THE NIGERIAN ETHANOL producer Nosak Distilleries is investing $30mn to boost the domestic production of sorghum, corn, and sugarcane molasses to help expand its output and reduce operating costs by cutting the use of imported fuel
Much of those raw materials now used by the firm are shipped from Brazil. Nosak Group Managing Director Toni Ogunbor says sourcing more of that fuel locally “will add to the foreign exchange gain of our economy and create thousands of employment opportunities in the value chain.”
The new investments target growers around the city of Calabar in Cross River State and will help fuel Nosak's third ethanol plant to expand beyond the firm's current production of about 320,000 litres per day.
“This will bring the daily combined production to 540,000 litres,” Ogunbor says. “This capacity, in addition to the capacity of other local producers will be enough to meet the local market demand and excess for the export market.”
Joint venture
Nosak Distilleries is a joint venture between the Nosak Group and Spain's Tradhol International. Launched in 2001, it runs two distilleries at the Amuwo Odofin Industrial Layout in Lagos producing various industrial and consumer chemicals, including ethanol, some of which is exported to Ghana.
With over 250 employees and total investments of over Naira 5 billion, Ogunbor says the firm is reengineering its operations to prepare for a listing on the Nigerian Stock Exchange and the broader hunt for capital-market investors because of what he says is the prohibitively-high cost of borrowing through Nigerian banks.
“Manufacturers find it difficult to cope with interest rate as higher as 15 per cent,” Ogunbor says. “So we want the federal government to provide intervention funds that will help manufacturers to continue production in large scale which will lead to creation of jobs for Nigerians.”
Special tax incentives
Speaking to reporters in Lagos, Ogunbor called on President Goodluck Jonathan's government to introduce special tax incentives for local producers of ethanol because, he says, national development can not be built on retail commerce alone.
“Doing business in the Nigerian environment is highly challenging. But we can not quit, especially as manufacturers. For if we all engage in buying and selling, the country would not grow,” Ogunbor says.
He says President Jonathan's intervention fund from the Bank of Industry has helped Nosak. But it is not enough, and BOI has said it can not provide further assistance because remaining funds are for smaller businesses.
"We are preparing this company to access the capital market in order to tap the abundant benefits, especially long term funds that will help us expand our production capacity,” Ogunbor says.
Boosting finance
The International Finance Corporation is working with the Dutch Development Bank and the United Nations Environment Programme Finance Initiative to boost financing for renewable-energy and low-carbon investments in Nigeria.
Environment Minister Hadiza Mailafia says the federal government is partnering with the private sector to enhance “green financing” in energy, transport, agriculture, waste management, and industry.
“The global climate challenge provides and urgent imperative to build a green economy that can deliver greater prosperity, health, and security and be an engine for economic recovery,” Mailafia says. “A low-carbon economy is an essential part of poverty alleviation in Africa.”