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April 14, 2024

AFDB, Indorama Finalise  $75m Loan Agreement to Boost Fertiliser Production, Export

The African Development Bank (AfDB) has finalized a loan agreement of $75 million with Indorama Eleme Fertilizer and Chemicals Limited, marking a substantial investment aimed at enhancing Nigeria’s fertilizer production capacity and bolstering its export potential.

In a statement released by the AfDB, the strategic allocation of funds is designated for expanding Indorama’s fertilizer production by adding a third urea production line and constructing a new port terminal at its Port Harcourt complex.

This expansion is not only focused on increasing domestic supply but also on positioning Nigeria as a key player in the international fertilizer market.

The planned production line is set to achieve an impressive annual capacity of 1.4 million metric tons of urea, solidifying urea’s pivotal role as a fundamental fertilizer 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 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.” 

The $75 million senior loan from the AfDB is just a portion of a larger $1.25 billion financing package led by the IFC. This comprehensive financial arrangement includes contributions from a group of international development finance institutions and commercial banks.

The joint commitment underscores the project’s capacity to drive agricultural growth, improve food security, and generate employment opportunities, making a significant contribution to Nigeria’s socio-economic development.

“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 the Industrial and Trade Development Department at AfDB, expressed satisfaction in the collaboration with Indorama, the International Finance Corporation (IFC), and other financiers, highlighting it as a partnership with substantial developmental impacts for Nigeria.

Manish Mundra, Group Director for Africa at Indorama Corporation, emphasized the initiative’s alignment with Nigeria’s industrial expansion and economic diversification objectives. He emphasized the project’s critical role in leveraging Nigeria’s strategic geographical location to enhance its global export capability, which is anticipated to increase significantly with the introduction of the third production line.

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