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African Development Bank approves $100 million loan to Indorama Eleme Fertiliser and Chemicals Limited for the building of a gas-urea fertiliser plant in Port Harcourt

|  By Maureen Chigbo   |  Feb. 18, 2013 @ 01:00 GMT

FERTILISER production in Nigeria received a boost in January this year with the African, Development Bank, AfDB’s approval of a $100 million loan for the Indoroma Eleme Fertiliser and Chemicals Limited, IEFCL. The Board of Directors of the AfDB approved the loan to enable IEFCL to build and operate a gas to urea fertiliser plant located in Port Harcourt. The plant will serve markets in Benin, Brazil, Ghana, India, Nigeria, South Africa, the United Kingdom and the United States of America.

The plant will start production in 2015, and will allow Nigeria, which relies heavily (80 per cent) on imported fertilier, to progressively become self-sufficient and a major exporter. Ultimately, the project will act as a catalyst to support job creation in the area in addition to striving towards achieving the Millennium Development Goals in the areas of food sufficiency and a cleaner environment.

Realnews learnt that President Goodluck Jonathan will soon be at the IEFCL premises to flag of the project. Already, the IEFCL is working hard to complete all the environment impact assessmnent fora which involves meeting with different communities to explain how the project will impact on them and carry them along. “We are clearing the land, getting all our international partners, tying up contracts for the supply of feedstock,” an official of IEFCL told Realnews.

The IEFCL plant, located in the existing Eleme industrial complex, will produce urea to be sold in export and domestic markets. Other project components will include an 84-kilometre pipeline and a multipurpose jetty and terminal infrastructure at Onne Port, 16 km from the project site. The complex is expected to be among the most competitive production sites given the low feedstock price and economies of scale. Indorama Eleme Fertiliser & Chemicals Limited is the borrower and project company. It is owned by Eleme and Indorama. Eleme is Africa’s second largest polyolefin producer and has a majority market share of polyethylene and polypropylene in Nigeria. It also exports to nearby countries.

With this project, the AfDB also promotes small and medium enterprise linkages through the distribution supply chain for the domestic market. The project will create 3,854 jobs of which 3500 are direct and 348 indirect local positions during construction and operation. Moreover, the IEFCL project will generate revenues for host communities, Rivers State Government and Eleme employees as well as the federal government of Nigeria from dividends, taxes and foreign exchange savings through import substitution.

The AfDB approval of the loan for Indorama Eleme Fertiliser and Chemical Limited is in keeping with the realisation that agriculture in Nigeria is a dominant sector that engages about 70 percent of the population and provides more than 75 percent of non-oil foreign exchange earnings with the largest share of about 41.84 percent of overall GDP in 2009 (IEFCL Market Survey, 2010). The agricultural sector contributes significantly to rural employment and food security.

At the moment, the majority of the population dependent on agriculture currently lives below poverty line due to very poor land yields. Provision of fertilisers at affordable prices will help to get higher yields to meet the demands of the growing population as well as uplift a large part of the population out of poverty. The project will also help to reach the objectives of the federal gas revolution programme by providing the necessary infrastructures for natural gas-based industries.

A document on the fertiliser project obtained by Realnews stated that the project does not have negative health impacts on host communities around EPCL complex. According to the IEFCL, the population increment by the host communities will be managed in a proper manner to safeguard the health of the people from possible exposure to infective/transmissible diseases. During the operational phase, the IEFCL will dispose of EPCL residential facilities inside the complex for all employees. Also an acceptable increase of vehicular traffic is expected and will be adequately managed in order to minimise possible socio-economic impacts and potential and associated hazards.

“There are no socio-economic activities that are going to be negatively affected by the project and the installation of new units will not interfere with cultural/social elements present in the study of the area. The initiative will not modify the existing microclimatic conditions of the site considering also the expected increment of aqueous vapour emissions in atmosphere from cooling towers,” the document said. Concerning CO2 emissions, IEFCL said: “it is worth noticing that the project will use natural gas as raw material, energy resource that it is currently unused and that would be flared as alternative with CO2 emissions already associated”.

This major Olefins Plant (Eleme Petrochemical complex) situated on a site approximately 9km2 is located some 15 km north-east of Port Harcourt, the capital of Rivers State. Indorama Eleme Petrochemicals Company Limited is the current management of Eleme Petrochemicals Company Ltd, EPCL, having taken over the management/ ownership of the company from the Nigerian National Petroleum Company, NNPC, in 2006. The EPCL is the parent company of Indorama Eleme Fertiliser and Chemicals Ltd proponent of the proposed fertiliser plant. The existing complex is made up of four major process facilities, namely: Olefins, Butene, Polyethylene and Polypropylene plants. Related utilities units are made up of Power, Water, Air plants and off-site facilities for intermediate product storage, effluent treatment, waste management etc. The existing facilities are self-sufficient in terms of power which is presently generated by gas turbines.  The proposed nitrogenous fertiliser project is planned to be set up within the existing Eleme Petrochemicals Complex. The complex will consist of Ammonia / Urea trains with a total capacity of 2,300 metric tons per day, MTPD, of ammonia and 4,000 MTPD of granulated urea. The final product (urea) will be stored in new warehouses to be constructed within the IEPL Complex with approximately 60-70 percent of the product transported by road to the jetty for the export market. The remaining 30-40 percent of urea produced will be bagged in 50 kg bags for onward distribution in the domestic market.

The Project entails the  construction of a 84 km pipeline from the gas supplier’s processing facilities to the plant (the pipeline) for supply of the feedstock gas that will run adjacent to two existing pipelines within an existing right of way, RoW.

The third and last component though not part of the AfDB transaction, will be the construction of a multipurpose jetty inclusive of material handling facility (jetty) located 16 kms from the site within the operational Onne Federal Ocean Terminal Zone. Due to the difference in activities, impacts and locality of the three components, their environment and social studies have been separated also because they don’t fall in the same category as per national legislation.

The natural gas feedstock pipelinewill be 84 km long and 35 cm in diameter. It will connect the gas supplier (Nigerian Azienda Generale Italiana Petroli (Agip) Pipeline Company (NAOC) from Obrikom (OBOB) within the Ogba-Egbema Local Government Area, LGA, and will cross two further LGAs before terminating at Eleme LGA. All the four LGAs are within RiversState of Nigeria. The pipeline will run within a right of way, RoW, managed by the NAOC which has been in existence since 1992. The RoW is 15 m wide and is currently utilised by two other pipelines with sufficient space for a third pipeline.  

The jetty will be situated approximately 16 km south-east of the fertiliser complex within the operational Onne Federal Ocean Terminal, FOT, Zone. The multipurpose jetty will have a section for handling urea loading to vessels capable of handling 30-35,000 MT DWT; and another for containerised and break bulk cargo vessels capable of handling 6-8,000 MT DWT. The total cargo envisaged to be handled at the jetty will be one Million MT of urea per annum and other cargoes (such as containerized loads, pipes and dry chemicals) are anticipated to be approximately 400,000 MT per annum.

 In 2011, Manish Mundra, managing director of IEPL, announced the plan for the fertiliser project. The total investment package is worth about 1.8 billion US dollars (N275 billion Naira). Then, it was said that production would commence in the next three or four years.  It should be recalled that the Indorama Group, in 2006, invested $400 million dollars to acquire and resuscitate the moribund Eleme Petrochemicals Company Limited, which has now become one of the best success stories of privatisation in Nigeria.

The Indorama Group revamped the IEPL, which was a subsidiary of the Nigerian National Petroleum Corporation, NNPC. Within three months, it concluded and extensive turn-around maintenance, TAM, of the company and re-started production of polyethylene and polypropylene, which had hitherto been imported into the country by manufacturers of plastics products. In October 2010, Indorama-IEPL won the Presidential Award for Exports, organised by the Nigerian Export Promotions Council, NEPC.   The company has paid more than N11 billion to the government in taxes such as value added tax, VAT, customs duty, with-holding taxes, and pay-as-you earn, PAYEE. It has also paid, to date, a dividend of over N23 billion to its shareholders including the NNPC, the Rivers State government, and the Bureau of Public Enterprises, BPE, which holds shares on behalf of the federal government of Nigeria.

Indorama said that it has helped Nigeria to save more than one billion dollars in foreign exchange through import substitution and has turned Nigeria into a net exporter of petrochemicals products and contributed 10 percent of Nigeria’s total non-oil exports.

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