Price Fixing: Dangote petitions Industry & Trade Ministry, wants BUA Sugar Refinery shut down

*It is all about our refusal to increase sugar price at the expense of consumers during Ramadan ─BUA Group

Isola Moses | ConsumerConnect

Dominant Nigerian sugar producers’ attempts at setting the sugar price at a level that competitors can match in order to avoid price cutting in favour of product consumers are fast generating concerns among the stakeholders in the industry.

Subsequently, the bubbles which a major price war said to have been ignited for some time now, seemed to have burst with Dangote Group’s decision to petition the Federal Government of Nigeria, requesting the Federal Ministry of Ministry of Industry, Trade and Investment to shut down BUA Group’s Sugar Refinery located in Port Harcourt, Rivers State capital.

It was gathered Nigerian multibillionaire, Alhaji Aliko Dangote, Chairman of Dangote Industries Limited, in a letter dated 28th January, 2021, alleged that at the time BUA Sugar Refinery was opened in Port Harcourt, he had cautioned the Federal Government against the development, and said the authorities told him that ‘no new refinery would be allowed to operate in Nigeria.’

A copy of Dangote Group’s petition to Federal Government

In what observers have described as undue monopoly of sort, which could be detrimental to consumers’ interest in the economy, Dangote reportedly later accused BUA of operating with impunity by contravening the stipulated laws in the National Sugar Policy by selling its products in Nigeria instead of producing for export alone.

BUA Group, however, in defence of its operations wrote a letter to Otunba Niyi Adebayo, CON, Honourable Minister for Industry, Trade and Investment, clarifying issues that the law allows the company to sell sugar products within the country.

Attaching the enabling permits and due approval to that effect, BUA stated that because of the connivance of the two major sugar manufacturers to hike sugar price during the Ramadan period, the law allows the company to sell its product locally.

BUA also warned that Dangote Group and another dominant player in the sugar industry have not been involved in any backward integration project.

Rather, the companies depend on 80 percent raw sugar allocation, which is detrimental to the Nigerian economy in a long-term analysis, the firm alleged.

According to BUA, the company has been involved in backward integration project with its Lafiagi Sugar BIP set to be completed in 2022.

 

BUA Sugar Refinery Complex, in Port Harcourt

It noted that over US$250million has been spent on the export-focused BUA Sugar Refinery already, and it is also employing over 1,000 Nigerians.

The group as well stated that ‘price war’ between the company and other stakeholders is at the centre of the current attempt to force the Federal Government to shut down the BUA Sugar Refinery.

The company further recalled that in 2020 before Ramadan fast period, a bag of sugar sold for about N18,000 in Nigeria.

However, as Ramadan fasting started in the past year, the price of the product suddenly rose to N30,000 per bag while the consumers had to bear the price increase, it said.

A copy of BUA Group’s Response Letter to the Minister for Industry, Trade and Investment

BUA Group stressed that Nigerian consumers at the time had no choice but to buy sugar  because they needed much of the product during the Islamic fast period, and the sugar manufacturers were smiling to the bank.

Nonetheless, in a way to protect the consumers’ interest in connection with the high price of sugar in the country last year, BUA Group disclosed that it noticed the trend and decided that it had to change.

There was no reason to increase the price during Ramadan simply because the demand is high, it said, saying that usually, the price increase happens about a month to commencement of the fasting period.

In the thick of the price increase in the past year, the company stated when the other sugar manufacturers got across to BUA so as to increase sugar price as well, Alhaji Abdulsamad Rabiu, CON, Chairman of BUA Group, refused to budge.

The other sugar producers reportedly put pressure on him, suggesting that it was the right time to make “good money”, but he put his feet down by not joining the fray.

The company stated that after failing to follow suit by increasing the product price like others, the competitors petitioned the Federal Government that he was breaking the law by selling sugar locally instead of for export.

Meanwhile, sequel to the raging product price war and attendant move by the competitors to make the government shut down the BUA Group Sugar Refinery in Port Harcourt, it was learnt that BUA already has instituted a legal action against the Minister for Industry, Trade and Investment in order to ensure that the operations of the sugar refinery are not tampered with.

It is all because of an apparent desperate attempt by Dangote Group to monopolise the sugar trade in Nigeria, BUA alleged.

Additional reporting by Alexander Davis

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