Delta Steel: Group Wants Bid Cancelled
From Onwuka Nzeshi in Warri
The Bureau for Public Enterprises (BPE) and the National Council on Privatisation have been asked to nullify the bidding exercise for the choice of a core investor for Delta Steel Company, Ovwian-Aladja, as the current exercise which has BUA International as the highest bidder offering $20.5 million portends grave dangers to the survival of the gigantic steel plant.
A group which identified itself as Concerned Stakeholders of Delta Steel Company (CSDSC) said the current exercise should not only be nullified but a fresh one should be opened without "impossible and strangulating conditions", so as to pave way for the participation of reputable steel producing firms in Europe and Asia. The stakeholders made up essentially of selected chieftains of the ruling Peoples Democratic party (PDP) in the Central Senatorial District of Delta State where the steel plant is situated, observed that for an integrated steel plant established at the cost of $1.5 billion (about sixteen years ago), the bids resulting from the current exercise were ridiculously low, but blamed the scenario on the extraneous conditions imposed on would-be investors by the Bureau for Public Enterprises.
Business magnate, Chief Gabriel Sefia who led the stakeholders to register their misgivings at the press centre, Warri remarked remarked that many genuine investors were scared away from the bidding exercise because the process was riddled with impossible conditions some of which included that the preferred bidder would undertake the dredging of the Escravos bar to Warri river; complete the rail line from Itakpe to Warri, establish a captive power plant; reactivate the steel melting shop but would not enjoy any tax and import duty concessions from the Nigerian government.
These conditions, THISDAY checks revealed, when added to the cost of procurement of essential raw materials for effective take-off of the plant means that the core investors will have to bear an extra financial burden of over $585 million to move the steel plant from its dormant stage to a state where it can resume production.
"With all the optimism in the world, it is difficult to see how a profit-oriented investor would, in a world of infinite investment opportunities, stake so much to re-activate a plant after paying the bid price. Faced with these insurmountable financial obstacles the winner of the financial bid could decide to dismantle the plant and move it to a more financially viable location in Nigeria or in a neighbouring country.
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