Dangote Cement, Sinoma Deal Comatose…….As Aliko engages in roundtriping
irst off the blocks to congratulate Alhaji Aliko Dangote for promising and failing to keep his promise of lowering the price of cement in Nigeria. No one really took Aliko Dangote seriously when he stood in front of TV cameras, in the presence of two State Governors to promise that by 2010, his cement conglomerate would increase the manufactured cement production capacity in Nigeria to 26 million tonnes. Hopes were also raised in Senegal where Aliko also promised to expand supply to 2.5 million tonnes by 2010.
Despite the euphoria generated by the $1.85 billion acquisition of four new cement plants from Sinoma; a Chinese Company last year, Dangote's avowed promise to create the largest cement manufacturing company in the world has turned out to be what it really was; a bad joke. With the price of cement all but going through the roof, experts agree that the construction sector in Nigeria needs a special “stimulus package” if it is to stave off disaster.
Other analysts reckon, financing new cement manufacturing plants will be much difficult after Dangote, all but scuttled the cement deal, short-changing the financing syndicate of ten commercial banks which provided the money; some of whom have been forced to withdraw from the project they previously backed. The banks include; Guaranty Trust Bank acting as lead agent and advisor on the transaction and First Bank and First City Monument Bank acting as co-lead managers. Other banks were; Fidelity City Bank, AfriBank, Zenith Bank, IBTC Stanbic Bank, United Bank for Africa (UBA), Access Bank, and BankPHB.
Speaking alongside Ogun State Governor, Otunba Gbenga Daniel and his Kogi counterpart, Abubakar Idris, representing their host communities, Dangote stated that the expansion when completed, would increased the Obajana cement factory production lines to four and expand output capacity to 12 millions tonnes; making it the largest cement factory in the world.
Dangote also promised that the new plants would be operational within 28 months and would combine with the existing assets to bring the production capacity in Nigeria to 26 million tonnes annually, adding that it would not only make Nigeria self sufficient in cement, but also make the country a net exporter that can compete across the continent and globally. He added that the new planets when completed would provide direct employment for over 20,000 Nigerians as well as the provision of schools , hospitals, water, power and other developments in their host communities.
That was then. Huhuonline.com has learnt that after the deal was signed, the Naira suffered devaluation and lost value viz-a-viz the dollar. No sooner, Dangote's fist slammed the table and he began applying the breaks. Sources told huhuonline.com that Dangote went back to the Chinese and scaled down the project by as much as 50%. In the process, the Chinese Company reportedly “reimbursed” him up to $900 million which he sold at the black market at the then prevailing exchange rate of $1 to N148 – the exchange rate at the time the loan was contracted was $1 to N120. There have been some reports that Dangote has been trying to arm-twist the Chinese company in re-financing, or cancelling the deal altogether, so he can be reimbursed, consequently leading to another black market trade at the rate of N153 to $1.
This “round tripping” by Dangote was a classic Ponzi scheme, a source at one of the banks told Huhuonline.com, adding that; Aliko Dangote is known to be suffering from incurable money-mindedness, and the man will stop at nothing in his quest for personal gain.
It is now evident that the price of cement will continue to rise owing to the limited supply and the high demand. All Dangote's promise to increase the supply and reduce the price to make home construction more affordable in Nigeria has turned out to be a hoax.| Article source