Daily Independent Online.
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Wednesday, July 21, 2004.
ALSCON bid splits NCP
• BPE denies frustrating BFI Group
By Sanya Adejokun
Senior
Correspondent, Abuja
Parties to the
proposed sale of the Aluminium
Smelter Company of Nigeria (ALSCON) have continued to throw brickbats at one
another while the company, shut down years ago, remains idle in Ikot Abasi,
Akwa Ibom State, where it could have provided employment for thousands.
A Presidential
directive that the Bureau of Public Enterprises (BPE) should re-open
negotiations with disqualified Russian Aluminium (Rusal) is causing ripples at
the National Council on Privatisation (NCP).
On top of that, the
BPE has reacted to claims by BFIGroup that the agency frustrated its effort to
acquire ALSCON. It denied allegation of conspiracy and instead passed the
“guilt” of the failed bid back at BFIG.
In its April 19 letter
to BPE Director General Julius Bala, Rusal stated that the 77.5 per cent shares
of ALSCON they intend to acquire would be for $205 million (N28.7 billion), of
which only $5 million would be paid upfront while the balance would be paid in
$10 million installments over a 20 year period.
But some NCP members
have resolved to fight against the decision to cancel the offer made to bid
winner BFIGroup, which is “many times better than that of the
Russians”.
Rusal bid under the
name Dayson Holdings Limited. It wrote in the letter: “First of all, we
would like to draw your attention to the fact that the total amount of funds to
be invested by Rusal in the Nigerian economy, in case we take over the 77.5 per
cent of shares of ALSCON, will be around US$390 million, consisting of: cash
offer of $205 million, of which 5 per cent million up-front, and $10 million
over 20 years; approximately up to $130 million required to launch available
capacity and complete the smelter to 100 per cent; up to $30 million required
to finance the net working capital of Alscon; and up to $25 million may be
needed to finance industrial and social infrastructure of the plant”.
An NCP source said
President Olusegun Obasanjo may be confused over the running controversy as
some of his most trusted technocrats in the privatisation programme are now
showing signs of rebellion.
He cited the example
of when the President directed one of the young Turks to discuss with Rusal
shortly after their disqualification and, in the course of the discussion, he
stormed out and even refused the President’s summon conveyed to him by a
senior BPE official.
He lamented:
“Rusal did not meet the requirement of BPE, to start with. And the whole
transaction at the NICON Hilton was televised globally for the whole world to
see. What you will see with Russian Aluminium is a conditional bid, again
meaning that Nigeria is not worth $1 million. And when they even came up with
the bid bond, it was written in a language that nobody understands and from a
bank with no correspondent in Nigeria”.
Bala promised on
Sunday to provide the views of the BPE on the claims by Rusal. However, he was
said to be in a meeting when he was contacted on Tuesday. None of the calls
made to his telephone lines went through.
But in its denial of
claims by BFIG, the BPE blamed the cancellation of the transaction on the
inability of erstwhile preferred bidders to produce a soft copy of the
strategic business plan (SBP) and a copy of the technical and marketing
agreement (TMA) with Daewoo International of America.
“There was no
way that the share purchase agreement (SPA) could have been signed without
those requirements. Unfortunately there was no response from the corporation
till the afternoon of July 8, 2004”, a statement signed by BPE’s
Charles Odenigbo said in Abuja on Tuesday.
It denied claims by
BFIG that it wrote three letters demanding extension on the 15 days stipulated
for the payment of the $41 million 10 per cent deposit.
According to the BPE,
leader of BFI Group Reuben Jaja, accompanied by his Nigerian legal advisers
James Essien and Mfon Amana, only came to their office in the afternoon on July
8, a few hours to the midnight deadline, with a backdated letter from their
general counsel Thomas M. Greham, stating, among others:
That BFIG directors
had approved the SPA as modified, and authorised Essien and Amana to sign it on
behalf of BFIG;
Execution of the SPA
had become especially critical in the light of media reports that the sale to
BFIG was being set aside and or the bid process for ALSCON was being reopened
and that the news caused concern among BFIG investment group;
Funding partners had
firmly indicated that providing for deposit of the initial 10 per cent payment
of $41million in an escrow account in a neutral country had become essential in
view of the mixed signals the Nigerian Government had expressed since the June
14 financial bid opening;
BFIG has commitments
for the full amount of the $41 million, much of it conditioned upon the funds
being paid to the escrow account. However, if there is no agreement on an
escrow, it is possible but not likely that BFIG will make the initial payment
by the July 8 due date; and
BFIG and the BPE
should set up an escrow account within ten working days into which the $41
million would be transferred;
On the presentation of
the letter (dated July 6, 2004), BFIG expressed the wish to sign the SPA.
However, they were reminded that they were yet to forward the soft copy of the
SBP and a copy of the TMA with Daewoo, in the absence of which the SPA could
not be signed.
BPE re-stated that the
availability of these documents is crucial to the execution of the SPA.
But in a reaction,
Jaja described the BPE leadership as not being truthful and challenged it to
make copies of BFIG technical bid “available to the world where the lies
would be discovered”.
