Ajaokuta: Senate Wants FG to Revoke Pact with Solgas
Asks EFCC, ICPC to probe firm
From Kola Ologbondiyan in Abuja
The Senate yesterday unanimously passed a resolution urging President Olusegun Obasanjo to mandate the Economic and Financial Crimes Commission (EFCC), as well as the Independent Corrupt Prac-tices and Other Related Offences Commission (ICPC) to investigate alleged fraudulent activities in the operation of the Ajaokuta Steel Company by Solgas.
The Senate also resolved that the concession pact entered into between the Federal Govern-ment/Ajaokuta Steel Company Limited and Solgas Energy Nigeria Limited should be terminated as Solgas does not have the capacity for power generation, distribution and gas processing.
Before the report was "received, accepted and adopted" the Senate resolved that in the face of fresh revelations from Senator Mohammed Ohiare (Kogi Central) that "expensive gadgets of the steel company are being carted abroad" the committee should amend its report to include that EFCC and ICPC be mandated to investigate Solgas.
The Senate Leader, Senator Dalhatu Sarki Tafida, moved that "we accept and adopt the report as presented and submitted then forward to the executive and send copies to the ICPC and EFCC" and the motion was carried.
The resolution to terminate the contract was contained in the report of the Senate Committees on Power, Steel Development and Metallurgy, as well as Judiciary, Human Rights and Legal Matters, which jointly investigated the concession agreement. But the investigation of Solgas management for economic and financial crimes was an amendment to the report.
Senator Arthur Nzeribe, the Chairman of the Senate Committee on Power, Steel Development and Metallurgy, who presented the joint committee's report, stated that, "Solgas Energy Nigeria Limited is not capable and does not possess the financial strength, managerial and technical capacities to handle the concession agreement in any of its ramifications. The project cost of US $3.6bn as claimed in the estimate is well above the ambit of Solgas Energy LTD and Solgas Nigeria Limited. It is in excess of what is required to execute the project.
"The combined effect of our findings and conclusion is that Solgas Energy Nigeria Limi-ted is not ready, willing and capable to deliver steel, power and gas as demanded in the concession agreement in order to rehabilitate, complete, commission and operate the Ajaokuta Steel Company Ltd. (ASCL) Plant in the interest of the parties to the agreement in order to safeguard the Nigerian tax payers fund, and provide other trickled down dividends and benefits from the project," Nzeribe said.
The report highlighted that "whereas Solgas Energy Nigeria Ltd was incorporated in 2001 with a capital of only N1m, the parent company, Solgas Energy Ltd was registered in the Isle of Man in the UK in 2000, with a net worth asset of $60 million only. Nigeria's investment in this project is now in excess of $10 billion, which is about N1.5 trillion. The project is now 34 years old without production and should not be allowed to be buried.
"Conscious of the fact that the Concession Agreement is for US $3.6 billion, about N5.4 trillion, and the government has entrusted the tax payers money to that magnitude to Solgas, it became imperative that we turn in a report that is factual in all respects, that cannot be faulted and that we observed all democratic principles particularly Section 36 of the 1999 Nigeria Constitution, in respect of fair hearing.
"We gave Solgas every opportunity to answer all enquiries. Solgas failed to demonstrate that it has the muscle to shoulder such a huge financial investment. Besides, the amount required for the job is less than US $3.6 billion.
The estimated project cost is in the magnitude of US $1.5 billion.
"The thrust of our investigation established that Solgas Nigeria Limited does not have the capacity for power generation, distribution and gas processing. It confirmed positively that the company does not have the managerial and technical expertise in steel production to handle such a gigantic project. We found that it is an energy-based company and knows next to nothing about the steel business and industry.
Describing Solgas as "a Teflon organisation on which nothing positive sticks," Nzeribe noted that, "all the negative assertions were substantiated. Whereas Solgas was not able to put up a defence, not one shred of defence was produced to the contrary, in favour of Solgas.
The committee therefore finds ample and numerous justifiable reasons to implore the Federal Government of Nigeria to suspend further negotiation or action on the agreement between Federal Government of Nigeria and Solgas Energy. Our findings are not in favour of the decision of government to award the contract to Solgas. It is not prudent politically, and not sound commercially. We are confident that the project as conceived will not succeed under the care of Solgas.
The report however alerted the Senate that, "Solgas at the moment is trying to sell or subcontract their concession agreement. Solgas is in negotiation with yet another foreign company in order to transfer their franchise at a price, a commission or a fee. In fact, there is an MOU between Solgas and the foreign company.
"The foreign company is presently assessing the feasibility and viability of the project with the view of working with Solgas and paying off Solgas. Solgas should be prevented from abusing the concession agreement. They are now sorting and touting the project in the international market without success. Solgas is bad news to all stakeholders including labour. It continues to misrepresent itself to government and all stakeholders.
The committee therefore recommended that, "government should terminate the Solgas contract and seek to enter into contract with a viable partner with a demonstrated and proven financial capacity to execute the project. Solgas should have no stake whatsoever in this arrangement."
Meanwhile,the management of Solgas has described as unfortunate, the recent protests embarked by some staff.
In a statement yesterday, management urged the workers to remain calm and go about their normal duties as the Federal Government was making efforts to address their problems.
The concession agreement signed between the Federal Government and Solgas Energy Limited on ASCL states that the government would continue to pay salaries and allowances of workers while Solgas provides funding for equipment and expertise needed to rehabilitate, complete and manage the steel complex within the stipulated period it (Solgas) is expected to run Ajaokuta and hand it over to the government.
However, THISDAY checks revealed that the Federal Govern-ment has since May this year cut allocations to Ajaokuta Steel Company and its staff salaries as well as those of other steel companies by about 50 percent.
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