Africa’s richest man, Aliko Dangote has teamed up with two Nigerian states to bid for a majority stake in Peugeot Automobile Nigeria (PAN) Limited, a local joint venture with the French automaker. The disclosure was made by Malam Nasir El Rufai, the governor of Kaduna State said on Thursday.
El-Rufai said the states of Kaduna and Kebbi, along with development lender Bank of Industry (BoI) and Dangote had submitted bids for the stake which the Asset Management Corporation of Nigeria (AMCON) is looking to sell.
PAN, the Nigerian assembly plant located in Kaduna State, has Peugeot Citroen PEUP.PA as its technical partner with a capacity to assemble 240 cars a day, PAN said on its website.
“We have submitted bids for the carmaker … with Aliko Dangote on board together with BoI, Kebbi and Kaduna State, we are confident our bid will sail through,” El-Rufai told a conference.
The billionaire tycoon’s Dangote Group is active in cement, oil, food and sugar business, and is also expanding into farming across Africa.
Peugeot Nigeria, a checkered history
PAN Nigeria Limited was set up in 1972 as a joint venture between the Nigerian government and France’s Peugeot, with an annual production of 90,000 cars by the 1980s.
In November 2006, PAN was privatized in line with government’s agenda to build a stronger, more competitive and diversified economy.
ASD Motors emerged as the successful core investor and took over management of the company (Peugeot) in January 2007, with a 54.78 percent stake, making Sani Dauda, CEO of both ASD Motors and Peugeot Nigeria.
The expectation was that the privatization of PAN would create a quantum leap in performance, but operations nosedived and debt racked up shortly after the government sold its stake to local core investors, as cheap, imported, second-hand vehicles from Asia and poor manufacturing infrastructure hurt profits.
“Following the accumulation of huge non-performing loans (NPL) indebtedness to banks, in October 2012, the Asset Management Company of Nigeria (AMCON) acquired the debts of the company and converted a portion to equity to help restructure the firm,” Peugeot had said.
Some of the debts were bought and others converted into equity by AMCON, the state-owned “bad bank,” thereby taking its shareholding in PAN Nigeria Limited to 79.3 percent.
Nigeria, Africa’s biggest economy is seen as key hub for the African market and some automakers are beginning to setup assembly plants in the country. Rival automakers, Renault-Nissan, South Korea’s Kia Motors and Germany’s Volkswagen have announced plans to assemble vehicles in Nigeria.
U.S. carmaker Ford Motor Co has partnered with a local car dealer to set up a 5,000 annual capacity assembly plant in Nigeria in November. It plans to produce 10 vehicles a day initially for the domestic market and then develop an export trade across West Africa.