Information reaching the Hot Pepper news desk is that Fouani Brothers Corporation has applied for an investment incentive from the Government of Liberia (GOL) to allow it to import Crude Palm Oil (CPO) into Liberia with duty free privilege, in order to refine the CPO in Liberia for domestic consumption and for export.
According to the information, Fouani Brothers Corporation has submitted an investment incentive bill to the Government of Liberia (GOL) for the construction of a crude palm oil refinery in Liberia. The bill is said to have been prepared since 2021, but signed on the eve of the 2023 general and presidential elections.
According to documents accessed by the Hot Pepper during its investigation into the matter, President George M. Weah signed the Fouani Brothers Corporation’s Investment Incentive on September 5, 2023—the last day sitting of the extended session of the Sixth Regular Session of the 54th National Legislature. It may be recalled that President Weah, on August 18, 2023, issued a proclamation extending the Sixth Regular Session of the 54th National Legislature by two weeks beginning August 22, 2023 and ending on September 5, 2023. The agreement, signed on September 5, was then sent to the House of Representative for ratification and, accordingly, signed by members of the House of Representatives on September 6, 2023—after the expiration of the extended sitting—by less than fifteen (15) representatives. It is now before the Liberian Senate for concurrence. However, because the bill was signed while lawmakers were on recess and allegedly done at the Royal Grand Hotel, with several of them not being aware, lawmakers are requesting that the bill be recalled and returned to the House of Representatives for proper scrutiny because it did not pass the floor of plenary. However, it is pondered whether the Speaker, Dr. Bhofal Chambers, will do the needful to protect the interest of the state.
Credible sources from the House of Representatives have informed this paper that members of the House are threatening to go to court to ensure that the incentive agreement goes through what is required by law.
Section 11 of the agreement (Importation of Crude Palm Oil) says, “In any event or under any circumstance reasonably unforeseeable to the investor, verified and validated by the Minister of Agriculture, that the volume of crude palm oil available in Liberia during the term of this agreement is of insufficient supply to meet the requirements of investor’s refinery, the investor may, with prior approval by the Minister of Agriculture, for a cumulative period not exceeding thirty-six (36) calendar months for the six-year period commencing from the commercial production date, import into Liberia crude palm oil as is needed and required for investor’s operation free from import duties, provided that the thirty-six (36) calendar months shall be used by the investor to invest in palm farming or the growing of palm in Liberia. Investor also has a duty to purchase all the available crude palm oil grown local at fair market value, and to actively coordinate and participate with the Minister of Agriculture in the Outgrower Scheme, and to address and resolve supply chain challenges in the sector.”
Section 11.2 of the agreement interpreted “insufficient supply” to mean less than 60% of the prior six-month average CPO utilized by the refinery.
Interestingly, Section 10.1 of the investment incentive gives Fouani Brothers Corporation the luxury to be exempted from import taxes and duties on capital equipment, spare parts, raw materials, RBD Olein, packaging and related materials, and construction materials. According to Section 10.1 (b), “From the refinery construction completion date and for seven (7) years thereafter, investor shall be exempt from import taxes and duties on capital equipment, spare parts, raw materials, RBD Olein, packaging and related materials used for the refinery’s finished products and for investor activities and investor operations. Thereafter, investor shall be subject to import duties in accordance with the Revenue Code.”
Stakeholders of the business sector have informed the Hot Pepper that the Fouani Brothers’ investment incentive severely undermines local farmers’ initiatives and undercuts existing investments in the palm oil sector that have been moving the country’s agricultural sector forward.
The business tycoons disclosed that there are large agricultural concessions that have invested in the palm sector, including Sime Darby, which has now been taken over by Mano Palm Oil Plantation (MPOP), Golden Veroleum Liberia (GVL), Equatorial Palm, etc., in addition to numerous other smaller palm farms owned by Liberians across the country. They say that all these agricultural projects have built or are planning to build refineries in Liberia in order to process crude palm oil from their farms.
According to them, by granting incentives to a large company to import CPO into Liberia duty free the government will be undercutting all of the investments in the palm oil sector in Liberia. “Fouani plans to import CPO from outside of Liberia where production costs are much cheaper. The CPO will then be refined in Liberia and offered for sale locally and abroad at much lower costs than the local plantations can produce. This will force local producers of CPO to sell to Fouani,” they forewarned.
Also, they say, this proposed investment incentive will create a monopoly that will force smaller producers out of the crude palm oil business and cause loss of investments already made in plantations and refineries and cause the workforce to be laid off, thereby increasing unemployment.
They strongly warned against the passage of the proposal in a lame duck session of the National Legislature, where at least fifty percent of the members have been replaced. “This session should be focused on the transition of leadership and members, instead of taking actions that will have long-term effects on the national economy and the livelihood of the people at large,” they emphasized.
“The proper option available to Fouani is not to try to undercut the palm oil market by getting duty free privilege on imports; instead, they should import CPO just as they do now, and refine it for local sale or export. Fouani should not be given duty free privilege to import CPO and thereby be able to produce refined oil cheaper than what the local producers can do,” they maintained.