Presidential Fertilizer Initiative (PFI) Releases New Whistle blower Numbers

by Bamidele Ogunberu Posted on August 23rd, 2017

Kaduna, Nigeria. The Executive Secretary, Fertilizer Producers and suppliers Association of Nigeria (FEPSAN) Alhaji Ahmed Rabiu Kwa, in a press release issued and made available to newsmen in Kaduna on Tuesday stated that the Presidential Fertilizer Initiative (PFI) has released new numbers for it’s whistle blower program to enable stakeholders register their complaints, feedback and dissatisfaction about the program. He disclosed that the old numbers given to whistleblowers are no longer in use, urging Nigerians to use the new numbers which are 081175777724, 08175077773.

Rabiu Kwa, urged members of the public to call the numbers to report any form of irregularity noticed in and about the programe to enable the PFI whistleblowing Policy under President Muhammadu Buhari succeed.

Photo: Audu Ogbeh Nigeria Agriculture Minister

He also disclosed that plans are on to establish a taskforce to be supervised by the office of the National Security Adviser (NSA) with sole responsibility of combating hoarding, racketing and adulteration of the product.

The Presidential Fertilizer Initiative

In December 2016 the King of Morocco, His Royal Majesty Mohammed VI, paid a 2-day state visit to Nigeria. He was hosted by President Muhammadu Buhari, in Abuja. During the visit, the two leaders oversaw the signing of several agreements. One of these was conceived as Partnership between the Fertiliser Producers and Suppliers of Nigeria, FEPSAN and OCP, a state-owned Moroccan company and a world leader in phosphate and its derivatives, in which OCP would supply discounted phosphate to Nigeria, to help support the domestic blending of NPK Fertiliser starting in 2017.

Following the signing of that agreement, the stage was set for implementation. The stated goal was/is to achieve the local production of one million metric tonnes of blended Nitrogen, Phosphorous and Potassium (NPK) Fertiliser for the 2017 wet season farming, and an additional 500,000 metric tonnes for dry season farming.

Prior to 2017, most of Nigeria’s stock of blended NPK Fertiliser was shipped into the country as fully-finished products, even though Urea and Limestone, which constitute roughly two-thirds of the component of each bag, are available locally. To make the imported Fertiliser available to farmers at reasonable prices, a subsidy scheme was birthed, and which cost tens of billions of naira annually.

Basically, the objective of the Presidential Initiative is to ‘disrupt’ this importation of blended Fertiliser status-quo, by directly negotiating discounted contracts to procure the 4 constituent raw materials for NPK Fertiliser — locally-sourced Urea, locally-sourced Limestone granules (LSG), Diammonium Phosphate (DAP) imported from Morocco, and Muriate of Potash (MOP) sourced from Europe — and blending these locally to produce NPK Fertiliser at reduced cost.

Note that the PFI is concerned only with the production of NPK Fertiliser, which is what is known as a “multi-nutrient” Fertiliser. Other types of Fertiliser exist, like ‘Single Super Phosphate’, and ‘Urea’, which are both examples of “single nutrient” Fertilisers, and are already being manufactured locally in Nigeria. Urea — which apart from being a single-nutrient Fertilizer, is also a component of NPK, is produced by Indorama Eleme Fertilizer and Chemicals (IEFCL) Company and Notore Chemical Industries, both in Rivers State.

The discounts and savings accruing from the PFI negotiations with suppliers (OCP and by extension the Government of Morocco in the case of Phosphate, and private companies in the case of the others) are passed on to the blending plants and then the farmers. This is what allows the finished products to be delivered to Nigeria’s farmers at a starting price of about ₦5,500 per bag, compared to the ₦8,000 — ₦9,000 cost of imported fertilizer.

Since the goal was to revive Nigeria’s well-below-capacity local blending industry, the CBN has designated the Nigeria Sovereign Investment Authority (NSIA) to manage the 9 percent per annum Fund on behalf of FEPSAN. Because managing a Fertiliser Fund is not the NSIA’s core mandate, it established a Special Purpose Vehicle, known as NAIC-NPK Limited (where NAIC = ‘NSIA Agric Investment Company’), to carry this function out on its behalf.

As has been pointed out above, FEPSAN has already successfully negotiated substantial discounts with the suppliers/producer of the four main raw materials (the two from abroad, and the two sourced locally). For each batch of raw material required under the PFI, FEPSAN makes available to NAIC-NPK Limited the invoices from the suppliers.

NAIC-NPK Limited then pays the suppliers directly, on behalf of FEPSAN; takes delivery of the raw materials, and then supplies these raw materials to the blending plants, which it has already signed on as contract blenders. (For this contract-blending NAIC-NPK Limited pays the blenders a fee).

The blending plants then produce, bag and sell the finished, packaged fertilizer to Agro-dealers and State Governments at the cost of 5,000 per bag, and remit this revenue to NAIC-NPK Limited, for re-investment into the next phase of production. The PFI is therefore a self-sustaining revolving fund, in which the revenues are re-invested into subsequent production cycles.

This price of 5,000 per bag at which the blending plants are mandated to sell covers the blending plants’ labour, cost of production, cost of packaging, interest costs (the 9% interest on the capital), etc, alongside a modest profit margin. The price modelling of the PFI was carefully done such that the 5,000 factory selling price covers the complete cost of production (recall that this is possible on account of the generous discounts already negotiated with the raw materials’ suppliers, by FEPSAN).

The discounts are therefore passed on from the suppliers of the raw materials straight to the end-users of the Fertilisers, i.e. the farmers — and not the blending plants or the Agro-dealers.

The Agro-dealers and State Governments then sell the blended Fertiliser to the end-user farmers at the cost of 5,500 per bag, which allows them to cover transport costs and make a modest profit. This is how the PFI is able to sell the finished product at 5,500 per bag, compared to the 8,000–9,000 naira per bag at which imported, finished Fertiliser is sold.

The Presidential Fertilizer Initiative has been effective in securing a supply of quality Fertilisers by bringing in raw materials required for the production of the item in line with the crops and soils adaptable to Nigeria, stimulating local production of NPK Fertiliser by resuscitating moribund Fertiliser plants, and reviving the local blending Fertiliser industry, making Fertiliser available to Nigerian farmers at affordable prices and in time for the 2017 wet and dry season farming, enhancing food security as a result of the expected increase in food production, reducing food-induced inflation and stimulation of economic activities across the agriculture value chain.

The PFI has also been instrumental in creating thousands of direct and indirect jobs — so far a minimum of 1,100 factory jobs; and 2,600 transport jobs (truck drivers and drivers’ assistants), strengthening capacity to ensure a timely supply of quality Fertilisers in adequate quantities and in a cost–effective manner to rural areas as well as an efficient supply chain and improvement of logistics management, including warehousing and transportation services; and strengthening the agricultural extension services system and stimulating product innovation and development through the deployment of the Moroccan expertise in producing scientifically recommended formulae adaptable to the needs of the Nigerian soil.

Beyond the broader goal of ensuring food security for the country by providing high-grade fertilizer to enhance harvest in the 2017 farming season, the Buhari Administration is by this initiative reinforcing its commitment to reviving and diversifying the economy, and creating growth, through a focus on agriculture.

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