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Tuesday, March 28, 2023

What Dangote Sugar Reveals about Lack of Major Factories in Eastern Nigeria

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A look into the financials of Dangote Sugar Refinery shows that Lagos, and Northern Nigeria are responsible for the majority of the sales of the firm.

The Group has 4 reportable segments based on location of the principal operations as follows: Northern Nigeria, Western Nigeria, Eastern Nigeria and Lagos.

Revenues from Lagos was equivalent to N77.2 billion in September 2020, compared to N60.66 billion for the North, N15.2 billion for Western Nigeria and N7.4 billion for Eastern Nigeria.

Dangote Sugar had total assets including plant and machinery of N194.4 billion in the Lagos business unit and N65.4 billion in the North.

There are two customers who buy industrial non-fortified sugar that represents more than 10 percent of total sales of Dangote Sugar. These are Nigeria Bottling Company Limited and Seven Up Bottling Company Limited operating from Lagos.

Large Corporate and Industrial users such as leading blue chip companies in Nigeria including manufacturers of confectioneries and soft drinks account for 35 percent of Dangote Sugar Group’s sales. They buy Non-Fortified sugar exclusively.

The Group sells unfortified sugar mainly to pharmaceutical, food and beverage manufacturers, while Vitamin A-fortified sugar is sold to distributors who sell to small wholesalers, and other smaller value-adding enterprises who provide the distribution network to the Nigerian retail market.

The Group also sells a small amount of sugar directly to retail customers. Retail packaging comes in various sizes of 250g, 500g and 1kg under the brand name ‘Dangote Sugar’. Sales to distributors account for 65 percent of the Group’s revenue.

Dangote Sugar’s after-tax profit surged 81 percent to N26.62 billion in the nine months’ period to September 2020.

The numbers above tell a tale of a lack of major consumer goods and pharmaceutical factories in Eastern Nigeria and the Governors of the region may do well to fix the infrastructure and regulatory bottlenecks holding back big investors from the region.

Dangote Sugar is a world class 1.44MT/PA facility located at Shed 20 NPA Apapa Wharf Complex, at Apapa Wharf Lagos with a dedicated jetty that berths large shipments of raw sugar from Brazil. The facility, commissioned in year 2000, was the first sugar refinery build in Nigeria, with an initial refining capacity of 600,000MTPA.

Over the years, the facility has undergone two major upgrades which turned it into one of the largest sugar refineries in the world with 1.44MTPA refining capacity, at the same location. The refinery is powered efficiently with gas and/or Low-Pour Fuel Oil (LPFO) with 16MW of in-house power generating capability.

Dangote Sugar refinery operations are supported by warehouses located strategically across the country, served with over 400 trucks that deliver finished products to various markets.

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