More than eight months after the Nigerian Supreme Court ordered the annulment of the sale of Aluminium Smelter Company of Nigeria, ALSCON, to UC RUSAL, the latter on Friday announced its decision to suspend production on the plant.
The Russian firm, which took over the plant in 2006 from the Bureau of Public Enterprises, BPE, was sacked on July 6, 2012, after the Supreme Court declared that the smelter company be handed over to BFIGroup, the Nigerian-American consortium that was declared winner of the bid held in 2004.
Since the Supreme Court handed down the order, UC RUSAL have been occupying the plant located in Ikot Abasi, Akwa Ibom State, in breach of the Supreme Court's order as it continued to insist on ownership of the plant.
In defiance of the order, the company approached the International Arbitration Court, IAC, in London urging it to restrain the Nigerian Government from implementing the judgment of the Supreme Court.
But on Friday, its Director of Public Relations, Albert Dyabin, said in a statement that its management had decided to "suspend production" citing operational challenges, including lack of reliable power and gas supplies, pending the outcome of the appeal it filed at IAC against the Supreme Court judgment.
"Aluminium production at the plant is deeply loss-making, which renders it impossible to fully utilise the existing capacities," Mr. Dyabin said.
"Today, despite all measures undertaken by the company, ALSCON does not have a reliable and continuous gas supply.
"The on-going situation around the illegal attempts to challenge RUSAL's rights of ownership to the plant and the recent decision of the Supreme Court of Nigeria to cancel the sale of ALSCON shares to RUSAL impede long-term investment in the smelter.
"Consequently, RUSAL will suspend production till further notice and will resume as soon as the legal uncertainty has been resolved and the continuous power supply has been secured."
BFIG, which had indicated its desire to be joined with the Federal Government in the IAC suit, last February, announced that it had dragged UC RUSAL before a Federal High Court, Abuja claiming N2.8 billion damages over the bid for the plant.
The consortium said, in its statement of claim, that it wants compensatory damages from UC RUSAL for "tortuous interference" in its contractual relations with BPE; conspiracy to defraud; unfair competition; and interference in prospective business advantage in the acquisition of ALSCON.
It listed other defendants to include all companies under the umbrella group, United Company, UC, RUSAL, consisting JSC Russian Aluminium (RUSAL); JSC Bratsk Aluminium Plant; RUSAL America; Dayson Holdings Limited, a Shell Corporation subsidiary under the Commonwealth Trust Limited; a private Trust in Tortola British Islands, and 20 others.
Hearing in the case, to be presided over by Justice Jude Okeke, is scheduled for March 25.
BPE Spokesman, Chukwuma Nwoko, refused to pick his call when PREMIUM TIMES called. He did not also respond to the text message sent to his phone. However, a BPE official told PREMIUM TIMES in confidence that the privatisation agency is not aware of the decision by RUSAL to suspend production on the plant, saying they have no reason to do so.
"They (RUSAL) have no reason to suspend production and vacate the plant until BFIG executes the agreement (share purchase agreement to acquire the plant) by making the payment of the initial 10 per cent of the offer it made for the plant," the official said.
The official, who said he had no authority to speak on the issue, till BPE is fully briefed by Russian company, said what he gathered was that the company was only forced to reduce the number of production pots it has been firing following a technical fault in its power transformer. He gave no further details, as the legal tussle between UC RUSAL and BFIGroup continues.