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Tuesday, December 6, 2022

Dangote-Kogi Feud Over Obajana

THE dirty squabbles between the Kogi state government and Dangote Cement Plc seems to have simmered following federal government’s intervention over claims of “tax evasion” and “unresolved ownership” of Obajana cement plant by the kogi’s government which the latter resisted.

THE dispute between the two had been long-running  but took a violent turn when on Wednesday October 5, a group of vigilantes reportedly stormed the premises of the plant, forcefully sealed it off, and injured many in the process.

WE condemn the forceful seizure and shut down of the plant as a means of resolving the dispute. Our position is that violence is not, and cannot be the answer to resolving a dispute over an entity of value to both parties. We also frown at any outcome that will lead to loss of jobs of the thousands of Nigerians who work at the plant, especially at a time the economy is only stuttering to recovery from the ravages of the pandemic and spill-over effects of a global economic crisis.

WE are also shocked that a state like Kogi with its extremely low capacity to generate adequate employment for its teeming youths could put the jobs of those already engaged by the cement firm at risk.Such hardline posture contradicts the federal government’s position on investment promotion by state governments in this period of serious revenue challenges.

BOTH sides appear to agree that the old cement company, established 30 years ago in 1992, was solely owned by the Kogi State Government. Beyond this, however, the matter is hazy: thin on facts, thick on hubris on both sides. But the questions in dispute are clearly over the terms and conditions of the 2002 agreement at which the ownership rights of the old company changed hands between the two parties.

DANGOTE Industries Limited (DIL), which owns the Dangote Cement Plc, on October 11 claimed that the 2002 agreement between it and the KSG stipulated that “DIL would establish a cement plant with a capacity of 3,500,000 metric tonnes per annum. That DIL shall hold 100 per cent of the shareholding in OCP, and source for all the funds required to develop the cement plant. KSG shall have the option to acquire five per cent equity shareholding in OCP within five years; and KSG shall grant tax relief and exemption from levies and other charges by KSG for a period of seven years from the date of commencement of production”.

IT further accused the Kogi State Government of breaching all of these provisions in the agreement between the two parties, and insisted that the Obajana Cement Company, now Dangote Cement Plc “has paid all due sub-sovereign taxes, levies and charges to Kogi State Government since it commenced production in 2007”.

THE Kogi State Government has refuted this claim describing the 2002 agreement as an exercise in “callous and deliberate asset grabbing”, and challenged the DIL to provide proof of ownership. The statement reiterated that the state government “held 100 per cent of its shareholding in trust for its people, long before Dangote Industry Limited, DIL, ventured into the state and longer still before Dangote Cement Plc came into existence”.

THE statement further claimed that the government had taken a loan of “at least 15million Deutsche Marks” to conduct feasibility assessments and commercial viability of “vast limestone deposits” at the site of the plant. “Sadly, for over a decade after DIL and DCP started posting profits from the operations of the Obajana plant, the Kogi State Government is still labouring to pay off the said loan and interests accruing thereon”.

WE suspect that both sides are being economical with the truth . Also, Lengthy advertorials in newspapers are not evidence of payment of taxes or the legal proof of ownership of a company, nor are reports of a contorted Judicial Commission of Inquiry or the resolutions of the Kogi State House of Assembly on a matter in which the government of the state is a party . Dangote Industries Limited cannot prove ownership of Obajana plant of Dangote Cement Plc merely by publishing advertorials in newspapers. And the Kogi State Government or Kogi State House of Assembly cannot be a judge in its own case.

WE therefore advise both  parties, in the interest of resolving the issue permanently, to await the outcome of their litigation before the court, or to submit to an independent arbitration process the outcome of which must be made public.

WE commend the federal government for intervening promptly in the dispute and helping to avert further escalation. It is also commendable that the Buhari government has reportedly secured a new agreement between the two parties and ‘ordered’ the Kogi State government to reopen the plant in the interest of workers and the overall national economy.

THE case is about the rights of ownership of a legal entity. One party in this dispute is a business conglomerate, and the other is the government holding forte for the people of Kogi State, including generations of those yet unborn.

THEREFORE, early resolution of the crisis would do both the state and Dangote Industries Limited good and also encourage investors to do business in Nigeria having realised that their investment is safe.

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