5 January 2013

Nigeria: Controversies Over AlSCON's Assets, Ownership

Uyo — The cost of ALSCON's assets and its ownership has attracted the most attention. Weekly Trust examines the issues that have raised so many questions.

There have been growing concerns and controversies over the actual market price and ownership of the Aluminium Company of Nigeria (ALSCON), since July, last year when the Supreme Court of Nigeria stripped UC Rusal,a Russian firm of its ownership of the Aluminium plant following a suit filed by BFIG Corporation against the Bureau of Public Enterprise (BPE).

These controversies centered around the sudden reduction of the assets value of the plant from N130 billion in 2006 to N30 billion as indicated by the report of an independent auditor which carried out an assessment of the plant prior to its privatization.

The reduction has generated a lot of controversies and bad press among the different stakeholders, leading to buck passing and suspicion as far as the auction deal was concerned.

The company's director in-charge of public and governmental affairs, Mr. Albert Dyabin, told Weekly Trust that the net asset of the plant before privatization was N130billion equivalent to $0.9bn as indicated in the report of the independent assessment.

However, in January, 2006 when the push for privatisation became hotter, an independent auditor, Deloite, was commissioned to carry out an assessment of the plant, the outcome of which put the market value of the plant at N30.9 billion equivalent to $240.4million. This, it was gathered, was prior to the company's second take-off in 2007.

"In 2006, the cost of the net assets of the plants was N130bn ($0.9bn). Due to the fact that in 2006 privatization was in progress, it was necessary to identify the exact cost of the plant's assets. For that purpose an independent auditor Deloite carried out an assessment of the plant. Based on the outcome of that assessment as at January 1st 2007 the actual value of ALSCON was N30.9 bn ($240.4 bn)" he said.

The argument in some quarters that the reduction in the assets of the plant, including equipment, machines, building and facilities was carried by the Russian firm when it effectively took over control of the plant is therefore not tenable as it was carried out by the independent auditor.

Dyabin said UC Rusal has invested heavily to revive the moribund factory since it took over the plant in February, 2007. These huge investments, according to him, can only be appreciated and understood by viewing the history of the plant before and after the privatization.

Sources said the construction of the plant started in 1990, but when it started production in October, 1997, it could only operate at 20 per cent capacity, since it was only 75 percent structurally completed.

Our sources revealed, however, that due to technical difficulties, it could not sustain production and had to be shut down operation in June 1999. Consequently, over 60 per cent of the staff, it was gathered, were sent on compulsory leave and eventually laid off.

Several efforts to re-start the plant by the Federal Government were made with the help of technical partners arrangement or tolling arrangements as it were, with some international companies such as the ALCOA, in the United States of America, ALCAN, a Canadian company and of course, Glencore.

These efforts, however, did not yield the desired result because of the conditions given by these companies, and the then prevailing insecurity in the Niger Delta Region, where the plant is cited.

However, when the push for privatization gathered momentum, United Company, Rusal, a world leader in aluminium production purchased ALSCON as the second bidder who proposed the second bid price among qualified bidders, owning over 85 per cent stakes in the steel plant.

In February, 2007 when it effectively took over, the plant was non-functional for eight years. Modernization of the plant led to overhaul of the pots, commissioning of five cranes for operations, commissioning of carbon plants as well as injection and repairs of casting lines and fumes treatment plants.

This has enabled the company to meet the yearnings and demands of the Nigerian companies in primary aluminium production and for export.

The question of who is the lawful owner of the ALSCON has often arisen. This question became more compelling now than before since the Supreme Court judgement in July, last year.

Dyabin told Weeky Trust that by a copy of the Supreme Court judgement BFIG Corporation is to remit $410 million to the Bureau for Public Enterprise (BPE) for ALSCON.

Such payments, according to the director, must be paid as follows: ten per cent of the bid price, that is, $41million must be paid within 15 working days from the day of signing the Shared Purchased Agreement (SPA) between the BFIG Corporation and BPE, while the remaining 90 per cent must be paid by the American-Nigerian consortium within 90 days from the day of the first payment.

He, however, said the date of the SPA between BFIG and BPE is not signed and the company is yet to remit the 10 per cent as stated in the Supreme Court judgement and it is yet to pay the entire amount of $41million as demanded by the apex court.

Though representatives of the BFIG Corporation are yet to be reached to substantiate the claims, UC Rusal has maintained it legitimate ownership of the country's premier steel plant at Ikot Abasi in Akwa Ibom State.

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