Chemical, pharma industries await Dangote plant for inputs

The chemical and pharmaceutical industries are hoping the ongoing Dangote Petrochemical Plant will be completed soon to free resins and other excipients/ raw materials to them.

The two industries import most of their raw materials and often run into hitches during periods of foreign exchange scarcity.

The industries struggled badly in 2016 in the heat of FX scarcity and hope the situation would not repeat in the future.

“There is a lot of hope that Dangote Petrochemical Plant is being structured in a way as to address the inputs challenge faced by chemicals and pharmaceuticals sector,” Okey Akpa, immediate past chairman, Chemicals and Pharmaceuticals Group of the Manufacturers Association of Nigeria (MAN), said at an annual general meeting in Lagos last week.

Dangote Group is building a $12 billion facility in Lagos which contains a refinery, a petrochemical plant, fertilizer plant and gas pipelines. The petrochemical plant is expected to produce about 1 million tonnes of polypropylene and other inputs.

Akpa said Nigeria has been talking about switching on the petrochemical industry for long and now needs to take the lead by ensuring that manufacturers have access to inputs.

“Virtually every raw material in this sector has a high import dependency ratio. If you then face the scarcity of forex like we do have in this country, it poses further challenge,” he said.

Local input sourcing in the chemicals and pharmaceutical industries is below 50 percent as most of the resins and other excipients are imported.

“We need to have a petrochemical industry that will substitute what we are presently importing. It is a sector with a big potential, but this is largely unrealised because of lack of petrochemical industry,” he said.

He said Indorama Eleme Petrochemicals Plant has not reached the level where it can produce the precursors, stressing that there is no reason Nigeria cannot have a paracetamol plant locally.

“If you look at the volume of paracetamol powder being imported into this country, you will see that we have no reason for not having a local plant here,” he said.

He advocated for a right policy to attract investments in this area, which is capital intensive.

“There must be a period for investors to recoup their investments. There also must be ‘smart protection’. I call it smart protection because if someone sets up a factory and produces in a high-cost environment like ours, and you still allow unregulated importation of what he is producing in a way that he cannot sell, he cannot sustain his investments. I will like to refer to that as smart protection.”

He argued that the industries face the infrastructural challenge, which must be immediately addressed.

“This industry is yet to be competitive. If it’s not competitive, then it is set to face challenges when you throw it open to initiatives such as the African Continental Free Trade Area (AFCFTA), which is going to enlarge the market a lot more,” he said.

He expressed gratitude to the government for sustaining the fiscal policy in the pharmaceutical sector, which goes to show that industry has a bright future.

Chima Igwe, acting director-general of the Federal Institute of Industrial Research Oshodi (FIIRO), said the institute has developed a number of equipment for pharmaceutical and chemical industries.

Igwe cited equipment for water recycling and treatment of effluents as well as dryers and stamping machines as some of innovative tools that can help manufacturers.

He added that FIIRO has commercialised a high-density biscuit in collaboration with Nasco Foods. The biscuits are used for the federal government’s School Feeding Programme, he said.