The Federal Government has revealed that the incentives or tax reliefs granted to sugar-producing giants BUA, Flour Mills and Dangote in order to improve the local production of sugar have failed. This comes after the three top sugar companies imported 13.6 million tonnes of raw sugar under the Backward Integration Programme (BIP) which was apparently a failed project as findings show that no tangible improvement has been recorded; total local production stands at a mere 600,000 tonnes or five per cent of the imports.
The BIP policy was introduced to cut down the importation of sugar while creating millions of job opportunities for the Nigerian populace. The policy includes five-year tax relief for investors in the sugar value chain; a 10 per cent import duty and 50 per cent levy on imported raw sugar; 20 per cent duty and 60 per cent levy for imported refined sugar. With the National Sugar Master Plan (NSMP) between 2016 and 2020, another 10 per cent duty and 80 per cent levy for raw sugar; 20 per cent duty and 85 per cent levy for refined sugar imports were provided.
As a way to salvage the situation, the Executive Secretary of the National Sugar Development Council (NSDC), Mr Zacch Adedeji, said henceforth, the sugar quota allocation of any sugar firm would be based on their performance under the BIP of the National Sugar Masterplan. Adedeji made this known at a tour of sugar refining sites in Lagos operated by BUA, Flour Mills and Dangote Sugar. During the visit, the executive secretary explained that government would take the implementation of the sugar masterplan seriously as the council commences the second phase in 2023.
He noted that the approval for raw sugar quota allocations to refineries would now be strictly based on their commitment to the BIP which they have signed onto. “The next phase we are going, there is going to be a change, and the change in the next phase, which I want you to start having that model is that I will restrict the sugar allocation to your performance in the Backward Integration Programme. What this means is that if what you promised us from the BIP is only ten per cent of our self-sufficiency, you will only get ten per cent of the total allocation for sugar. “Because the only reason why we are giving the projective tariff is that the difference between 70 per cent and the certain percentage you are being given is meant to be used on the farm.
“But if your total farm projection is not up to the quota you are collecting, that is a mismatch because if we are giving you 100 per cent and you are not producing 100 per cent, it means that at the end of the programme we will fail,” explained Adedeji. He also noted that some sugar firms had not reached their quota, adding that the government would be able to achieve more if these companies could work with farmers or landowners to grow sugar cane.