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HomeInfrastructureInvestingNigeria’s Sovereign Investment Fund, OCP Morocco seal $1.4bn deal to build ammonia...

Nigeria’s Sovereign Investment Fund, OCP Morocco seal $1.4bn deal to build ammonia plant in Akwa Ibom State

The Nigeria Sovereign Investment Authority (NSIA) has sealed a $1.4bn deal with the OCP of Morocco as well as the Akwa Ibom State government to develop a plant where ammonia and diammonium phosphate will be produced.

Partners in the deal also include the Nigerian National Petroleum Corporation (NNPC), Nigerian Content Development & Monitoring Board (NCDMB), Gas Aggregation Company Nigeria Limited (GACN), and Fertilizer Producers & Suppliers Association of Nigeria (FEPSAN).

The new deal comes under NSIA Gas Industrialization Strategy and will drive implementation of the Multipurpose Industrial Platform project, a backward integration initiative which builds on the successes of the Presidential Fertilizer Initiative (PFI) and other sovereign bilateral initiatives between Nigeria and Morocco.

The project is structured to commercialize Nigeria’s vast natural gas resources and satisfy Morocco’s demand for cost-competitive ammonia.

Five crucial agreements were signed under the deal designed to create a clear path for the second phase of the Presidential Fertiliser Initiative as well as the creation and operationalization of a Multipurpose Industrial Platform (MPI) in Nigeria. The MOUs were signed Tuesday at the Mohamed VI Polytechnic University (UM6P) in Benguerir, Morocco.

The first phase of the project will produce 1.5 million tons per annum of ammonia in two phases. Up to 70 percent of the ammonia produced will be allocated for export to Morocco and the balance will be routed to the production of 1 million tons per annum of di-ammonium phosphate (DAP) and NPK fertilizers to feed domestic demand.

“It is expected that project construction will commence no later than Q3, 2021,” NSIA noted in a statement.

“US$1.4 billion will be invested in building out the plant and its supporting infrastructure with a target operations-commencement date of 2025.”

The project will be sited in the gas-rich Akwa Ibom State. Land availability and accessibility; gas adequacy; sufficiency of marine draft; and other environmental and social considerations informed the decision to site the plant in Akwa Ibom.

At completion, the integrated ammonia and fertilizer plant will house – within its battery limits – the process plants for ammonia and fertilizer production, administrative buildings, fertilizer bagging units, water purification units, storage for raw materials and finished goods, onsite power plant and other ancillary facilities.

The plant is also structured to have a dedicated jetty to facilitate seamless importation of raw materials from Morocco and other suppliers and export of excess ammonia and fertilizer to Morocco and potentially other regional markets.

The agreements on the second phase of the PFI give effect to the presidential directive which has restructured the PFI programme.

With the revised structure, NSIA’s role moves upstream thereby limiting its involvement to bulk importation of raw materials on behalf of the fertilizer blenders, with bank guarantees provided by the blenders.

Under the deal, a Memorandum of Understanding (MOU) was signed between Nigeria Sovereign Investment Authority (NSIA), OCP Africa and the Fertilizer Producers and Suppliers Association of Nigeria (FEPSAN) to commit to the second phase of the Nigerian Presidential Fertilizer Initiative (PFI II).

The NSIA also signed a Shareholders’ Agreement (SHA) with the OCP Africa for the creation of the Joint Venture Company (JVC) which will oversee the development of an industrial platform that will produce ammonia and fertilizers in Nigeria.

The third MOU was between NSIA, OCP Africa and the Akwa Ibom State in Nigeria on land acquisition, administrative facilitation, and common agricultural development projects in the Akwa Ibom State.

The fourth was an agreement MOU between NSIA, OCP Africa, and the Nigerian National Petroleum Corporation (NNPC), to evaluate the opportunity of an equity investment by the NNPC in the JVC and for its support on gas.

The fifth was a Framework Agreement between NSIA, OCP Africa, Mobil Producing Nigeria (MPN), the NNPC and the Gas Aggregation Company Nigeria (GACN) on gas supply for the MPI.

Uche Orji, NSIA managing director, said the project forms a key part of NSIA’s gas industrialisation strategy and will deepen intra-continental trade which is essential to Africa’s development and economic renaissance.

“This landmark project, the MIP, will explore increased levels of synergy between NSIA and OCP and the partners to the transactions and ultimately ensure that Nigeria builds an industrial base that is sustainable and complimentary to mutual objectives of developing the agriculture sector in Nigeria,” Orji said.

“The change to the PFI significantly reduces NSIA involvement and transfers the responsibilities to the blenders.”

Authorities have expressed firm commitment to the project with optimism that this approach will make the programme more sustainable, strengthen the productive capacity of the blending plants and eliminate financial risk to the NSIA.

Timipre Sylva, Minister of State for Petroleum Resources and head of the Nigerian delegation, said President Muhammadu Buhari is quite committed to actualisation of this project and has mandated the Ministry of Petroleum Resources and all its agencies, notably the NNPC, DPR, NCDMB and all other government agencies to give maximum support for this project.

Welcoming the Nigerian contingent, the chairman and CEO of OCP, Mostafa Terrab, said “ultimately, these agreements will strengthen the partnership between the NSIA and OCP Group and the different institutions in the gas industry in Nigeria”.

Terrab added that the agreements will translate to knowledge transfer and broader economic opportunities as we build out the industrial platform.

“The platform will leverage the best of Nigerian and Moroccan natural resources, namely the Nigerian gas and the Moroccan phosphate and create a new basis for stronger ties,” Terrab said.

Mele Kyari, GMD NNPC, also assured that the NNPC and all its subsidiaries are committed to the project.

He hinted at NNPC’s commitment to taking equity stakes in the joint venture company and to ensure sufficient gas is available for the project to succeed.

Akwa Ibom State Governor Udom Emmanuel assured the parties that his state is committed to ensuring the PMI project is a resounding success.

“Our state is receptive to investments and we are prepared to offer the necessary support to make the project a reality,” Emmanuel said.

“With a site that is suitably located to enable operational logistics and an abundance of gas resources, all that is left is for the parties to accelerate the project development process,” he said.

Naija247news Nigeriahttps://www.naija247news.com/
Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.
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