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INDORAMA ELEME PETROCHEMICALS LIMITED:

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HBSP No.: NTU121
BEYOND CSR FOR SECURE, SAFE AND Ref No.: ABCC-2017-014
SUSTAINABLE OPERATIONS IN NIGERIA Date: 26 April 2017

K. Ravi Kumar and Divya Bhutiani

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It was April of 2009 and the sweltering Nigerian heat did little to alleviate the tension within the boardroom.
Mr. Amit Lohia, Group Managing Director (GMD) of Indorama Corporation, was in a meeting with the
Corporate Social Responsibility (CSR) team based in Rivers State, Nigeria. The objective of the team was
to develop a CSR programme that would support safe, secure and sustainable operations of the Indorama
Eleme Petrochemicals Limited (IEPL) facility in Eleme. CSR results had been generally favourable (except
for one case of hostage-taking) since they took over the plant in 2006. Now, what stood before them was
either a unique strategic opportunity or a recipe for disaster.
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An arm of the Nigerian Federal Government, the Bureau of Public Enterprises (BPE), was looking to divest
its 15% shareholdings in IEPL as it did not have the mandate to hold onto the shares for an extended period.
As the majority shareholder at 65%, Indorama was offered these 15% shares. One member of the CSR
team raised an interesting idea of working with the government through a Public–Private Partnership (PPP)
to enable local workers and the host communities in Eleme to own the 15% IEPL shares offered by BPE.
This would secure the buy-in of local stakeholders, ensuring the security of investments and sustainable
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successful operations of IEPL post-privatisation.

It was, however, an ambitious project with many team members raising concerns about the need and the
feasibility of the PPP scheme, and whether it was within the scope of Indorama’s CSR programme for
Eleme.
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Professor K. Ravi Kumar and Research Fellow Divya Bhutiani prepared this case based on interviews with Indorama
Corporation. This case is intended for class discussion and learning, and not intended as source of research material
or as illustration of effective or ineffective management. We wish to thank Padmakumar Nair, Lawis Koh and Nathaniel
Kok for their invaluable inputs in writing this case. We would also like to extend our gratitude to the team at Centre for
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African Studies (CAS), Nanyang Business School, for introducing us to Amit Lohia, Vice Chairman of Indorama
Corporation.
COPYRIGHT © 2017 Nanyang Technological University, Singapore. All rights reserved. No part of this publication may
be copied, stored, transmitted, altered, reproduced or distributed in any form or medium whatsoever without the written
consent of Nanyang Technological University.
The Asian Business Case Centre, Nanyang Business School, Nanyang Technological University, Nanyang Avenue,
Singapore 639798. Phone: +65-6790-4864/6552, E-mail: [email protected]

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TROUBLED HISTORY OF FOREIGN CORPORATIONS IN THE NIGER DELTA

The Niger Delta was one of the most culturally diverse regions of Nigeria, hosting more than 40 ethnic
groups that spoke over 250 different dialects. Oil exploration in the Niger Delta dated back to 1908 with the
first foreign company being Nigerian Bitumen Corporation. This German company, however, left the country
without any success in 1914 at the onset of the First World War.1,2 Later in 1937, the license to carry out oil

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exploration in Nigeria was given to a joint venture by Shell Petroleum Development Company and British
Petroleum. After continuous exploratory efforts for several decades, the joint company discovered oil in the
Oloibiri Region of the Niger Delta in 1956, and by 1958, Nigeria joined the list of oil producing countries.
The Niger Delta which was historically famous for its agricultural exports, particularly palm oil, was now a
major oil producing region of the world. Due to the abundance of oil in the Niger Delta, several multinational
companies, such as Mobil, Tenneco, Gulf Oil, Chevron, were granted exploration rights.

Over several decades, this region had attracted enormous international attention due to pollution by the oil

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companies, 3 which resulted in ecocide, kleptocracy, militancy and human rights violations. Despite the
tremendous oil wealth in the region, the quality of life of the local communities had not improved and the
region was marked with extreme poverty and inequality. In fact, owing to the negligent operational practices
by the big oil companies, the region was affected by oil spills polluting the natural habitat of plants, animals
and aquatic life. This had resulted in violence from ethnic groups who felt ignored and exploited by the big
foreign corporations, and who demanded compensation for the damages done to their health and the
environment.4 Several groups, such as the Movement for the Survival of the Ogoni People (MOSOP), Niger
Delta Volunteer Force (NDVF), Movement for the Emancipation of the Niger Delta (MEND), fought for the
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rights of the local communities, demanding compensation for the damages caused. Ethnic and political
unrest began as early as the 1990s with the problem culminating in the form of various militant groups
engaging in violence and kidnapping.

Shell being the largest company operating on land in Nigeria faced the highest criticism and scrutiny from
the local communities and the human rights commission. 5,6 The mass protests by the Ogoni people, who
belonged to one of the 20 minority tribes of the Niger delta, was a historical landmark in the history of Shell.
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They demanded greater control over the natural resources of their region, which resulted in conflicts with
the national armed security forces. Most of these communities blamed the multinational corporations for
converting their rich oil reserves into a curse for the local community by polluting their habitat that resulted
in severe health risks.7,8

1 Azaiki, S. (2003). Inequities in Nigerian politics. Yenagoa, Nigeria: Treasure Communications Resource.
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2 Ebegbulem, J., Ekpe, D., & Adejumo, T. O. (2013). Oil exploration and poverty in the Niger Delta Region of Nigeria:
A critical analysis. International Journal of Business and Social Science, 4(3), 279-287.
3 Amnesty International. (2015, March 19). Nigeria: Hundreds of oil spills continue to blight Niger Delta. News,
Amnesty International website. Retrieved from https://www.amnesty.org/en/latest/news/2015/03/hundreds-of-oil-
spills-continue-to-blight-niger-delta
4 Amnesty International. (2005, November 3). Nigeria: Ten years on: Injustice and violence haunt the Oil Delta.
News, Amnesty International website. Retrieved from
https://www.amnesty.org/en/documents/document/?indexNumber=AFR44%2F022%2F2005&language=en
5 Amnesty International. (2016, March 2). Investors warned: Shell faces further lawsuits for Nigeria oil spills. News,
Amnesty International website. Retrieved from https://www.amnesty.org/en/latest/news/2016/03/shell-faces-further-
lawsuits-for-nigeria-oil-spills
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6 Allen, K. (2015, January 9). Shell in Nigeria: The landmark oil case is a warning shot to multinationals. The
Guardian, Africa. Retrieved from https://www.theguardian.com/global-development-professionals-
network/2015/jan/09/nigeria-shell-oil-case-warning-multinational-companies
7 Allen, F. (2012). The enemy within: Oil in the Niger Delta. World Policy Journal, 29(4), 46–53.
8 Shephard, B. (2013, March 20). Uganda’s oil: Lessons on governance and the resource curse. The Guardian, Africa.
Retrieved from https://www.theguardian.com/global-development-professionals-network/2013/mar/20/uganda-oil-
governance-resource-curse

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From 2006 to 2009, many militant groups in the Niger Delta, particularly MEND, resorted to kidnapping
foreign employees of international corporations. Hostages were generally returned unharmed following the
delivery of a ransom, which could range greatly between US$700,000 to US$7,000,000. 9 These militant
activities by the local communities against the oil companies resulted in militarisation of the Niger Delta by
the Nigerian Federal Government, which led to intensified violence and human rights violations. A military
incursion by government troops in May 2009 left thousands displaced. 10 Two casualties in 2006 were also

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due to a botched rescue attempt by the Nigerian Armed Forces. Despite the support of the Nigerian Federal
Government, Nigeria remained a difficult environment to navigate. The risk of kidnapping had made
retention of expatriates at the managerial level a challenging task.

In July 2009, President Umaru Yar’Adua initiated an amnesty programme for militants in the Delta Region
as a response to the outbreaks of violence from 2006 to 2009. The amnesty programme offered
unconditional pardon, and sought to disarm and rehabilitate militants with a stipend, job training and a
micro-loan credit.11 The results of this scheme, however, were hard to predict. 12

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INDORAMA’S ENTRANCE TO NIGERIAN MARKET

Indorama Corporation was one of Asia’s leading holding companies that was founded in 1975 in Indonesia
by Prakash Lohia and his father M. L. Lohia. The GMD of Indorama was Amit Lohia who was based in
Singapore (see Exhibit 1 for the holding structure of Indorama Corporation). Indorama Corporation was a
leading producer of industrial products, such as polyethylene, polypropylene, spun yarns, fabrics, medical
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gloves and fertilisers, in a large number of countries (see Exhibit 2).

Amidst all the upheaval and criticism against foreign corporations exploiting the natural resources of Nigeria
for their self-interests, the National Council on Privatization (NCP) under the Nigerian Federal Government
invited bidders to buy over Eleme Petrochemicals Company Limited (EPCL) in May 2005 as part of the
privatisation programme. EPCL was a wholly owned subsidiary of the Nigerian National Petroleum
Corporation (NNPC) that was incorporated in 1988 and became operational in 1995. Due to several
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operational problems, such as a lack of spare parts, inadequate maintenance and equipment break-downs,
this plant was not performing to its full capacity. 13 Dangote Chemicals Co. Consortium, Indorama Group
and LG Chem were initially shortlisted after the bidding process. Out of these three companies, Indorama
emerged as the core private investor based on 100% equity value of US$300 million with Indorama
Corporation getting a major stake of 75%, which resulted in the forming of IEPL.

Indorama was aware of the conflicts between the local communities and the foreign oil corporations in the
Niger Delta, where employees of the foreign oil companies were attacked, abducted or killed by the
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militants.14 Big companies, such as Shell, had to spend millions of dollars to protect their employees and

9 VOA News. (2009, October 31). Nigerian militants demand $250,000 ransom. Retrieved from
http://www.voanews.com/a/a-13-2006-07-30-voa21/325496.html
10
IRIN. (2009, June 11). Toll on civilians still unclear in Delta. IRIN website. Retrieved from
http://www.irinnews.org/report/84800/nigeria-toll-on-civilians-still-unclear-in-delta.
11 Rice, X. (2009, August 6). Nigeria begins amnesty for Niger Delta militants. The Guardian, Africa. Retrieved from
https://www.theguardian.com/world/2009/aug/06/niger-delta-militants-amnesty-launched
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12 Warri, C.O. (2017, January 30). Neither PIB nor amnesty deal will end militancy in Niger Delta, say Uduaghan. The
Guardian, Nigeria. Retrieved from https://guardian.ng/news/neither-pib-nor-amnesty-deal-will-end-militancy-in-
niger-delta-say-uduaghan
13 International Finance Corporation (IFC), The World Bank. (2017). Eleme Petrochemicals Company Limited. IFC
website. Retrieved from https://disclosures.ifc.org/#/projectDetail/SPI/24802
14 Africa Masterweb News. (2007, February 21). Chronology of Nigerian militants’ attacks. Retrieved from
http://www.africamasterweb.com/AdSense/NigerianMilitants06Chronology.html

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installations.15 Despite all these risks and uncertainties, Indorama, a relatively small and young corporation,
decided to invest in the Niger Delta. Indorama was also well aware that highly experienced oil giants
operating in the region were heavily blamed for environmental exploitation and “green washing”16 in light of
their CSR programmes.17,18 But they decided to learn lessons from their counterparts and do it differently
so that they would not face similar rejection by the local communities.

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INDORAMA ELEME PETROCHEMICALS LIMITED (IEPL)

IEPL was one of the group companies of Indorama Corporation that started its operations in August 2006
after it won the bidding and the selection criteria for EPCL plant in Port Harcourt, Rivers State, Nigeria.
Since then, IEPL was operating its 400 acres complex above 100% of its capacity with a CAGR of 15% in
polymer production from the Eleme plant. It was exporting to more than 20 countries across four continents.
Within a decade, IEPL became the second largest integrated producer of poly-olefins in Africa, and the

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largest in West Africa. They wanted to turn IEPL into the largest petrochemicals hub in the whole of Africa
by 2019 (see Exhibit 3).

A key driver to the success of IEPL was the successful turnaround maintenance of the EPCL plant based
in Rivers State, Nigeria. As of April 2009, the following shareholders who owned IEPL where Indorama
Corporation (65%), BPE (15%), NNPC (10%), and the Rivers State Government (10%). 19

Located in Port Harcourt, IEPL was under the jurisdiction of the Rivers State Government, and was within
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the territories of six host communities in Eleme. As of 2009, the plant had a manpower count of over 1,600
personnel, with 763 of the headcount being permanent staff that included local Nigerian workers and
expatriates. Owing to the volatile environment of the Niger Delta, it was important not only to ensure safety
of the plant workers and security of the plant, but also to ensure the buy-in of local Nigerians. From 2006
to 2009, Indorama managed to conduct a successful turnaround of the facility, achieving a CAGR growth
in polymer production of 20%. The plant was expected to produce 282,286 MT (metric tonnes) of polymer
products by 2010, double the amount in 2006 (see Exhibit 4). Achieving this increase in production entailed
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a significant investment in plant technologies and operating systems worth US$275 million (see Exhibit 5).

IEPL positioned itself strategically in the Nigerian economy, contributing to the import substitution of quality
polymer products (82% domestic market share), while placing Nigeria on the global polymer map. IEPL’s
EBITDA grew from USD 97 million in 2007 to USD 210 million in 2008.

IEPL’s presence in Nigeria had positively benefited both the country’s economy and balance of trade, with
high GDP contributions and significant polymer exports. In 2009, IEPL was given a tax holiday for the five-
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year period of 2006 to 2011, but had paid a dividend distribution close to US$115 million to federal and
state governments and NNPC over the period of 2006 to 2009.

15 Hirsch, A., & Vidal, J. (2012, August 19). Shell spending millions of dollars on security in Nigeria, leaked data shows.
The Guardian, Africa. Retrieved from https://www.theguardian.com/business/2012/aug/19/shell-spending-security-
nigeria-leak
16 Greenwashing was a term used when a company or organisation spent more time and money claiming to be “green”
through advertising and marketing than actually implementing business practices that minimised environmental
impact. EnviroMedia Social Marketing. (2017). About greenwashing. EnviroMedia Social Marketing website.
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Retrieved from http://greenwashingindex.com/about-greenwashing

17 Ogula, D. (2012). Corporate social responsibility: Case study of community expectations and the administrative
systems, Niger Delta. The Qualitative Report, 17(37), 1–27.
18 Uzoagu, I. F. M. (2015). Corporate social responsibilities of Shell Petroleum Development Company (SPDC) and
Nigeria Agip Oil Company (NOAC) for sustainable community development in Rivers State. Journal of Economics
and Sustainable Development, 6(3), 215–222.
19 Indorama Eleme Petrochemicals (IEPL). (2012). IEPL homepage. Retrieved from http://www.indoramaeleme.com

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MINOR SHAREHOLDERS OF IEPL

Nigerian National Petroleum Corporation (NNPC)

The Federal Government of Nigeria regulated and monitored the petroleum industry in Nigeria through the
state-owned oil corporation, NNPC. On 1 April 1997, NNPC was established through a merger between the
Nigerian National Oil Corporation and the Federal Ministry of Mines and Steel. NNPC’s key activity involved

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the management of joint ventures between the Nigerian Federal Government and foreign petroleum
multinational companies to develop the oil industry in Nigeria. NNPC focused its efforts towards the
development of the downstream industry in Nigeria, with two refineries in Port Harcourt, and one refinery
in Kaduna and one in Warri. EPCL was established by NNPC in 1990 to meet the rising demands for plastic
resin in Africa. Following unsatisfactory performance of the plant, however, it was sold to Indorama
Corporation in 2006 in the hopes that the sale would help further develop Nigeria’s petrochemicals industry.
Following the sale in 2006, NNPC retained 10% of its shareholdings in IEPL.

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Bureau of Public Enterprises (BPE)

BPE was a state-owned enterprise that provided secretarial support to NCP in Nigeria. The major
responsibility of BPE was to advise NCP and to ensure the implementation of the Council’s policies on
privatisation and commercialisation by helping the enterprises that were approved by the Council. Basically,
BPE played a key role in Nigerian Federal Government’s economic reform programme. The privatisation
exercise of EPCL in 2006, in which Indorama Group had emerged as the highest bidder, was managed by
BPE. Following the exercise, BPE held on to 15% of IEPL’s shareholdings for subsequent distribution. As
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BPE did not have the mandate to hold onto the shares for an extended period of time, it was seeking private
investors to buy its remaining shareholdings by 2009.

The Rivers State Government

The Rivers State Government was responsible for the governance of the Rivers State in Nigeria. Rivers
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State was one of the 36 states of the Federal Republic of Nigeria and had a population of above five million
people (as per the census data of 2006), 20 making it the sixth most populous state of Nigeria. It was divided
into 23 local government areas (LGAs), including Port Harcourt and Eleme, where an elected official was
charged with the governance of the LGA. Port Harcourt was the capital and largest city of Rivers State
which was also the economic centre of the Nigeria’s oil industry, producing more than 60% of the country’s
crude oil. When Indorama Corporation took over the EPCL plant in 2006 in Eleme and established IEPL,
10% of its original 75% shareholdings were sold to the Rivers State Government in 2006 as part of its
turnaround strategy. As a result, the Rivers State Government was given one board seat in IEPL.
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Eleme, Rivers State, Nigeria

The Eleme LGA was one of the 23 administrative subdivisions within Rivers State, Nigeria. Eleme was
located east of Port Harcourt and spanned an area of 138 sq. km., with a population size of 190,194 (as
per 2006 census data).21 It was a heavily industrialised territory, housing various petrochemical industries
following the discovery of oil in the Niger Delta in 1958 and hosted one of the busiest sea ports in Nigeria.

The main indigenous ethic group of Eleme was the Eleme tribe. Eleme was a kingdom with 10 major towns
ruled by a king referred to as “The Oneh Eh Eleme” (Chief of Eleme). Under the Chief of Eleme were the
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leaders of the two major groups of towns, Nchia and Obido, referred to as “Oneh Eh Nichia” and “Oneh Eh

20 Masterweb Reports. (n.d.). Nigeria 2006 census figures. Retrieved from

http://www.nigeriamasterweb.com/Nigeria06CensusFigs.html
21 City Population. (n.d.). Eleme (Local government area in Nigeria). Retrieved from
https://www.citypopulation.de/php/nigeria-admin.php?adm2id=NGA033009

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Odido”, respectively. Each of the two major groups of towns was further divided into smaller communities,
ruled by a community chief. These communities had their unique beliefs, customs and practices, and each
with a unique sense of identity. Indorama’s Eleme land area fell under the township of six different host
communities.

Despite the economic development spurred by foreign investments, Eleme was still an impoverished

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society in need of public infrastructure and amenities. While many foreign ventures engaged in community
projects to improve the quality of life while increasing local acceptance, it was not uncommon to see the
communities neglected by the firms. According to some sources, the Akpajo community had long
demonstrated their displeasure over Shell’s lack of community-improving projects in their territory.

Eleme Host Communities

Eleme consisted of six local communities known as the Akpajo Community, the Njuru Community, the

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Okerewa Community, the Aleto Community, the Agbonchia Community and the Wakohu family of the
Elelenwo Community. These six communities were collectively called “Eleme’s host communities”.

Five of the host communities, namely, Akpajo, Njuru, Okerewa, Aleto and Agbonchia, were semi-urban
settlements within Eleme and belonged to the Eleme tribe in Rivers State. The sixth host community,
Elelenwo had socio-economic resemblance with rest of the five communities of Eleme but it had its own
distinct language called “Ikwerre” and own cultural practices because it fell within the Obi-Akpor LGA and
shared land borders with the Eleme people. The Elelenwo community held its male members in higher
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regard than its female members, a social standard not found in the other five communities.

The emergence of several foreign corporations in the area resulted in the government’s acquisition of
farmlands, payment of compensations and quest for formal education. As a result, the Eleme people moved
from being peasants, hunters and tradesmen to being civil servants, factory workers, contractors,
entrepreneurs, academicians and members of armed forces. As mentioned before, the Eleme people had
a rich cultural heritage marked by their own language, festivals, dresses, cuisines and other traditional
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practices of art, music and dance.

IEPL WORKFORCE IN ELEME

The IEPL facility had a manpower count of over 1,600. Around 50% of the staff were hired on a contractual
basis with the majority being hired for casual labour, security and cleaning services. The rest of the 50%
staff was hired on a permanent basis. As of 2013, IEPL’s permanent staff comprised 169 expatriates and
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594 locals (see Exhibit 6). The local workforce comprised not only the Eleme people, but also other ethnic
groups within Nigeria that had migrated in search of work. The company had increased the number of local
employees from just six in 2006, when it bought EPCL, to above 600 in the following year, thus generating
employment in the region.

INDORAMA’S CSR PROGRAMME IN ELEME

To ensure safe, secure and sustainable operations in Eleme, IEPL had designed a comprehensive CSR
programme that focused on giving back to the host communities of Eleme. A project advisory committee
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(PAC) was established to oversee all engagements with the host communities. PAC comprised
representatives from the six host communities, the Rivers State Government and the Eleme local
government. IEPL also commenced numerous community projects to improve the lives of the host
communities in Eleme, focusing on the construction of public infrastructure (see Exhibit 7). Some of the
important host community development projects included employment generation, the construction of roads
and facilities, electrification for selected villages and scholarships for engineering students.

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The purpose of the PAC was to serve as a key interface between IEPL and the host communities for the
management of relationships and ensuring execution and delivery of community projects that were chosen
by the host communities. Under the guidance of the Chief of Eleme, PAC worked in liaison with “Paramount
Chief” of each of the host communities to identify the projects to be undertaken by IEPL in a year from
those documented in the memorandum of understanding between IEPL and the host communities (see
Exhibit 8).

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As a next step, PAC then informed, in writing, IEPL of the chosen projects for its execution along with the
names of indigenous contractors from the host communities. These contractors then worked under the
overall supervision of IEPL to ensure the delivery of the selected projects and received payments directly
from IEPL. IEPL invested approximately US$4.4 million (Naira 880 million) per annum in such projects.

IEPL’s CSR programme was congruent with the global strategy adopted by Indorama Corporation. The
global CSR strategy was centred upon creating positive social impact and had been successfully applied

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with significant contributions towards community development in countries, such as Thailand, Indonesia
and Mexico (see Exhibit 9).

Despite all these community efforts and basic security in place (by employing security staff on payroll and
an external security agency), IEPL employees faced an abduction incident in 2007. Ten people (three of
them being senior managers and five of them having been in Indorama over 10 years) were kidnapped by
MEND in a pre-dawn raid of Indorama’s residential estate22. The GMD, Amit Lohia, was on a vacation in a
coffee plantation in Indonesia when he received a call saying, “We are under attack”. After consulting his
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father, Chairman Prakash Lohia, he hired an international security consultant to take charge of the incident.
The Chairman flew to Nigeria and spent two weeks to understand the situation.

The matter was eventually resolved over a period of a month, with none of the abducted employees being
harmed. As a result, Indorama strengthened its security measures and imposed a strict employee curfew
following the incident. Amit also assured his employees that since such an incident had never happened
before in the history of Indorama, all efforts would be taken to ensure that similar incidents never happen
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again. Due to the security risks posed by terror groups such as MEND, an international security consultant
was hired who advised IEPL to increase the level of security in the plant. Some of the key measures that
were recommended included:

a) tightening up security on its premises with more security guards, and fencing the entire perimeter of the
plant;

b) restricting expatriates to travel off-premises (such policies were used by other oil and gas companies in
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Eleme);

c) allowing expatriates multiple periods of vacation during the year, in compensation for having to work and
live within the premises; and

d) convincing the national government to provide a 100-soldier battalion of armed forces that would be
stationed at the plant for security and provide convoys in and out of the IEPL facility.

IEPL made a huge investment and successfully adopted the first three recommendations by the consultant
to assure security and well-being of their employees. The company were also successful in convincing the
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Nigerian government to station a battalion of soldiers outside their facility to ensure no recurrence of such
an incident.

22 Reuters News (2007, June 2) More abductions in Nigerian oil delta, siege ends. Retrieved from
http://in.reuters.com/article/2007/06/02/idINIndia-30113320070602

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THE PUBLIC–PRIVATE PARTNERSHIP (PPP) SCHEME

As per the UN General Assembly Resolution A/RES/60/215 (2006), PPPs were defined as “voluntary
relationships between various parties, both public and non-public, in which all participants agree to work
together to achieve a common purpose or undertake a specific task, and as mutually agreed, to share risk
and responsibilities, resources and benefits”. The PPP scheme considered by IEPL involved collaborating
with the Nigerian Federal Government through BPE to allow both IEPL’s Nigerian workforce and the host

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communities to purchase BPE’s 15% shareholdings in IEPL. This scheme would require significant support
in both execution and financing of the purchase.

IEPL’s intention was to bring all stakeholders on board as owners of the firm, which already had both the
federal and state governments holding positions. It would be more difficult to convince both the Nigerian
workforce and the host communities as they lacked the knowledge of how a company board functioned and
why it would be beneficial to them to be on the company board. Currently, the host communities enjoyed

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their involvement with the selection and execution of PAC community projects. The idea of stock purchases
and dividend payouts was completely alien to the Eleme people. This uncertainty would discourage the
host communities from taking up the scheme, especially when it was likely they would need to finance the
purchase with a loan. Thus, a key challenge to overcome would be communicating the benefits to the Eleme
people to buy-in.

Another key barrier to the PPP scheme would be the difficulty in financing the purchase. Due to the state
of poverty in the Niger Delta, it was unlikely that the host communities had the power to purchase IEPL’s
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shareholdings (estimated at US$31 million, based on 2006 acquisition price). Financing through a loan was
an option, although it would be difficult to find financial institutions willing to extend a loan to the host
communities, due to justifiable concerns over the repayment capabilities of the Eleme people.

Implementation of the PPP scheme

IEPL would need to design an effective framework to organise all the stakeholders it hoped to bring onboard
tC

with the PPP scheme. Decision-making rights, communications and the distribution of dividends would
need to be determined through the framework. Additionally, it was especially important that IEPL found an
equitable way of allocating the shareholdings between the host communities. Would it be distributed as per
the land area, population size or by other means? A suitable way of allocating the shareholdings must be
devised such that it was accepted by each one of the communities.

A feasible and pragmatic action plan as required if the PPP scheme was to be given the green light. The
team at IEPL would need to show how it could be implemented, right from gaining stakeholder buy-in to
No

overcoming challenges in financing, organising the interested parties, and distributing rights, ownership and
dividends equitably.

A DECISION TO BE MADE BY MONDAY

Moving forward, Amit needed to determine if approaching BPE for the new PPP scheme was worth the
effort. Since the privatisation of EPCL three years ago, Indorama’s initiatives towards increasing the buy-in
of the local host communities had seen positive results, with the total number of local disturbances greatly
reduced. Several team members did ask if the PPP scheme was necessary.
Do

However, Indorama’s decision to sell 10% of its shareholdings to the Rivers State Government had enabled
the firm to gain tremendous support for the plant’s activities and the development of operations. Perhaps
the same could be achieved with both the Nigerian staff workers and the host communities through the
PPP scheme.

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To build a strong case that would convince both Indorama and the BPE directors, it was necessary to show
that it was thoroughly deliberated. At the very least, the following questions raised at Friday’s meeting would
have to be answered.

1. Establishing a need for CSR: Why does the business environment in Nigeria warrant such investment
towards CSR? Which stakeholders were important to Indorama and deserved a focus in their CSR

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initiatives?

2. Evaluating Indorama’s CSR programme: Had Indorama’s CSR programme been successful in Eleme,
Nigeria? If so, was the PPP scheme still necessary? What other alternatives did Indorama have to focus
its 2009 efforts on?

3. Implementation of the PPP Scheme: Assuming that the PPP scheme made sense for Indorama, how
should they go about doing it? How should they finance the scheme and what other challenges would

yo
need to be addressed?

As Amit leaned back in his chair, he knew that he needed to come to a decision before the meeting on
Monday. He was in an ethical dilemma of whether IEPL should further compensate the local community for
the negative externalities of his business through the PPP scheme or stay satisfied with whatever they were
doing in the name of CSR. BPE’s intent to divest its 15% shareholdings had provided an excellent
opportunity to get the host communities onboard, provided he could get the buy-in of all those involved.
How would they finance and implement this PPP scheme, which was practically unheard of in Africa? And
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perhaps more fundamentally, was this within the scope of their CSR initiatives? If the objective was to gain
the buy-in of indigenous communities, surely there must be other ways to do so? It would probably be a
long night before Amit would get any sleep.
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No
Do

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EXHIBIT 1

INDORAMA HOLDING STRUCTURE

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op
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Source: Welcome address to Mr. Shabbir Hassanbhai (Singapore’s High Commissioner to Nigeria, Ministry of Foreign
No

Affairs) at IEPL Nigeria, March 13, 2014.

Do

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EXHIBIT 2

INDORAMA GLOBAL FOOTPRINT

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yo
op
Source: Welcome address to Mr. Shabbir Hassanbhai (Singapore’s High Commissioner to Nigeria, Ministry of Foreign
Affairs) at IEPL Nigeria, March 13, 2014.
tC
No
Do

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EXHIBIT 3

INDORAMA ELEME (IEPL) OPERATIONS IN AFRICA

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yo
op
tC

Source: Welcome address to Mr. Shabbir Hassanbhai (Singapore’s High Commissioner to Nigeria, Ministry of Foreign
Affairs) at IEPL Nigeria, March 13, 2014.
No
Do

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EXHIBIT 4

INDORAMA ELEME (IEPL) POLYMER PRODUCTION AND SUPPLY VOLUMES

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yo
op
tC

Source: Welcome address to Mr. Shabbir Hassanbhai (Singapore’s High Commissioner to Nigeria, Ministry of Foreign
Affairs) at IEPL Nigeria, March 13, 2014.
No
Do

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EXHIBIT 5

INDORAMA ELEME (IEPL) INVESTMENT OVERVIEW

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yo
op
tC

Source: Welcome address to Mr. Shabbir Hassanbhai (Singapore’s High Commissioner to Nigeria, Ministry of Foreign
Affairs) at IEPL Nigeria, March 13, 2014.
No
Do

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EXHIBIT 6

INDORAMA ELEME (IEPL) PLANT MANPOWER COUNT

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yo
op
tC

Source: Welcome address to Mr. Shabbir Hassanbhai (Singapore’s High Commissioner to Nigeria, Ministry of Foreign
Affairs) at IEPL Nigeria, March 13, 2014.
No
Do

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EXHIBIT 7

INDORAMA ELEME (IEPL) HOST COMMUNITIES PROJECTS

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yo
op
tC

Source: Welcome address to Mr. Shabbir Hassanbhai (Singapore’s High Commissioner to Nigeria, Ministry of Foreign
Affairs) at IEPL Nigeria, March 13, 2014.
No
Do

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 Page 17
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EXHIBIT 8
Do
INDORAMA’S ELEME PROJECT ADVISORY COMMITTEE (PAC)
No
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[email protected] or 617.783.7860
yo
Source: Welcome address to Mr. Shabbir Hassanbhai (Singapore’s High Commissioner to Nigeria, Ministry of Foreign Affairs) at IEPL Nigeria, March 13,
2014.
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os
t

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EXHIBIT 9

INDORAMA CSR STRATEGY

Indorama’s efforts at sustainability revolve around its Seven Pillar framework.

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yo
op
Source: Indorama Ventures Sustainability Report 2014. Moving towards Sustainability: An emphasis on Recycling
Business; p: 22.
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Strategic CSR Initiatives

Indorama’s strategic CSR efforts had been able to effectively combine both business and environmental
interests. Multiple investments in recycling had allowed Indorama to capture more of the value chain via
backward integration. This backward integration had equipped them with capabilities in producing recycled
resins and fibres, which were then used in products, such as swimwear and household furnishing.
No

Efforts at waste reduction and reusing resources had also been able to align business and environmental
goals. This resulted in increased process efficiency that translated into cost savings for the company while
reducing the risk of incurring potential environmental liabilities and any associated penalties. IVL Mexico
had implemented energy reduction projects to reduce costs and greenhouse gas emissions. In 2013,
Mexico saved 1,084 MM BTU (Million British Thermal Units) from gas consumption and 1,615,127 km/h
from electricity consumption.

Generic CSR Initiatives

Do

Indorama’s efforts in local community development had been more focused on generating social impact
instead of generating business value. These efforts mainly revolved around philanthropic giving, and
developing physical infrastructure and community development projects, which were focused on the areas
of education, health, environment, art and culture, natural disaster relief and community development.

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Philanthropic giving largely manifested as cash donations and one-off volunteering opportunities across its
countries of operation.

CSR efforts in developing public infrastructure aimed to improve living standards among communities.
Indorama focused on developing health infrastructure to promote healthy living among its local communities.

Community development projects were undertaken through Indorama’s involvement in arts, culture and

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education. Indorama had been supporting a variety of local events and activities to help communities
enhance arts and culture in Thailand and Indonesia. Indorama had also focused on developing human
capital in these communities. Scholarships, donations, and volunteer and awareness efforts had been
directed at the local students with the aim of building stronger communities.

yo
op
tC
No
Do

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[email protected] or 617.783.7860