MAN Decries Sealing of Coca-Cola, Guinness, Peak Milk Factories by Lagos Govt, Calls Action ‘Unwise’

By Jessica Osajie / Posted December 30, 2024 UPDATED

The Manufacturers Association of Nigeria (MAN) has criticized the Lagos State Government for sealing several manufacturing industries, calling the action “unwise, unwarranted, and ill-timed.” The statement, issued by MAN’s Director General, Segun Ajayi-Kadir, expressed the association’s dismay over the incident and highlighted ongoing discussions between the affected companies and relevant state agencies prior to the shutdown.

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The controversy stems from the Lagos State Water Regulatory Commission (LASWARCO) taking enforcement actions last week against major companies, including the Nigerian Bottling Company (producers of Coca-Cola), FrieslandCampina (makers of Peak Milk), and Guinness Nigeria Plc.

The firms were accused of violating water abstraction regulations by extracting large quantities of groundwater without the necessary authorizations. LASWARCO’s Director of Technical Services, Mr. Olowu Babatunde, confirmed the enforcement measures during a press briefing on Tuesday.

The LASWARCO defended its action, saying, it had been engaging with these companies for over seven years to ensure compliance with water abstraction regulations, but these efforts had largely been unsuccessful.

“We operate a law that empowers us to regulate most of these heavy abstractors in Lagos State. Abstractors are individuals or entities that extract large quantities of groundwater for commercial purposes.

“So, these companies that we have sealed, basically three of them – Coca-Cola, FreislandCampina and Guinness, abstract water in large quantities.

“And we have been engaging them over time. At least, I have been here for more than seven years now. We’ve been engaging these companies for more than seven years now.

“Some, either they do partial compliance, or some don’t comply at all. So, now that we started implementation of our regulation, we now compel them to fulfill all their regulatory demands,” he said.

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In response, MAN’s DG accused the government of acting in bad faith, given that discussions to resolve the issue were already underway. He also noted that efforts to engage the authorities after the enforcement were unsuccessful, exacerbating concerns within the manufacturing sector. MAN emphasized the importance of dialogue and expressed frustration over the economic impact of the closure on the industries involved.

In his statement released on Friday, MAN’s DG said the government’s decision was ill-timed and done in bad faith as talks were ongoing about the issue between both parties. He said efforts to reach the authorities after the shutdown were futile.

He said: “The Manufacturers Association of Nigeria (MAN) is constrained to convey this open message to the Governor of Lagos State, as all attempts at approaching the relevant heads of agencies and ministry have failed. MAN is appalled by the inauspicious act of the Lagos State Water Regulatory Commission (LASWARCO) in sealing factories over their purported refusal to pay the astronomical and unjustifiable water abstraction fees imposed by the Commission.

This action is ill-timed and quite unfortunate, as the Commission and MAN had engaged in meaningful dialogue and reached some agreements over the lingering issue about three Months ago. This was expected to culminate in an MoU to commence in January 2025.

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“Only three weeks ago, another round of discussions took place between LASWARCO and representatives of MAN, including affected member companies, which led to ongoing discussions in the companies as to the most viable option for addressing the alleged outstanding payments from earlier contested fees. It is while these discussions were going on and during the Yuletide that the Commission decided to cause this major and unwise shutdown of the companies.”

Furthermore, he accused the Lagos state government of being tyrannical in its regulation and imposing exorbitant fees on manufacturers at a time when the industry is facing a downturn and spending a lot on water for production as the government fails to supply water.

“It is important to properly situate this inappropriate action within the context of the prevailing inclement operating environment in general and the downturn in the manufacturing sector in particular. A situation where industries are burdened with payments in excess of N100 million for generating water for production purposes, in the face of the government’s failure to supply the same, is unfair.

“The exorbitant fees and the untoward means of extracting payment exemplifies the negative impact of the tyranny of regulation on private business,” the statement read further.

Mr. Ajayi-Kadir lamented that manufacturers are enduring a harsh economic climate as the volume of unsold inventories keeps rising. He expressed concerns over the possibility of other states taking similar enforcement action as the Lagos state government.

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“To date, manufacturers across the country are saddled with more than N1.2 billion of unsold inventory, borrowing at more than 30% and struggling under a debilitating 250% increase in the cost of power.

“Numerous taxes, fees, and levies by the three tiers of government and non-state actors in some cases, numbering between 60 to 120 confront each manufacturer, not to mention the disruption of production activities due to insecurity and high cost of logistics. There are more! So to add this oppressive water abstraction fee in Lagos state that may potentially be adopted by other States presents an ominous and rancorous future for manufacturers in particular and private businesses in general,” he added.

He pleaded with Governor Babajide Sanwolu to prevail on LASWARCO to reopen the sealed facilities while MAN and the agency resume discussions.

“This will pave the way for a logical and passable conclusion of the ongoing conversations on how to permanently resolve the matter of outstanding fees, as well as conclude the impending MoU between the Water Commission and the Organised Private Sector,” he said.

A few days ago, the Nigeria Employers’ Consultative Association (NECA) warned that the closure of the three facilities by LASWARCO could scare investors away from the state.

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NECA’s Director-General, Mr Adewale-Smatt Oyerinde described the demand for multimillion sums of water abstraction levies by the Lagos state government as unreasonable, noting that manufacturers already pay many other taxes on the same activities they use water for

NOTE: Jessica is on Student Industrial Work Experience Scheme (SIWES) at DDNEWSONLINE.COM from the Department of Mass Communication, National Open University of Nigeria (NOUN).