Nosak pumps $75m into ethanol plants, readies for AfCFTA
Nosak Group has invested more than $75 million in three ethanol plants in Nigeria even as it gets ready to tap opportunities in the African Continental Free Trade Area (AfCFTA) which begins in July 2020.
In an interview with Businessday, Osaro Omogiade, managing director of Nosak Distilleries Limited, said his group’s investments had been huge, adding that the company would continue to pump huge amounts to tap opportunities in the economy.
“Conservatively, to put up a distillery, let’s just say a 100,000-litre per day capacity distillery, you need at least $20 to $25 million. By the time you start adding storage tanks and other utilities, the cost will have been more. So, put that amount in three places and you will be looking at over $75 million. This is just being conservative. So, it is a huge investment,” he said.
Nosak is a diversified business group with interests in agriculture, finance, logistics/haulage, real estate and manufacturing. The distillery plant was established in 2001 in Lagos and it manufacturers food-grade ethanol which serves as a raw material for paint makers, pharmaceuticals, soap manufacturers, perfume makers and brewers, among others.
Its distillery segment has three ethanol plants, and it has commenced the process of setting up a backward integration project in Edo State.
According to Omogiade, the company was working with foreign experts in the engineering, equipment design, and fabrication in order to make the project happen.
“It is our hope that the project will be completed in the next two years,” he said.
He estimated the installed capacity of the company at 500,000 litres per day.
“When we started in 2001, we started with a capacity of about 100,000 litres per day. But currently we have three plants in Lagos and the three of them have a total installed capacity of 500,000 litres per day,” he said.
He explained that Nosak was ready and well positioned to tap opportunities in the AfCFTA.
“Let me even take you from the point of the Group. The Group’s presence in the export free trade zone is an indication that we are ready. We have resumed export to neighbouring West African countries, commencing with Ghana,” he further said.
The managing director said the steps taken by the company signified readiness for the upcoming continental trade treaty.
“We believe in living global because of the associated advantages. If you do export, you will hedge against the foreign exchange problems.”
He noted that the company had experimented with some neighbouring West African countries, which placed it on the right footing for regional and continental competitiveness. “After Ghana, we plan to go to other African countries. That has always been our roadmap— to export to most African countries. We are also looking at other countries such as Togo, Benin Republic, Cote d’ivoire, Angola and Central African Republic. Those are the countries we are looking at, and we have the capacity to do so,” he explained.
He said export expansion was the strategic direction of Nosak Distilleries.
“Beyond playing in the country, we want to extend our frontiers to African countries, especially with the coming of the African Continental Free Trade Area agreement. If you do not do that, you leave the market for foreigners. When you look at the players around, you will see that Nigeria is possibly the biggest in the whole of Africa. So everybody must be ready,” he noted.
Like other manufacturers, Nosak Distilleries faces challenges.
Omogiade said one of the major challenges was poor state of infrastructure.
“Most of our roads are not accessible. When we have products, goods and services to deliver, the turnaround time is longer than necessary,” he said.
“Where ordinarily you should spend two hours, you may end up spending 20 hours. Your customers sometimes may be unwilling to come because of the roads. Also, it adds to the cost. You spend more money on petrol or diesel as well as more time on the road. For a journey of two days, you spend one week,” he said.
He said government must intervene in the area of infrastructure to save businesses from shutting down.
“That is one area we need government intervention. Power is also a challenge. When we set out, we said to ourselves, ‘The power situation in this country is not so good. If we depend on the national grid, we might not have it easy.’ So we invested in gas generators. As we speak, we have over 5,000KVA gas generators. Beyond that, we also invested in diesel generators of over 2,000KVA. It is very expensive, but we are able to plan our operations.”