Dangote Adopts Alternative Energy Sources For Production

By Favour & Akinola Ajibade 

Dangote Cement, one of the companies, largely owned by the billionaire, Akiko Dangote, has adopted palm kernel and rice husk as its alternative energy sources, in order to reduce its cost of production. 

This follows the rising cost of gas and coal, a development, which saw some major industries, opting for alternative and lesser cost of producing their products for growth.Its 

Its Acting Chief Executive Officer, Mr Gbenga Fapohunda, disclosed this on Arise Television recently..

He said the firm has adopted a new strategy of cutting energy costs using biomass.

According to him, the alternative energy, adopted by Dangote Cement is Biomass, which is the use of palm kernel shell to power its plant, as  against using expensive coal to produce cement.

Fapounda said, “Alternative fuel is mainly biomass using palm kernel shell to power our plant instead of expensive coal. We are using rice husk to power our plant instead of using expensive diesel. So, we have invested heavily in this and we have gotten serious mileage.

“We call it thermal substitution. It has really helped and we have doubled our investment in it.”

According to him, the decision became expedient because the cost of powering the manufacturing concern is getting too high and it is eating into the profit of the company.

The acting ceo stated that spent N157 billion on fuel and power in the half year of 2023 as against the N129 billion spent in 2022.

“Power is a key part of our business, so, that is one factor that contributed to the increase in the cost of production.

The cost of coal actually increased as well significantly across our major markets.

“In our Nigerian market, by this time last year, we were buying local coal at about N13,000 -N14,000 per ton but now, we buy about N28,000 per ton. So, you see a form of hike.

He said:” Gas is another form of power that is actually key to the business, so, basically, we buy gas billed in dollars and we pay in naira.”

The depreciation of the naira as a result of the new Central Bank of Nigeria foreign exchange policy has worsened the situation because they pay more for gas which is priced in dollars, he said.

The cement company, he explained recorded a revenue of N950.8bn in the first six months of 2023 but production cost was N383.1bn up from N322.5bn recorded same period last year.

The cost of production along with other costs, he said led to a slight fall in its profit to N 239.86bn from N264.9bn in 2022 first half.

“So, the dollar was N465 now the dollar is N756, so we are now paying more naira for the dollars. For us as management, what is important to us is what we are doing about it. So, for us, we have invested heavily in what we call alternative fuel,” the CFO said.