Dangote Industries Ethiopia received a 10.7 million Br insurance compensation from Nyala Insurance for business interruption and damage it faced in November.
The company’s cement plant operations were interrupted on November 15, 2018, due to troubles with the conveyor belt, which transports gravel and sand to the cement plant. The 10Km belt conveyor transports the raw materials from the nearby quarry to the plant, which is located in Mugher, Adebern Wereda, Oromia Regional State. Last November, the conveyor snapped, forcing the company to cease operations for 20 days.
The insurance firm paid the claims of a full insurance policy including all assets risks, machinery breakdowns and business interruptions on March 20, 2019, at its headquarters located on Mickey Leland Street.
Four million Birr in compensation was paid for the damage to the belt, while the remainder was paid for losses the company suffered due to interruptions in its operations.
Investigation of the losses and damages was conducted by a private firm, according to Nebiyat Markos, engineering service manager of Nyala. Nayala has reported the highest profit in the industry for two successive years, registering 141.3 million Br in net profit last year.
Established nearly a quarter of a century ago, Nyala, whose assets reached 1.9 billion Br and operates with 315 staff and 45 branches, paid 163.5 million Br in claims for general and life insurance in the last fiscal year.
The insurance firm’s prompt response was a positive signal for Dangote, which is aggressively moving into the Ethiopian market, according to Danillo Trugillo, country manager of Dangote. The company’s cement plant became operational four years ago following a 600 million Br investment.
“The insurance firm’s backing gives us confidence in our endeavours,” said Danillo, whose company produces 2.5 million tonnes of cement a year from its plant that employs 1,000 people.
Dangote, one of 21 cement factories in Ethiopia, has faced various attacks for the past couple of years. In 2016 protesters attacked and vandalised Dangote’s cement plant and burned down vehicles and machinery of the company. Last year gunmen killed Dangote’s former country manager, Deep Kamara.
For these damages, the company did not receive any compensation, according to Folahan Durotola Orimoloye, country head of risk management at Dangote Industries, which is owned by Africa’s richest man, Aliko Dangote. Dangote is a multinational conglomerate that works in the cement, sugar, oil refining and real estate industries, employing over 30,000 people and generating 4.1 billion dollars in revenue in 2017.
“We didn’t buy insurance policies for political risk,” Folahan said.
Habib Mohammed, a financial expert with a decade and a half of experience, sees the payment as setting a precedent.
“Many companies only buy damage insurance policies,” said Habib. “They don’t have a culture of buying policies for business interruption.”
PUBLISHED ON
Mar 23,2019 [ VOL
19 , NO
986]
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