Backward integration: Dangote targets 700,000MT of refined sugar

Dangote Sugar Refinery

. As Q1 revenues rise by 20.1% to N122.7bn

 By Stanley Onyeka, Lagos

Dangote Sugar Refinery Plc (DSR) has unveiled plans to produce 700,000 metric tonnes of refined sugar from locally grown sugarcane in the next four years, through its Backward Integration Programme (BIP).

DSR Chairman, Aliko Dangote stated this at the company’s 18th Annual General Meeting (AGM) held yesterday in Lagos, just as the Nigerian Exchange released the company’s first-quarter result for 2024, indicating an increase of 20.1% in its revenue to N122.7 billion.

At the AGM, Dangote said that in alignment with the Federal Government of Nigeria’s policy guidelines, DSR continues to focus on and enhance its Backward Integration Project (BIP) by deploying and reviewing project strategies to ensure efficient delivery, according to the company’s statement.

He noted that the 700,000MT would meet 50% of the current market demand for refined sugar, adding that the 10-year sugar development plan to produce 1.5 million MT of sugar annually from locally grown sugarcane remains a germane roadmap to the attainment of the Company’s objectives.

He was quoted as saying: “Our focus is on achieving the revised targets set for DSR Numan Operations, Dangote Adamawa Sugar Limited, and Nasarawa Sugar Company Limited, while we are hopeful that the Taraba State Government will resolve the community payment issues that have led to the stoppage of activities at the Dangote Taraba Sugar Limited, Lau/Tau project.

 “During the year under review, despite the challenges we were faced with, the company significantly scaled up investment in the Backward Integration Projects with the ongoing expansion of the DSR Numan factory refining capacity from 3,000TCD to 9,800TCD year-end.

“The factory will be increased with an additional 5,200TCD to 15,000 TCD (tonnes of cane crushed per day) eventually to meet the need in view of the massive land development activities also going on at the site. The aim is to achieve 24,200 hectares in total by the year 2029.”

He also emphasised that despite the adverse impact on the business environment by the continuous increase in the inflationary trend, lack of liquidity and foreign exchange (FX) to fund the company’s equipment import among others for the backward integration projects, concerted efforts are ongoing to secure the needed funds for the development of the Nasarawa Sugar Company at Tunga in Awe Local Government Area of the state.

“This will enable the company to put in place the needed infrastructure for the eventual commencement of full-scale production and ensure that the Dangote Sugar Backward Integration ‘Sugar for Nigeria Project’ is achieved. In the end, over $700 million investment would be committed to the Backward Integration Programme,” he added.

Achieving the backward integration goals will go a long way in delivering the anticipated benefits, especially in FX savings and cushioning its impact on our operations amongst other benefits to the company, all stakeholders, and the nation.

Dangote also informed that the Dangote Sugar (Ghana) Limited, was established as a subsidiary of the Company during the year under review, in line with the plan to expand its presence in the sugar industry across Africa.

On outlook, he said that “achievement of the goals of the Sugar Backward Integration Master Plan remains our focus. This will go a long way in delivering the anticipated benefits, especially in FX savings and cushioning its impact on our operations amongst other benefits to the company, all stakeholders, and the nation.”

Group Managing Director/CEO of Dangote Sugar, Ravindra Singhvi, said: “Despite these challenges, we are resolute and focused on the delivery of our business targets in the medium to long term.

“As we continue to navigate through the scarcity and high cost of foreign exchange, escalating costs of raw materials amongst others, our focus is to enhance the effectiveness of our supply chain processes, optimise cost, improve our operational efficiencies and delivery on our Sugar for Nigeria backward integration project.”

He added that “Achievement of a sustainable business remains one of our key strategies and concerted efforts were made towards sustaining the achievements we have recorded in the past.”

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