Daily Independent Online.
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Monday, June 21, 2004.
Heads may roll in BPE over failed ALSCON bid
By Bassey Udo
and Sanya Adejokun
Snr.
Correspondents, Abuja
Heads may roll in the
Bureau of Public Enterprises (BPE) over last week’s bungled bid to select
a core investor for the $3.2 billion Aluminium Smelter Company of Nigeria
(ALSCON) in Ikot Abasi, Akwa Ibom
State.
Prior to the opening
of the financial bids, allegations of underhand dealings, which put the
integrity of the privatisation process into question, were dismissed by top BPE
officials as blackmail.
Meanwhile, BUA
International Limited, owned by Kano businessman Isiyaku Rabiu, at the weekend
emerged the highest bidder for the 80 percent shares on offer in Delta Steel
Company (DSC), Aladja, Delta State.
In its determination
to acquire DSC, BUA substantially upped its first round bid of $7.5 million to
$20.05 million when NCP Technical Committee Chairman Akin Kekere-Ekun announced
the second round bidding conducted at the NICON Hilton Hotel, Abuja.
The company beat two
other contenders - OSAKA Steels, which bid $2.55 million, and Niger Benue
Transport Company (NBTC), which refused to raise its $10 million offer.
NBTC has been
operating in Udu Council in Delta State since incorporation in 1959. It is
located on the bank of Escravos River and shares a common boundary with DSC.
BUA, though originally
a trading company, has diversified into the real sector of bulk cement
re-bagging, flour milling, oil processing, fabrication and financial services.
Said Kekere-Ekun:
“BUA has established enduring working relationships with foreign groups
such as Midland Standard Inc, Cleveland, Ohio USA; Rooney Associates, USA; and
Kardemir Iron & Steel Works, Karabuk, Turkey.
“It has a proven
technical partnership and management agreement with Ferro International Trade
Inc., Turkey for the iron and steel projects. This Turkish firm has agreed to
work with Kardemir Integrated Iron and Steel Company to support BUA”.
Established with $1.5
billion, DSC started operations in 1982, produced at 25 per cent capacity in
1985 but stopped in 1996 due to capital restraint.
BPE Director General
Julius Bala said its rehabilitation could not go on because only the government
paid its financial obligation of $45 million while the contractors failed to
remit $95 million counterpart funding.
Following this, NCP
approved the immediate privatisation of DSC on the basis of 80 per cent (core
investor), 10 per cent (local community) and 10 per cent (DSC staff).
NCP has ordered BPE to
formally convey the approval of BFIG bid and invite them to begin the process
of payment.
Both BFIG and BUA have
the additional responsibility of dredging Rivers Imo and Warri. On it own, BUA
would complete the abandoned rail line from Ajaokuta to DSC site.
BFIG emerged the sole
bidder for ALSCON following the disqualification of Russian Aluminium (RUSAL).
However, as BFIG
emerged the preferred bidder with a $410 million offer, President Olusegun
Obasanjo was said to have intervened “to save the country from further
ridicule and embarrassment”.
Aso Rock, it was
learnt at the weekend, refused to accept the recommendation that BFIG be
confirmed the preferred bidder and that it intervened after receiving security reports that BPE was not
thorough in examining the business history, background and capacity of the two
companies pre-qualified to acquire ALSCON.
One of them is
reportedly headed by someone who has “a string of judgements and liens
hanging on his neck from two United States Federal Tax Liens” as well as
an indictment over questionable roles “as money transmitters regulatory
compliance service”.
Bala is now holding
talks with representatives of RUSAL to find a way out of the confusion that
attended the process and more details have surfaced over why RUSAL submitted a
conditional bid.
A source close to it
said the reason included the inability of the government to give specific
guarantees on the liabilities of ALSCON, commitment to the dredging of Imo
River and lack of guarantee for uninterrupted gas supply by the Nigerian Gas
Company (NGC).
RUSAL had requested
the government to either write off ALSCON’s liabilities or present a
complete picture of the situation about outstanding commitments to enable
whoever emerges as core investor
to know the level of financial commitment
to be inherited.
Said the source:
“RUSAL is an organised entity with standard principles and practice in
issues that have to do with investments.
It deals with complete facts and details as businessmen.
“Because its
commitment and interest were genuine, it did not want to go into a business
venture it would not be able to deliver. It did not want to give a bid that the
liabilities inherited would render the reactivation effort meaningless”.
He said even at the
time of the bid, a complete picture of the liabilities of ALSCON was yet to
emerge and about N966 million owed NGC was not included in the amount earlier
submitted by BPE for gas supplied, whereas RUSAL did not want the non-guarantee
of gas supply bogged down by liabilities.
Besides, the negative
response to RUSAL’s request for the dredging of Imo River did not
encourage it to continue with the quest.
Obasanjo is said to be
nursing doubts about BFIG meeting the June 29 deadline to pay the mandatory 10
per cent bid offer and has reportedly given Power and Steel Minister Liyel
Imoke instructions to supervise the negotiations with RUSAL to ensure an
amicable resolution of the matter.
