AMCON’s slow bidding process for Peugeot Automobile Nigeria and Dangote Group’s takeover

Two weeks ago, it was announced that Dangote Group has been given the franchise by the Peugeot of France Groupe to construct and operate an assembly plant in Nigeria. The new assembly plant by Dangote-Peugeot Automobile Nigeria Limited (DPAN) is a joint venture between Dangote Industries Limited, the Kaduna State Government, and Peugeot of France PSA Groupe.

According to reports, the plant is set to be located along the Kaduna-Abuja expressway, about 25 kilometers from the present location of Peugeot Automobile Nigeria (PAN) Limited assembly plant in Kakuri industrial zone of Kaduna State.

In order to confirm this, the representative of Peugeot Automobile France in Nigeria, Eric Maydiey, said that the automobile company has granted Dangote Group the franchise to construct and operate a new assembly plant in the country.

According to Maydiey, the idea of the new Dangote-Peugeot Automobile Nigeria (DPAN) was conceived after Asset Management of Nigeria (AMCON) failed to declare a winner for the bidding process of the Kaduna assembly plant. He stated that it has been over a year that Dangote bidded for the company with an initial ₦11 billion bid for majority stake but nothing has been done.

A look at Peugeot and what led to AMCON’s take over

Peugeot Automobile Nigeria Limited, assemblers of Peugeot brand of automobiles in Nigeria, was incorporated on December 15, 1972, as a joint venture between the Nigerian government and France’s Peugeot, with an annual production of 90,000 cars by the 1980s. It then commenced full operations on March 2nd, 1975.

In 2016, shortly after the government sold its stake through a privatisation to local core investors the began having issues due to bad loans which were also caused by changes in policies by the Nigerian government and inadequate tariff protection for local assembly plants.

By 2011 it was already in a huge debt of ₦30 billion with no private investor willing to risk his money in rescuing the company. In 2012, the Asset Management Company of Nigeria (AMCON), acquired a controlling majority stake shareholding and assumed board and management control.

As at 2013, the company’s revenue generation profile had dropped to about ₦2 billion per annum from about ₦30 billion which it made a decade before. Its market share dropped from 20 percent to only 2 percent, with car sales figure declining from ₦31.7 billion recorded in 2007 to ₦1.96 billion

In order to revive the company,  AMCON, in 2016 invited prospective investors to bid for the 79.3 percent stake in Peugeot Automobile Nigeria and this is yet to be concluded.

AMCON’s reaction to the news

In response to the news that Dangote has been granted the franchise to construct and open an assembling plant in Nigeria while a bidding process was still on for the defunct company, AMCON, through its Head of Corporate Communications, Jude Nwauzo, told Vanguard that “We have not finalised who we are going to sell to. So many interests are there. We have financial advisers, we allow them to do their job.”

He further stated that Dangote bidded like others for the plant and has not opted out yet according to the corporation’s record. The Chief Executive of AMCON, Ahmed Kuru, also told Reuters recently that all processes on the bids were completed about two months ago and all that is left is the approval of the Central Bank of Nigeria (CBN).

This decision by Dangote and Peugeot brings a lot of questions, which can only be answered by Peugeot and AMCON. Do we foresee having PAN when DPAN commence operations? Is it not wrong for Dangote to go ahead with his quest to own a Peugeot assembling plant in the country when AMCON is still working on getting a preferred bidder?

This whole saga shouldn’t have been an issue for discussion, given that in a working country, the needed regulatory framework should be in place to guide the bidding process, and it should be followed religiously. On another note, why AMCON delayed in the bid process if Dangote was the highest and may be the prefered bidder is a question that still requires an answer.