IGNATIUS CHUKWU writes that private takeover of Eleme Petrochemical Company has paid off with the thriving firm now delivering good returns to investors including Rivers State which has earned N5 billion dividend in four years.
Nigeria's only petrochemical company in Eleme, near Port Harcourt, Rivers State, now sold to a group of investors led by an Indonesian group, Indorama, has evidently boosted the nation's economy, helping Rivers State to garner over N5bn as dividend in just four years. Rivers State is part of the 75 per cent ownership held by Indorama, which makes the company to be called Indorama/Eleme Petrochemicals Limited (Indorama/EPCL)
The company was managed by the Nigerian National Petroleum Corporation (NNPC) until it was shut down for two whole years due to failure for decades to attempt one successful turn around maintenance (TAM). In 2006 the company changed hands in what was seen as Nigeria's most successful privatization exercise, though President Olusegun Obasanjo drew flaks for selling the 'dead elephant'.
Now, according to the managing director, Manish Mundra, the company has not only surpassed 100 per cent installation capacity but is exporting polymer resins (used in manufacture of plastics) to Europe, Asia and Africa. Now, Indorama is contributing about 10 per cent to Nigeria's non-oil export.
Mundra disclosed recently at an exclusive function in the company's headquarters in Port Harcourt that "our company has made tremendous progress to put Nigeria on the petrochemicals export map". This was confirmed by a performance merit award in October 2010 by the federal government of Nigeria through the Nigerian Export Promotions Council (NEPC).
Apparently buoyed by the excellent performance of Indorama/EPCL, the expatriate chief executive has expressed confidence that Nigeria as a country can truly become an industrialized nation and exporter. "After operating for four years, Indorama/EPCL has shown that Nigeria can do it and has done it".
Industry sources said Indorama/EPCL has become a world-class organization whose high-quality polymer resins are exported to 20 countries of the world, by which feat Nigeria has become a net exporter of petrochemical products. The export now account for about 10 per cent of Nigeria's non-oil exports. The Indonesian experts in Eleme have expressed firm belief that Nigeria is a great country and that those working in industrial concerns such as EPCL had a responsibility to make the country greater.
Rivers State as a host state under former governor, Peter Odili, sunk some billions of naira in some ventures including EPCL, Tinapa, Zenith Bank, Fidelity Bank, Unity Bank, etc but Odili's successor, Amaechi, told BusinessDay in an exclusive interview recently that of all these, the EPCL investment has turned out to be the most lucrative. "All I know is that the past administration did some good investments which are yielding dividends today. The investment he (Odili) made in Indorama Eleme Petrochemical in Eleme, we have recovered our capital and we have received, I think, about N5bn. The one in Zenith Bank, I think we have got N500m out of the N6bn they invested there. I think he made some good investments"
Now, management of the company has asked the workforce to brace up for the next phase after surpassing 100 per cent installed production capacity for expansion to produce fertilizer and enthanol. Should this come true the state would boast of two fertilizer plants, (NAFCON, now bought over by Notore) which resumed production in 2009, after many years of dormancy in government's hands.
Hints for a new fertilizer plant once came from then deputy managing director, Mundra, who is now the substantive MD, while conducting the lawmaker representing Eleme in the Rivers State House of Assembly, Isaac Kamalu, round the complex.
The MD had then told his guest during a briefing that Indorama planned to establish a fertilizer plant in the complex, and had appealed to the government to intervene in the supply of Natural Gas Liquid (NGL) to the company to save its production. NGL is the raw materials used at EPCL
The supply of the natural gas liquid had been another nightmare stifling operations of the company, which had caused stir when EPCL was being considered for privatization in 2006. Apprehension was high then that the company's plants and machines were rusty and could not restart in 25 months of efforts. Others had hinted that scarcity of NGL was going to stifle any buyer out of operation, but Indorama had delved into the venture.
Now, the lead technical expert in the place, Deepak Kedia, who is moving on to higher responsibilities in the headquarters in Jarkata, Indonesia, has revealed in an in-house journal (Impact) that the technical team performed what today represents a miracle by concluding a TAM in the place in 25 days.
Disclosing the secrets, Kedia told Impact that the team did predictive in-shipping by ordering for components and parts even before gaining full access to the dormant plants. When they gained full insight, their gamble proved a hit.
When NGL became a limitation, Kedia revealed that the team rather did external fire-fighting by offering to repair the plants of their suppliers, a strategy that has wiped away the tears of Indorama/EPCL in terms of free flow of the liquid natural gas.
With this proven technical creativity, Indorama/EPCL is believed to have met and surpassed targets, made huge dividends to its owners, boosted the economy of the local community (jobs, projects, scholarships, training, facilities, etc,) and helped the host state government to lift N5bn in less than four years. Mundra particularly said Indorama has added great value to the old EPCL through employment opportunities, import substitution, community development, and general socio-economic development of Nigeria.
By the plan to build fertilizer and ethanol plants, Indorama would be fulfilling one of the charges by Obasanjo at the re-commissioning in October 2006 to produce fertilizer in the face the failure (then) of the NAFCON buyers to begin fertilizer production then.
The company suffered huge set back in 2007 when 'back-to-back kidnapping' hit its top management, an experience Kedia said he would not easily forget, even as he jets back to Jakarta. The company stopped production for about two months but later overcame the psychological and financial trauma.
Observers say the company may have over-reacted to the incident by the huge security presence it introduced, the heavy restrictions imposed and the almost total news shot-out (de-publicity) it applied. Today, many journalists covering the state would hardly remember how the premises of the company look like.
Today, however, according to the outgoing technical head, Indorama/EPCL has overcome all that and since 2007, has grown by over 25 per cent per year. This has translated in huge returns on investment (ROI) to the owners and stakeholders and has launched Nigeria to global petrochemical status. It has, according to Mundra, served as a test to whether Nigeria can make it or not as an industrial power. "The conclusion is that if privatization is done right, Nigerians and their foreign partners can create an industrial hub in West Africa to marvel the world", an industrial analyst with one of the trade missions in the Garden City noted .