26 October 2012

Nigeria: FG Moves to Take Over ALSCON From Russia's Rusal

Abuja — Following a Supreme Court judgement, which revoked the sale of the Aluminium Smelter Company of Nigeria (ALSCON) by the Bureau of Public Enterprises (BPE) to Rusal, a Russian company, the Federal Government said it has commenced the process of handing over the company to BFI Group.

In December 2006, Rusal, the world's largest aluminium company, which belongs to Russian billionaire oligarch, Oleg Deripaska, acquired 77.5 per cent of the Federal Government's shares in ALSCON for $205 million.

It was later to acquire another 7.5 per cent of the company from MAN Ferrostaal AG, the German firm that built ALSCON.

However, Rusal's acquisition of ALSCON was mired in controversy, as the Russian firm did not win the bid during financial bid opening process held by the BPE.

Rather, the BFI Group, which was the preferred bidder, was side-tracked by former President Olusegun Obasanjo at the time, and Rusal was selected to acquire ALSCON.

Displeased by the Federal Government's decision, BFI went to court to challenge the process and got a Supreme Court ruling in its favour last July.

The Supreme Court, had on July 8, ordered the BPE to execute the share purchase agreement with BFI Group to enable the company to pay the agreed 10 per cent of the accepted bid price of $410 million within 15 working days from the date of the execution of the share purchase agreement.

Director General, BPE, Ms. Bolanle Onagoruwa, told THISDAY in an exclusive chat yesterday that it had no choice than to heed the Supreme Court directive.

"It is a Supreme Court judgment and we are bound to obey it," she said.

She said the agency had held series of meetings with the Russians and had already informed them of plans to take back the plant.

But, the Russians, THISDAY gathered, are demanding compensation from government before they are dislodged.

The BPE boss, however, said it had asked Russal to make a formal request stating how much it requires in compensation.

THISDAY further learnt that Russal is likely to be evicted from the plant even before it gets the proposed compensation.

Onagoruwa said as ordered by the Supreme Court, government had already commenced the process of finalising the Share Sale Purchase Agreement, which is supposed to be signed with BFI Group.

She said: "What they (Russal) are saying is that they want compensation because in the agreement that we signed with them, we said in any circumstances like this, we would indemnify them.

"What they are going to do is to submit to us a formal request that this is what we've spent in the number of years that we've been there and this is the compensation that we are requesting. We would then present it to our bosses."

Continuing, the BPE boss said: "We have to put in place an ordered process whereby BFIG comes in and the Russians leave but you know you can't just tell them to walk out of the country, so it must be an orderly process.

"There's a timeline for it; as I said, we are waiting for the Russians to come back with their proposal and we've had meetings with them. Once they come back with their proposal, then it would enable us to take the next step."

Asked what the Federal Government would do if Russal's proposal was unreasonable, she said: "We would negotiate it but in the meantime, what we are going to do is get in Federal Government officials to go into the plant and start to get them out of the plant.

"We don't have to wait for the negotiations to be completed before BFIG takes over."

In a judgment delivered by five justices, the Supreme Court had unanimously agreed that there was a binding contract between BFI Group and the BPE, which should be enforced.

Justice Afolabiyi Fabiyi, who delivered the lead judgment, held that BPE should not have gone ahead to sell the company to Rusal or any other company.

He said Rusal should have refrained from buying the company when it was aware that BFI Group, which was chosen as the preferred bidder before BPE unilaterally frustrated the contract, was already in court to challenge BPE's refusal to consummate the transaction.

ALSCON has been under the management of Rusal for almost seven years.

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