The Nigerian National Petroleum Corporation (NNPC) in a joint venture with Chevron Nigeria Limited (CNL) has signed a gas aggregation deal with Dangote Fertilizer Limited, with the Gas Aggregation Company of Nigeria Limited(GACN) being the “aggregator.”
Under the agreement, NNPC and CNL are obligated to supply 70 million standard cubic feet of natural gas to Dangote Fertiliser per day. This is to enable the startup and operation of the newly built fertiliser plant.
With the capacity of producing up to 2.8 million tons of urea per annum, the Dangote fertilizer plant is the biggest in Africa. It is designed to support the Nigerian Federal Government’s drive to develop the agricultural sector and in-turn improve the Nigerian economy.
No financial details have been given as regards the partnership, but the operation of this fertilizer plant is set to begin in 2020.
Once functional, it is expected to boost Nigeria’s agricultural sector, reduce the country’s imports of fertilizer, make it competitive in the international market and serve as a major source of foreign exchange in Nigeria.
More so, this development will create room for Nigeria to channel funds into other areas that the country is in dire need for improvement in, like steel and textile.
However, there are fears this may be a move towards monopoly over fertilization production in Nigeria as prices and output of fertilizer products will be solely determined by the company.
The government has to regulate pricing properly to ensure local farmers at the bottom of the agricultural chain benefit from the development.