Dissecting Enugu’s N100bn United Palm Products Deal
The recent N100 billion deal between the Enugu State Government and Pragmatic Palms Limited where the latter will provide finance for 60 per cent of the value of the transaction to revive the long-moribund state-owned United Palm Products Limited is a huge milestone towards Governor Peter Mbah’s effort to revive the state’s dormant assets and re-enact the Michael Okpara’s agriculture and agro-industrialisation revolution, writes Uche Anichukwu.
It is no longer news that the economy of the defunct Eastern Region was rated as the world’s fastest growing and industrialising economy between 1954 and 1964. It was well ahead of the Singaporean, South Korean, Malaysian, and Indonesian economies.
The man at the centre of this phenomenal growth was Michael Okpara, the premier of the region. His driving philosophy was “Pragmatic Socialism”, and the vehicle was largely the Eastern Nigerian Development Corporation.
In a matter of few years, the Michelin Factory, Port Harcourt; NIGERGAS Company, Asbestos Cement Factory, and Niger Steel Company all in Emene, Enugu; the glass factory in Port Harcourt; the Presidential Hotel in Port Harcourt and Enugu; and the Golden Guinea Breweries in Umuahia were all built in a matter of a few years. There were equally the textile industries in the region and a shoe factory in Owerri as well as the Calabar Cement Company and a host of others.
However, at the root of Eastern Region’s economic growth was agriculture, as Okpara established farm settlements/plantations across the region. From Uzo Uwani in the present-day Enugu State to Abak in the present Akwa Ibom State, Ulonna in Abia State, Boki in the Ogoja area of today’s Cross River State, Ohaji (Adapalm) in Imo State, Igbariam in Anambra State; from Amaeke Abam to Ndioji Abam, Ikwu, Ozuitem, Arochukwu, Ubani Ibeku, and the Imo and Niger River deltas, Abakaliki, Obudu, etc., the defunct Eastern Region boasted of sprawling cocoa, rubber, oil palm, banana, cassava, and pineapple plantations and thriving poultry and animal husbandry industry for both local consumption and export.
Unfortunately, decades down the line, all these have virtually disappeared or been sold or abandoned or become moribund. No thanks to largely visionless and profligate successive leaderships, the civil war, and the oil curse that drained leaderships at all levels of the creativity of their First Republic peers and effectively turned the Nigerian system into a feeding bottle federalism. In the abundance of free money that they did not work for, it was only a matter of time before leaders turned their backs on agriculture and agro-industrialisation.
The United Palm Products
One of the victims of such neglect is the United Palm Products Limited, also founded by Okpara and known today as Enugu State United Palm Products Limited, UPPL. It boasts of expansive lands at Ugwuoba in Oji River LGA, Umulokpa in Uzo-Uwani LGA, and Ibite-Olo in Ezeagu LGA and measures 6,700 hectares of which only 2,000 hectres have been planted after nearly 60 decades.
Yet this is a country that is unable to meet its large palm oil needs and rely on imports mainly from Malaysia. While it is common knowledge that the Malaysian bourgeoning palm oil industry has its roots in Nigeria, the country, ironically, imported 304,043 metric tons (MT) of palm oil from the southeast Asian nation alone in 2023 as against 227,035 MT imported in 2022.
In view of this, it is difficult to fathom why the various palm initiatives of the late Okpara like UPPL were left to rot away. More so when millions of our youths prowl the streets in search of jobs and the states are in dire need of money to fund development. Many local industries are also in serious need of not only palm oil but other derivatives for their production.
It is against this backdrop that the wind of resuscitation of moribund assets blowing through Enugu State since Governor Peter Mbah’s inauguration can best be appreciated. In his 64-page manifesto ahead of the 2023 governorship election, he promised to revive and transform moribund assets littered across the state to productive assets pursuant to his vision to eradicate poverty from Enugu State and exponentially grow the state’s economy from $4.4billion to $30billion in four to eight years, relying now on private sector investment.
From Hotel Presidential, Enugu, to the International Conference Centre where the administration awarded contracts for their revamping and completions, respectively; from the comatose NIGERGAS Company, Emene, which deal for its resuscitation it is almost concluded to the Aluminum Products Company, Ohebe Dim, etc. the governor is demonstrating the political will to turn things around.
However, the biggest one, not only in Enugu State, but also a massive landmark nationally, is the recently signed N100billion deal between the state and Pragmatic Palms Limited towards bringing United Palm Products Limited, UPPL, one of Okpara’s legacies, back to life.
The N100 billion Deal
Pragmatic Palms Limited, a Special Purpose Vehicle (SPV) for the partnership will provide finance for 60 per cent of the transaction value, while the Enugu State Government will provide the plantations valued as 40 per cent equity. In other words, the government is not releasing N100billion or any dime to Pragmatic Palms Limited as mischievously misrepresented. Instead, Pragmatic Palms is funding UPPL’s revival.
Because several parties/investors are involved, it became imperative, as is the best international practice, to register a Special Purpose Vehicle (SPV) as the platform to transact the deal. Although Pragmatic Palms Limited was duly incorporated before the signing of the agreement; the deal would still have been very valid even if it was not incorporated ahead of the deal.
Section 96 (1) of the Companies and Allied Matters Act (CAMA), 2020, provides for pre-incorporation contract. It provides: “Any contract or other transaction purporting to be entered into by the company or by person on behalf of the company prior to its formation may be ratified by the company after its formation and thereupon the company shall become bound by and entitled to the benefit thereof as if it has been in existence at the date of such contract or other transaction and had been a party thereto.”
Securing Enugu’s Interest
As demanded by the Enugu State Government, Pragmatic Palms Limited provided a guarantor, which is Diamond Stripes Ltd., a reputable and huge company that has done investments worth over $20billion spanning power and renewable energy sector, port sector, and agricultural sector since 2013. Diamond Stripes Limited is the sole investor in Onitsha River Port and has invested heavily in the agricultural sector where it is the largest owner of silo complexes in Nigeria. It was involved in the acquisition of 600MW Shiroro Hydroelectric Power plant in 2013, concessions of 30MW Gurara Hydroelectric Power Plant in 2019, and establishment of 300MW Shiroro solar power project in 2021.
Apart providing a corporate guarantor in Diamond Stripes, the state’s interest is further secured by the provision of bank guarantors from Pragmatic Palms. Importantly, performance targets and timelines were equally set in the Agreement for Pragmatic Palms Limited failing which the Enugu State Government is free to revoke the deal and reassume total ownership of UPPL. Thanks to Mbah’s experience as an investment finance expert and an entrepreneur, who has handled multi-billion-dollar projects himself.
In addition, Pragmatic Palm’s Board is structured in a way that the state nominates the chairman of the seven-man board in addition to two members, while its partners will produce the chief executive officer and three board members.
In Good Hands
Apart from the pedigree of the mother company, Diamond Stipes, Pragmatic Palm’s Managing Director, Prof. George Nwangwu, who is also the MD/CEO of Diamond Stripes, is a professor of Project Financing Law, who has led transaction teams that have participated in the consummation of over 100 privatisation of Public Private Partnership (PPP) transactions worth over $20 billion across Africa.
Nwangwu was the Head of Infrastructure Finance at the Ministry of Finance under the leadership of Dr. Ngozi Okonjo-Iweala, during which he led the team that delivered the Second Niger Bridge deal.
He has expectedly shown a very clear understanding of what is at stake – revival of one of Dr. Michaël Okpara’s legacies for the benefit of the people of Enugu and Nigeria.
Speaking during the signing of the N100billion deal, he said: “We realised the historical importance of this particular asset. We realised that one of Micheal Okpara’s key projects was the agricultural revolution in the Eastern part of the country and Enugu State is the capital of the Eastern region. His motto then was pragmatic socialism. That was what he used to build most of the palm resources that we had in the Eastern region today. So, we choose that name Pragmatic Palms (the SPV) for a particular reason to tie it to the spirit of what the current administration is the state is trying to do. We know the historical importance and it is a great weight. We realise that we hold this asset in trust for the people of Enugu State and the people of Eastern Nigeria.”
Obviously, with Mbah’s determination and humongous vision, it is a new dawn for not only the United Palm Products Limited, UPPL, but also all dormant, dead and forgotten assets to the benefit of the people of Enugu State after decades of rot and neglect.
It also underscores Mbah’s determination to wean the state from an agelong overreliance on federal handouts the path of wealth creation through innovative governance. This is the only assurance that the state can develop and grow its economy exponentially as promised by the governor.
