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NSIA: $350m Saved from Presidential Fertiliser Initiative Implementation


Over $350 million has been saved from the erstwhile payments on subsidy and import substitution through the implementation of the Presidential Fertiliser Initiative (PFI), the Nigerian Sovereign Investment Authority (NSIA) has said.
The Managing Director and Chief Executive Officer of NSIA, Mr. Uche Orji, in a statement yesterday said with the support of President Muhammadu Buhari, the programme had accomplished its principal objectives.

He said: “Having fulfilled the establishment, stabilisation and market discipline phase of PFI, the primary objective of which was to revive the blending plants and create a viable domestic blending industry, we believe the PFI should gradually evolve into the next phase, which is a tactical withdrawal of intervention in the industry and the emergence of a self-sufficient, sustainable, and efficiently operated market.

“NSIA is pleased with the government’s decision and looks forward to seeing the innovation and creativity which will characterise the open market in the sector.”

The presidency had approved the restructuring of PFI, starting in the 2021 cycle with various modifications, following the successes recorded over the past four years.

Under the modifications, the NSIA has been transitioned to an upstream player thereby limiting its involvement to importation, storage and the wholesale of raw materials to blenders.

The NSIA subsidiary, NAIC-NPK Limited, will be spun off to the Ministry of Finance Incorporated.

Under the new arrangement, blenders will no longer be paid blending fees by NAIC-NPK as they will recover their costs directly from selling the fertiliser to the market.

This will balance the incentives of the business and ensure the blenders build the right capacity to actively participate in the local supply sub-sector.

The blending plants are expected to provide bank guarantees to cover requisitioned raw materials demand that are appropriated for their respective production volumes.

As part of the new structure and in line with the Presidential directive, the Federal Ministry of Finance Budget and National Planning and the Central Bank of Nigeria (CBN) are expected to engage commercial banks to facilitate lines of concessionary credits to blending plants for the purchase of raw materials.

It is also expected that the CBN will ensure that the foreign exchange needed for the programme is provided as and when needed to cover some raw materials.

The approval, issued in November of 2020, and which takes effect immediately, was communicated in a letter through the Office of the Chief of Staff to the President.

Under the new arrangement, blenders will be responsible for the bulk of the activities in the fertiliser production value chain such as transporting the raw materials, sourcing filler, blending the fertiliser and selling to off-takers.

Also, the Federal Ministry of Agriculture and Rural Development will perform its statutory monitoring and quality control role over blender activities.
The benefits of this new approach include but not limited to the unlocking of more development finance (loans and investments) into the local fertiliser blending value chain of Nigeria.

It will also strengthen market systems and encouraging actor participation.
This will lead potentially to mergers and acquisition and innovation and growth across the industry which will benefit farmers.

The new approach will further reduce food price inflation in the market as the availability of fertiliser will drive down the price or cost of food product.
It is also expected to reduce the high rate of unemployment as more people will become engaged in the production process.

In his comment, the Chairman, Implementing Committee of the PFI and Jigawa State Governor, Alhaji Abubakar Badaru said: “The programme has in many ways served to augment the administration’s policy-driven programmes to diversify the Nigerian economy.

“In the main, the programme has bolstered Nigeria’s industrial base, resuscitated and strengthened domestic production capacity for fertiliser, eliminated to the huge fertiliser subsidy burden placed on the federal government, created thousands of direct and indirect jobs and alleviate the plight of the domestic farmer by ensuring availability of fertiliser.
“Clearly, the programme is a strong value proposition for the nation in the agriculture space given the variety of socio-economic benefits, it presents. We are grateful to Mr. President for creating this programme and look forwards to supporting the next phase as it evolves.”

Chairman, the Fertiliser Producers and Suppliers Association of Nigeria, Mr. Thomas Etuh, said the restructuring was a welcome development for FEPSAN.
“The new approach will afford operators the opportunity to build recognisable and trusted brand while ramping up distribution nationwide.”

According to him, within four years of the initiative, the programme has delivered on key outcomes, including over 30 million bags of 50kg NPK 20:10:10 equivalent spanning project period; price reduction on fertiliser from over N10, 000 to under N5, 500.

He also said that 41 blending plants had been resuscitated from the initial four plants at project inception, adding that an estimated 250,000 jobs (direct and indirect)across the agriculture value chain, including in logistics, ports, bagging, rail, industrial warehousing and haulage touchpoints amongst others have been created.

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