Project cost and funding mix
According to Wapmuk (2021), the project cost of the Indorama Eleme Fertilizer & Chemicals Limited is USD 1.2 billion. The total debt financing is USD 800 million, and equity financing is USD 400 million.
The main subjects of the financing were the International Finance Corporation (IFC, $ 200 million), the Dutch entrepreneurial development bank (FMO, $ 30 million), the German development finance institution (DEG, $ 35 million), CDC Group ($ 40 million), African Development Bank (AfDB, $ 100 million), Biotechnology Innovation Organization (BIO, $ 15 million). The eight-year international bank tranche providers were Standard Chartered ($ 60 million) and Afreximbank ($ 75 million). Local lending banks were Stanbic ($ 50 million), Emerging Africa Infrastructure Fund ($ 30 million), Guaranty Trust Bank ($ 40 million), Ecobank ($ 40 million), Access Bank ($ 10 million), and United Bank of Africa. ($ 20 million).
In 2018, the company was provided with another loan financing for the building of a new plant in addition to the existing one. According to Nigeria secures, $ 1 billion for fertilizer plant (2018), IFC provided $ 100 million of its own funds and raised another $ 850 million from other development financial institutions and commercial banks. Among them are the European Investment Bank, Standard Bank, Yes Bank, CDC Group, African Development Bank, Bank of Baroda, and Standard Bank. Moreover, Standard Chartered, Bangkok Bank, FMO, DEG, Emerging Africa Infrastructure Fund, Proparco, ICICI Bank, and Citibank also participated in the deal.
Demand, supply, and risks
Nigeria has realized enormous potential for achieving agricultural self-sufficiency and food security, which has led to a manifold increase in the consumption of fertilizers in the domestic market.
Indorama Eleme Fertilizer & Chemicals Limited has a production capacity of 2,300 tonnes per day of ammonia and 4,000 tonnes per day of granular urea, making it the world’s largest urea plant. Accordingly, the company produces 800 thousand tons of ammonia and 2800 thousand tons of urea per year.
Among the risks first of all, environmental and social ones stand out. Indorama Eleme Fertilizer & Chemicals Limited (n.d.) indicates negative ecological impacts resulting from the increased production of polyolefin materials and problems associated with the disposal of non-biodegradable polymers. An equally significant risk is employee dissatisfaction. The Office of the Compliance Advisor Ombudsman (2019) states that in April 2018, a complaint was received from 134 company employees who expressed concerns about low wages and discrimination.
Initial problems with the project and final restructuring
According to Wapmuk (2021), the first $ 800 million debt financing was closed quickly, despite the involvement of at least ten creditors. The first FCU, completed in 2018, has been installed as part of the construction of the Eleme Fertilizer Line I fertilizer production line and is operating satisfactorily. FCU II will be located alongside the existing FCU. The project is expected to launch in April 2022, about a year after the launch of Eleme II.
According to Overview: World largest single stream fertilizer project (n.d.), both IFL urea lines were funded by the International Finance Corporation (IFC) and various credit institutions. With their help, IFL has implemented a robust stakeholder engagement plan to address social issues. IFL has also developed the highest ethical standards for working conditions and relationships between management, staff, and employees in strict accordance with IFC Performance Standard 2. Indorama Eleme Fertilizer and Chemicals Limited. (n.d.) notes that nowadays, the company has completed the environmental and social action plans associated with previous IFC investments, has developed robust ecological and social management systems for all of its operations and has built the organizational capacity to manage and monitor its operations.
References
Wapmuk, S. (2021). Nigeria-India relations in a changing world. Lexington Books.
Indorama Eleme Fertilizer & Chemicals Limited. (n.d.). CDC Group Plc.
Indorama Eleme Fertilizer and Chemicals Limited. (n.d.). IFC.
Nigeria secures $1 billion for fertilizer plant. (2018). Indorama Corporation.
Office of the Compliance Advisor Ombudsman. (2019). CAO ASSESSMENT REPORT: Regarding concerns in relation to IFC’s investment in Eleme Fertilizer I and II (Projects #30967 and #40420) in Nigeria [PDF document]. Web.
Overview: World largest single stream fertilizer project. (n.d.). Indorama Corporation.