Nigeria plans to increase its palm oil production 700% over the next eight years to help improve its foreign-exchange earnings that are largely dependent on crude oil exports.
The new policy will boost local production to about five million tons from 600,000 tons a year by investing as much as 180 billion naira ($500 million) beginning this year, the trade and investment ministry said in a report.
“Our policy objectives over an eight-year period (between 2019 and 2027) will see that we locally produce 100% of local crude palm oil demand by 2027, increase revenue from importation via duties and deliver 225,000 full time jobs and at least 450,000 seasonal jobs,” it said.
The new policy also seeks to remove the 75% duty rebate granted on refined palm oil imports and extend a current three-year tax holiday for all producing and processing companies to five years. It will introduce a five-year restriction of crude and refined palm oil importation to large-scale refineries and crushing-plant owners.
Farmers will be given access to loans at 9% per year through a central bank-administered lending to expand cultivation by at least three million hectares.
Presco Plc, the country’s largest producer of palm oil, is driving an expansion plan that expects a 500-ton capacity refinery to begin operating in first quarter of 2020, with an additional increase of its milling capacity from 60 tons an hour to 90 tons an hour by next January, Chief Executive Officer Felix Nwabuko said in a conference call with investors on Thursday.
By 2022, the company expects to push capacity to 210 tons an hour, with an additional 60 tons per hour in milling facilities, he said.
The West African nation’s palm oil imports rose from 302,000 tons in 2017 to 600,000 tons by end of 2018, costing the country as much as $500 million, despite placing the commodity on a forex-exclusion list, central bank figures indicate.
While Nigeria wants to grow quickly in palm oil, it’s still likely to be a small part of a market dominated by Indonesia and Malaysia. The country currently ranks as the world’s fifth-biggest producer in palm oil, accounting for less than 2% of global production, according to data from the U.S. Department of Agriculture.