30 January 2013

Nigeria: BPE Writes BFIG, Gives Conditions for Alscon Takeover

More than seven months after the Supreme Court ordered the reinstatement of the American-Nigerian consortium as the authentic winner of the bid for the Aluminium Smelter Company of Nigeria, ALSCON, Ikot Abasi, the Bureau of Public Enterprises, BPE, on Wednesday formally transmitted an offer letter to the company to take over the plant.

The privatisation agency said the letter dispatched to the BFIG President, Reuben Jaja, was accompanied by a Share Purchase Agreement, SPA, which stipulates that the company must execute and pay within 15 days of the execution of the SPA, the sum of $41 million, being the agreed 10 per cent of the $410 million price it offered for the plant since 2004.

The apex court had since July 6, 2012 ordered the immediate sack of UC RUSAL, the Russian firm that BPE had handed over the $3.2 billion smelter company to in controversial circumstances; while urgent steps were to be taken to reinstate the new owners.

However, the order suffered several months delay following intrigues allegedly masterminded by officials of the BPE that connived with the Russians to delay its execution.

A three-day visit scheduled by the National Council on Privatisation, NCP, to enable all stakeholders conduct an assessment of the plant and ascertain its current state pursuant to the apex court's order was aborted at the last minute following the refusal by the Russian's to cooperate.

Though the Russians were duly informed of the visit and its purpose, they were non-committal on providing the logistics, including security, accommodation and access to the plant by the delegation, resulting in the indefinite postponement of the visit.

But BPE said on Wednesday that the decision to issue a letter and SPA to BFIG followed the directive of the National Council on Privatisation, NCP, after its meeting on January 22 presided over by its Chairman and the Nigerian Vice President, Namadi Sambo, in Abuja.

The BPE recalled the Supreme Court judgment, which included "an order of specific performance" mandating the privatisation agency and the NCP to a "mutually agreed share purchase agreement for execution by the parties to enable the plaintiff pay the agreed 10% of the accepted bid price of US $410 million (i.e., the sum of US $41 million) within 15 working days from the date of the execution of the Share Purchase Agreement in accordance with agreement dated 20/5/2004 and the 90% balance of bid price shall be paid within 90 calendar days."

The Supreme Court had also decreed that "the defendant is bound to accept payment of 10% of the bid price from the appellant (BFIG Group Corporation) within 15 days from the date of signing the Share Purchase Agreement (SPA) by the parties."

Notwithstanding the apex court's order, the BFI group has since drawn attention to the illegal devaluation of the plant by UC RUSAL, suggesting that the plant it bided for in 2004 may have drastically depreciated in value according to the company's financial statement, which shows its total asset base since 2006 was devalued by about 89.47 per cent.

Prior to the bid in 2004, ALSCON's fixed asset as at December 31, 2003 stood at about N127.7 billion, before dropping marginally to N127.3 billion at the beginning of 2004, according to a report published by the audit firm, PriceWaterHouseCoopers Limited.

But no sooner were Russians handed over the control of the plant by BPE in early 2007, that management reportedly carried out a comprehensive re-evaluation of the asset and marked down their value by over 76 per cent, from N129.9 billion at the end of 2006 to N30.98 billion.

The certified true copy of the audit report by an audit firm, KPMG, showed that the value has further depreciated from N30.98 billion in 2007 to N25.2 billion in 2008, N19.4 billion in 2009, N14.9 billion in N2010 and N14.7 billion in 2011.

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