By Okanga Agila
These are interesting times. The Kogi State government had questioned the legality of the 100% takeover of Obajana Cement Company by Dangote Industries Limited. After carefully analyzing the issues at hand, I think that the Kogi State government has a strong case in faulting the alleged takeover of the cement factory by Dangote Industries Limited.
Let us start with the origin of what is today known as Dangote Cement Plc. The Cement factory idea was started in 1992 by the Kogi State Government under the late Prince Abubakar Audu.
Ten years later, in 2002, the Kogi State government and Dangote Industries entered a partnership to actualize the Obajana Cement Factory in its desire to attract investors to the state.
Dangote Industries Limited agreed to be a part of the project in equity in the company and provide funding for the construction of the cement factory.
Here are the issues at play; three certificates of occupancy for Obajana Cement Company Plc, which the Kogi State Government solely owned at the time, were used to obtain a loan of N63bn by Dangote Industries Limited.
There is also no evidence of consideration paid by Dangote Industries Limited to the Kogi State Government from the alleged transfer of Obajana Cement Company.
How does this sound? Not right in all ramifications. Here is another one: the Kogi State government shall endeavour to grant the company tax waivers for seven years. Also, both parties shall be responsible for project funding in equal proportion of equity ( Dangote 90% and Kogi State 10%).
This is my take on the issues of why I think Dangote Industries must have played a clever one. It obtained a loan of 63 billion using the three certificates of occupancy owned by the Kogi State government to get funding for the project. Please note that at the time that was done, ownership still resided with the government of Kogi State.
And that begets the question of what was Dangote Industries Limited’s equity in the project aside from obtaining a facility for the project with collateral that belongs to the Kogi State government and not Dangote Industries Limited. Let us pause and reflect on what would have happened if the loan had failed. Who would have been liable? Dangote Industry Limited or Kogi State government? So by my reckoning, the Kogi State government bore the bulk of the risk and was entitled to a substantial part of the profit. But this hasn’t been the case, as there is no evidence of any payment consideration to the Kogi State government since the inception of the cement factory.
That aside, the acquisition of the Obajana Cement Company by Dangote Industries Limited was without the resolution of the House of Assembly, which effectively rendered the process null and void. The sale of government property must be backed by law. This is sacrosanct.
The Kogi State government is not mandated by law to grant waivers. Therefore the tax holiday granted by the then Kogi state government was defective as only the Federal Government can grant such waivers.
There are many infractions in acquiring Obajana Cement Company from Dangote Industries Limited.
The technical committee set up by the state government highlighted this much in evaluating the legality of Dangote Cement’s acquisition.
The technical committee reported, “There is no evidence of consideration paid by Dangote Industries Limited to the Kogi state government from the alleged transfer of Obajana Cement Company Plc, and no dividend was paid to the state from the profits realized from the inception of Dangote Cement Company Plc to date.”
The committee also said the right over the mineral sites belongs to the state government and that there is “no evidence” the state relinquished it to the company.
“Certificate of Occupancy No. KG. 12357, issued in consequence of the improper merger; which issuance date reads 25th November 2016 but was doctored to read 25th November 2015. The statutory right of occupancy issued pursuant to the improper merger dated 8th February 2016 but doctored to read 8th February 2015.”
I think the story is getting more apparent on the grave exploitation suffered by the Kogi State government and why the recent position of the Kogi state government in this regard is appropriate.
Let us assume that Dangote Industries acquired Obajana Cement Company legally; the rights over the mineral sites still rest with the Kogi state government. This is a valid position, hence the liability of Dangote Cement Plc to the Kogi State government.
There are indeed infractions in the alleged acquisition of Obajana Cement Company. This is the position of the Kogi State government, and Dangote Cement Plc must stop playing the tortoise game. It had exploited the Kogi state government for several years. In a way, the action of Dangote Cement Plc can be termed criminal.
I stand with Governor Yahaya Bello on this. I think these are the sort of leaders we need in the country. Leaders with the courage to confront those principalities that have exploited the country extensively with any form of remorse. Dangote Cement Plc should dialogue with the Kogi State government towards an amicable resolution of the conflict. Resorting to grandstanding and spreading half-truths won’t solve the problem.
I believe at the end of the day; both parties would reach an amicable resolution with lessons learnt by other states in the country.
This is not the time to be clever by half. This is the time to admit, make necessary restitution, and restructure the operational ownership of the Obajana/Dangote Cement Plc. My two cents.
