordance with the extant agreement, we have reported the unlawful invasion by KSG and the consequential adverse effects of same to all the relevant authorities, including the Federal Government of Nigeria who has now intervened in the matter. It is hoped that the dispute resolution process we have initiated will quickly resolve the disputes and allow us to focus on our business without distraction and continue our significant contribution to our national economy. It is in this context that we state in brief as follows.”
The group noted that the Obajana Cement Plant is one of the most crucial components of economic activity in the nation, being one of the highest taxpayers, and vehicle for one of the largest companies invested in by thousands of Nigerian and foreign investors.
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As stated, site’s most important assets are its land, the plant and machinery thereon, and the vast limestone deposit covered by mining leases issued under licence by the Federal Government of Nigeria (FGN).
The company further clarified that the land on which Obajana Cement Plant is built was solely acquired by Dangote Industries Limited (DIL) in 2003.
This was after it acquired the shares in Obajana Cement Company in 2002 and a legally binding agreement it entered into with Kogi State government to invest in the terrain.
Afterwards, DIL was issued three Certificates of Occupancy in its name after payment of necessary fees and compensation to landowners, the company stated.
The statement further read: “The plant and machinery were conceived, designed, procured, built, and paid for solely by DIL, again, well after it acquired the shares in Obajana Cement Company. The limestone and other minerals used by the Obajana Cement Plant, by the provisions of the Nigerian Constitution belonged to the Federation, with authority only in the FGN and not the state in which the minerals are situated, to grant licences to extract and mine the resources.
“After the agreement with the KSG, DIL applied for and obtained mining leases over the said limestone from FGN, at its cost and has complied with the terms of the leases since inception. The Government of Kogi State had no minerals to give, had no assets to give, and only invited DIL as most responsible governments do to come into the State and invest in a manner that will create employment, develop the State, and earn it taxes”.
WikkiTimes learnt that the state government in 1992 incorporated Obajana Cement PLC (OCP) as a public limited liability company.
About 10 years after the incorporation, the Kogi State Government invited Dangote Industries Limited to take the opportunity of the significant limestone deposit in the state by establishing a cement plant in the state.
“Following several engagements and assessment of the viability of the proposed opportunity, DIL agreed that it would establish a cement plant in Kogi State and provide the entirety of the substantial capital required for the investment.
“DIL also agreed, following a specific request by KSG, to use the OCP name (albeit only existing on paper as of that time, and without any assets or operations) for the time being, as the vehicle for this investment. On 30 July 2002, KSG and DIL entered into a binding agreement to document their understanding. The agreement was amended in 2003 and remains binding on, and legally enforceable by, the parties to same,” the company said.
Turning to issue of an agreement between Dangote and Kogi State Government, the statement said it was agreed, inter alia, that the group would establish a cement plant with a capacity of 3,500,000 metric tonnes per annum and shall hold 100% of the shareholding in the plant and source for all the funds required to develop the cement plant while KSG shall have the option to acquire 5% equity shareholding in OCP within 5 years; and Kogi State Government shall grant tax relief and exemption from levies and other charges by the government for a period of seven (7) years from the date of commencement of production.
It added that in consistent with the terms of agreement, Dangote limited sourced for 100% of the funds that was used to develop the plant without any contribution from the government, saying in line with its rights, ensuring alignment with the Dangote brand, as part of internal restructuring and for better market recognition the name of Obajana Cement Plant was changed to Dangote Cement Plc in 2010, and a number of other significant cement companies (such as the Benue Cement Company) owned by DIL were merged with OCP to become the enlarged Dangote Cement Plc.
It, however, alleged that the Kogi state government could not meet its financial obligations of contributing to the funding the plant in any form, neither could it fund acquisition of 5% equity shares in the Cement plant when it was asked on a number of occasions to exercise the purchase option.
“KSG also did not meet its obligations to grant waiver of taxes, charges and levies that it could charge the operations, affairs and activities of OCP. Rather despite being entitled (under the terms of the agreement with KSG) to tax relief and exemption from charges and levies by KSG for a period of seven (7) years from the date of commencement of production, OCP (and now DCP) has paid all due sub-sovereign taxes, levies and charges to KSG since it commenced production in 2007.
“KSG does not have any form of investment or equity stake in OCP, so no dividend or other economic and/or shareholding rights whatsoever could have accrued to it from the operations of the company,” the company alleged.
Justifying that it acquired the plant site legally, the company said “After the agreement between DIL and KSG in 2002, DIL in 2003, applied to KSG for the acquisition of land for the plant site, and this application was granted with the issuance of three Certificates of Occupancy to DIL.
“DIL to the knowledge of KSG, paid substantive compensation to Obajana Farmland Owners located within the two (2) square kilometres plant site.
“Subsequently, in September 2004, DIL, in good faith, applied to the State Governor for the statutory consent for DIL to assign the plant site to OCP being DIL’s investment vehicle. This consent request was granted by the State Governor and the appropriate consent fees were paid by DIL”.
Shedding more light on the company’s engagement with Kogi State government, the statement explained that the investment of the group in Kogi State through the Cement plant was at the instance of the duly constituted government of Kogi State, done in accordance with the law of the State and all enabling laws in that regard, and the transaction documents were effectively, lawfully and duly executed by the Governor and Attorney General of the State (at the time), after internal approvals were obtained within the government.
“Since the inception of Alhaji Yahaya Bello’s administration in 2016, and regardless that government is a continuum, we have had series of enquiries about the ownership structure of the Dangote Cement PLC as it relates to the alleged interest of KSG; and had several engagements with the officers of the State government including Governor Yahaya Bello. At all of these engagements we have provided all the details and information supported by relevant documents, required by the Government and the State House of Assembly to confirm our lawful investment.
“For instance, in 2017, we were invited by the Judicial Commission of Inquiry, and we made our submission to the commission with relevant documents to support our position. We are yet to receive any feedback from the Judicial Commission of Inquiry. While still waiting to hear of the report of the Inquiry, we were invited by the State House of Assembly on the same matter earlier this year, and again, we provided evidence in support of our position that KSG does not have any equity or other interest in OCP or DCP,” the company further clarified.
Despite the foregoing, the government invaded the plant with hundreds of armed men, destroying the company’s property, inflicted grievous injuries on many of its employees, and shutdown operations at the plant.
The statement added: “Curiously, on 6 October 2022, a day after the shutdown of our facility in Obajana on the orders of KSG, Governor Bello addressed the public and announced that a Specialised Technical Committee which was set up as part of the recommendations of the Judicial Commission of Inquiry had just presented its recommendations, which have been accepted by KSG. This statement makes it abundantly clear that the shutdown of DCP’s plant occurred regardless of the Governor’s own confirmation that implementation of the recommendations of the Specialised Technical Committee was still pending.
“Whilst we do not want to speculate on the motivation for the spurious claims being made by KSG in relation to the ownership of the Company, which have resulted in the unfortunate unlawful forcible closure and damage of our plant, and injury of several people, we condemn in strongest possible terms, the unlawful shutdown of our plant by KSG sponsored armed-thugs, the damage to our property (including the looting of large sum of money kept in the office), and grievous injury inflicted on our employees by them.”
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The company noted that the disruption of operations at the plant has caused loss of revenue not only to the company and its customers but also adversely impacted revenue due to both the Federal and state governments, adding that it has also occasioned loss of jobs for the teeming youths who are daily paid workers that throng the plant for their daily sustenance.
Appealing for overall peace and calm, the company implore all its stakeholders, namely shareholders, customers, suppliers, employees, and the entire community of Obajana and Kogi State at large to remain calm while it follow the legitimate and lawful process to resolve the matter.
“We shall keep our stakeholders duly updated whilst we remain confident that the statutory and contractual rights of DIL shall be upheld by these legal processes which we have initiated,” assured the company.