Ellah Lakes Plc, a palm oil producer is meeting investors to raise $40 million to expand operations and meet the increasing demand for the commodity after government restrictions on imports increased an existing supply gap.
The company, based in Edo State is raising $35 million by offering shares and debt as well as another N2.1 billion ($5.4 million) in equity to fund oil palm plantations, seedlings and fertilizer, Bloomberg quoted the company’s Chief Executive Officer, Chuka Mordi, to have said during an interview in Lagos.
The company is looking to cultivate 4,000 hectares of oil palm plantation by year-end from 2,300 currently, he said.
Ellah Lakes is increasing production amid intensified efforts by President Muhammadu Buhari’s government to encourage investment in agriculture and industries to help diversify the economy away from crude oil, which accounts for 90 per cent of export earnings.
The government had imposed a 35 per cent tariff on imported palm-oil to boost local production and the central bank had stopped the use of foreign exchange from official sources to import the commodity.
Nigeria accounts for about one per cent of global output, producing one million tons annually and consuming about at 1.4 million tons, according to the United States Department of Agriculture.
The capital raising started earlier this year through a private placement but was halted due to the coronavirus pandemic, Mordi said, adding that the company was expecting some foreign investors when international travels resumes.
Ellah Lakes will export some output to earn foreign exchange even though local demand is strong, according to the chief executive.
Half of the revenue will come from exports in the next three years “just to manage currency fluctuation,” he said. A slump in the price of crude oil cut revenue for the West African nation and hampered the ability of the central bank to meet the dollar requirements of companies for imports.