The African Development Bank (AfDB) has reached a $75 million loan agreement with Indorama Eleme Fertilizer and Chemicals Limited, marking a significant investment to amplify Nigeria’s fertiliser production capacity and boost its export potential.
According to a statement from the AfDB, the strategic deployment of funds is earmarked for the expansion of Indorama’s fertiliser production through the addition of a third urea production line, as well as the development of a new port terminal at its Port Harcourt complex.
This expansion is not just a nod to increasing the domestic supply but is designed to position Nigeria as a formidable player in the international fertiliser market.
The envisaged production line boasts an impressive annual capacity target of 1.4 million metric tons of urea, further cementing urea’s status as a cornerstone fertiliser in global agriculture.
With the proposed expansion, the company is not only anticipated to bolster food production domestically but also enhance food security across regional and international markets.
The statement read:
- “The African Development Bank has signed a $75 million loan agreement with Nigeria’s Indorama Eleme Fertilizer and Chemicals Limited. The loan will enable Indorama to increase its fertilizer production and develop a port terminal for exports, supporting food production and food security across regional and international markets, while fostering job creation in Nigeria.
- “The expansion will include the development of a third urea fertilizer production line and a new shipping terminal at Indorama’s facilities in Port Harcourt. The new production line is expected to have an annual capacity of 1.4 million metric tons of urea, one of the most widely used fertilizers worldwide.
- “Indorama’s two operational urea fertilizer lines serve Nigeria’s domestic market, supporting the country’s agricultural sector, which accounts for a quarter of its GDP and employs about a third of its labour force. The new production line and terminal, which will help meet growing global demand for fertilizer, are expected to create up to 8,000 direct and indirect jobs in Nigeria.”
AfDB’s loan a faction of $1.25 billion
The AfDB’s $75 million senior loan is a fraction of a broader $1.25 billion financing arrangement headed by the IFC. This financial package comprises contributions from a consortium of international development finance institutions and commercial banks.
The collective commitment is a testament to the project’s potential to stimulate agricultural growth, enhance food security, and create employment opportunities, thus contributing substantially to Nigeria’s socioeconomic development.
The statement added:
- “The $75 million senior loan is part of a $ 1.25 billion facility arranged by IFC. The financing package includes a $215.5 million loan from IFC’s own account, a $94.5 million loan through the Managed Co-Lending Portfolio Program (MCPP), and $940 million in parallel loans mobilized from other development finance institutions and commercial banks, such as the African Development Bank, Bangkok Bank, British International Investment, Citibank, Deutsche Investitions- und Entwicklungsgesellschaft (DEG), DZ Bank, Emerging Africa Infrastructure Fund (EAIF), Rand Merchant Bank, Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden (FMO), Export-Import Bank of India (India Exim Bank), Export-Import Bank of Korea (KEXIM), the Standard Bank Group, Standard Chartered Bank, and the United States International Development Finance Corporation (DFC).”
Ousmane Fall, the Acting Director of Industrial and Trade Development Department at AfDB, expressed pride in the partnership with Indorama, International Finance Corporation (IFC), and other lenders, heralding it as a venture with significant developmental outcomes for Nigeria.
Manish Mundra, Indorama Corporation’s Group Director for Africa, underscored the initiative’s alignment with Nigeria’s industrial growth and economic diversification goals. He stressed the project’s pivotal role in harnessing Nigeria’s strategic geographic position to strengthen its global export capacity, which is expected to soar with the addition of the third production line.
More Insights
- Senior bank loans, also known as syndicated bank loans, are often consolidated from multiple loans and then structured as a singular debt obligation that’s sold to investors. These loans are classified as “senior” due to their preferential repayment status over other debts of the borrower. In essence, should a borrower face default, bankruptcy, or liquidation, senior bank loans are prioritized for repayment from the borrower’s available assets.
- Six years ago, the AfDB approved a $100 million senior loan to Indorama Eleme Fertilizer & Chemicals Limited.
- Recently, the British International Investment (BII) pledged $65 million to support the expansion efforts of Indorama Eleme Fertilizer and Chemicals in Nigeria.
