ALSCON: Privatisation gone awfully wrong
• Erstwhile Money-spinner Hobbled By Litigation
• Collapse Of Outfit Costs Nigeria $16 billion –Expert
• Former Workers Harrassed By New Owners
To date, Ikot Abasi Town, in Ikot Abasi Local Council of Akwa Ibom State, still plays host to a number of colonial and neo-colonial relics of national importance. Peopled by a handful of civil servants, the area is home to predominantly farmers, fishermen, and sundry artisans.Some of the colonial and neo-colonial landmarks that still dot the area include the now rickety 1914 Amalgamation House along Marina Road; the floating jetty better known as the “Bridge of no Return,” built in 1795 (which many Nigerians sold into slavery set foot on); the European Cemetery; one of the oldest overhead water tanks in the country, and the statue of a woman breaking a gun, which is in memory of women who died in the famous 1929 Women’s Riot.
Except something is done and fast too, the $3.2 billion Aluminium Smelter Company of Nigeria (ALSCON), may soon join the league of historical relics in the area. This time, the Federal Government and its Bureau of Public Enterprises (BPE), would jointly take the credit for facilitating the very sad spectacle, and the blighting of a promising company with potentials to offer 1, 500 Nigerians direct employment.
The facility, which also has space to offer over 10, 000 indirect employment, was to save the country, over $3b of aluminium ingots and others through import by the downstream sector annually. Today, it is estimated that with the crisis in ALSCON, it costs the country and key downstream players like First Aluminium, Alumaco, and others, well over $6b annually through to import ingots for local production of aluminium products.
ALSCON project came into being as a result of the successful execution of an agreement in 1989 between the Federal Government, FEEROSTAAL AG, Essen, Essenbau Essen Gmbh and Reynold International Inc, Richmond (USA), all of whom did their bid in building and operation of an integrated aluminium smelter outfit-ALSCON.
The plant was designed to produce 187 tones per year (t/y), with capacities to process about 375, 000 t/yr of alumina and 80, 000 t/yr of coke, 20. 150 t/yr of pitch, and 193, 000 t/yr of aluminium as billets, ingots or slabs, with 85 per cent export. Built by FEEROSTAAL AG, the outfit was also intended to enhance Nigeria’s technological breakthrough; save the country from huge foreign exchange loss, through the import of ingots by aluminium firms, and also earn much through export of ingots.
With the coming on stream of ALSCON, the erstwhile rustic and sleepy Ikot Abasi gradually came to life, with small ancillary businesses sprouting up here and there. In addition to the increasing economic activities, the sobriquet “Aluminium City” began crystallising.Following a successful plant test run, the firm exported its product first in 1997. Before long, the firm encountered its first shutdown on June 6, 1999 due to the inability of the President Olusegun Obasanjo-led administration to dredge the Imo River, and get gas supplied to the firm by the Nigerian Gas Company, among other challenges.
After the maiden shutdown in 1999, the plant was resuscitated in 2006 and privatised in controversial circumstances. Despite BFIG emerging the preferred bidder, the public was aghast after the BPE handed the firm to RUSAL Aluminium of Russia.Today, as the firm stands crestfallen, Ikot Abasi is akin to a ghost town; it is dry and empty. Almost all the ancillary businesses that sprouted up have in similar manner suffered extinction. Most restaurants, saloons, business centres and others such artisanal workshops are now down and out. Banks have not been spared as most of them have equally closed shop.
At the ALSCON complex itself, the desolate situation is even more palpable. The usual hustle and bustle of visitors and staff members are no more. All the long staff buses (about 30) are no more, the massive parking lot for both visitors and company vehicles are empty for most part of the day. On both trips made by The Guardian, the place looked like a typical ghost town. Except for two trailers parked by the driveway inside the plant, loading some items classified as scraps, there was no sign of activity going on in the complex.
Stakeholders and analysts are of the view that ALSCON is today lifeless principally as a result of two Supreme Court and other judgments. They are, however, hopeful that the forthcoming May 28, 2018 Appeal Court verdict will either improve or worsen the situation in the complex.
Legal Battle For ALSCON’s Soul
In 2004, UC RUSAL lost out in the bid to acquire ALSCON after it was disqualified by the National Council on Privatisation (NCP), for violating bid guidelines. Although BFIG was later declared the winner of the bid with its $410 million offer, the BPE later cancelled the results.
Upon the cancellation, the BPE reinstated UC RUSAL and handed over the plant to it in 2006 on the orders of government. This step is what triggered a long legal battle that dragged till July 6, 2012, when the Supreme Court ruled in favour of BFIG as the recognised winner of the bid, and owner of ALSCON. Since then, there have been several back and forth litigations on both sides, as BFIG is in the process of enforcing the Supreme Court judgment in the Federal High Court, Abuja, and ruling on that is reserved for later this month, even though The Guardian gathered the Federal Government is planning a formal re-commissioning of the plant soon under RUSAL.
Earlier on, precisely July 11, 2016, the apex court had reaffirmed its ruling through a unanimous verdict, dismissing for lack of merit, a November 4, 2015 application by UC RUSAL seeking a review, and vacation of the previous judgment.
Several negotiations were carried out as ordered by the Supreme Court, but all have so far failed, as the Ministry of Mines and Steel Development, was not long ago, alleged to be actively involved in the plot to frustrate BFIG from taking.
Following the visit by the Minister of Mines and Steel Development, Kayode Fayemi in April 2017, the Chairman and Chief Executive of BFIG, Mr. Reuben Jaja, accused the ministerof perpetrating illegality, considering the fact that the Supreme Court has since ruled on the matter.Jaja said by refusing to uphold the subsisting Supreme Court rulings on ALSCON, the Federal Government and some of its agents have openly betrayed themselves as economic saboteurs and “part of the grand conspiracy with foreign collaborators against the interest of the Niger Delta people.”
Apparently displeased with the protracted delay in implementing the Supreme Court judgments on ALSCON, the member representing Ikot Abasi, Mkpat Enin and Eastern Obolo Federal Constituency in the House of Representatives, Francis Uduyok, in 2012 and 2015, expressed in writing, his constituents displeasure to the Office of the Vice President.
In the 2015 letter addressed to Vice President, Prof. Yemi Osinbajo, Uduyok recalled that the BFIG won the bid for the plant and went into an agreement with BPE. “However, due to some interested parties, the BPE has made all efforts to frustrate the contract, and rather decided to hand over the industry to the company that bided the lowest price, UC RUSAL.
“Due to this reason, the matter concerning the right of ownership of the industry was in court for over 10 years (13 years now), while the people of Ikot Abasi, Akwa Ibom State and Nigeria suffered economic losses waiting for the matter to be determined. In 2012, the issue was determined by the Supreme Court of Nigeria, with a verdict awarding the right to payment of the bid prize to BFIG, the company that gave the highest bid,” the lawmaker wrote.
Uduyok added: “All efforts were made by the BPE to frustrate the judgment of the Supreme Court. Once again, the parties headed to the court and the Federal High Court reaffirmed the judgment given on July 6, 2012 by the Supreme Court. The BPE has simply refused to put an end to this litigation, and in my view, there must be an end to litigation.
“Several years have passed since this matter started and the BPE has refused, neglected and failed to implement the decisions that were determined by the Supreme Court to the detriment of the company, the people of Ikot Abasi, and Nigeria at large, and this contravenes section 235 of the 1999 Constitution (as amended), which establishes the Supreme Court as the apex court with the final determination of a case, and which must be obeyed.”
Uduyok cautioned that, “a situation where the rule of law is trampled upon must not be encouraged, and actions that undermine the existence of the Supreme Court must be extinguished. Corruption has eaten deep into our dear nation and we believe that this administration is here to put an end to corruption. More so, the non-implementation of the judgment of the Supreme Court has brought tremendous hardship to the workers, and the Nigerian economy has suffered countless losses.”
He appealed to Osinbajo to look into the BPE versus BFIG matter, as well as, the involvement of other relevant government agencies in thwarting the revitalisation of ALSCON, and in the refusal to implement the Supreme Court judgments.”
Managing Director of Asuman Resources, of 70 Ibekwe Road, Ikot Abasi, Mr. Courage Asuquo, is also appealing to the Federal Government to facilitate a swift resolution of the impasse saying businesses have been hit by the lingering feud.“I have been doing business here since 2002. I was doing very well when ALSCON was booming. We had about 18 companies in Ikot Abasi that were rendering different services. But now, they are no more since ALSCON that every other small business around here revolved around is also grounded.
“I am appealing to the Federal Government to see our pathetic situation. A lot of people have retired to their villages for lack of patronage, while others have died. President Mohammadu Buhari and the EFCC should step up efforts towards unfolding the corrupt practices that have brought ALSCON down.”
Economic And Financial Losses
WITHOUT mincing words, the South-South Coordinator, Institute of Chartered Economists of Nigeria, Mr. Friday Udoh, said the country may have lost well over $16b through the closure of the aluminium smelting firm.
Udoh said: “The 2011 financial report on ALSCON prepared by KPMG revealed massive asset stripping of the plant allegedly perpetrated by UC RUSAL since 2006 when the plant was handed over to it by the BPE. The report showed how the $3.2b plant, valued at over $1.1b in 2004 (when the bid was held, and $1.03b when UC RUSAL took over in 2006), dropped in asset value to less than $73m by 2012 when the Supreme Court sacked the Russians from the plant. In 2013, the plant was shutdown again by RUSAL in what could be said to be it (RUSAL’s) inability to buy diesel to power the plant, which is built for multipurpose fuel, natural gas and diesel to keep the plant running, pending the restoration of gas supply.
RUSAL, according to him, withheld $0.120b from the total plant bid price of $0.250b. The actual amount paid the Federal Government by RUSAL was only $130m, in what was later qualified as credit made by the government to RUSAL for the dredging of Imo River in order to allow vessels access to and from the harbor, “unfortunately, this dredging never happened and the money not refunded to government coffer. Calculating the interest, we arrived at $0.283b representing 1.70 per cent components of the total loss.”
In summary, he said, cut-in gas plus unutilised pipeline capacity, social and environmental cost of $3, 517, 920, 750; the principal and the interest on $120m credit facility granted to RUSAL by the Federal Government in 2007 for the dredging of Imo River, which was $283 million; asset stripping ($1, 030, 000, 000 when RUSAL took-over in 2006 less than $73 in 2012 under the leadership of RUSAL) amounted to $957, 000, 000. Principal plus interest, from simple interest on a principal of $3, 200, 000, 000. 00 at a rate of 9 per cent/year for 29 years is $11, 552, 000, 000 resulting to a grand total of $16, 026, 921, 033 as the amount the Federal Government and ALSCON may have lost since the closure of the plant.
RUSAL’s Worsening Local, International Image
A former staff of ALSCON, Friday Akpan Timothy, is bothered by the growing negative perception of Russian aluminium giant RULSAL, and its poor relationship with staff members and those disengaged but not paid off.
According to Timothy, “The estates occupied by black workers popularly referred to as Soweto is totally neglected by the Russians. No maintenance works have been carried out there for a long time. Recently, two palm trees fell on a building, and the occupant was threatened with a quit notice if he fails not fix the damage.” One of the victims of the RUSAL-ALSCON ill-treatment in the Township Estate, 65-year-old Henry Usen, recalled how his former employers dragged him to court over accommodation issues, even when they were yet to sort out his entitlements.
Usen, who was former Head of Electrical Department said, “they took me to court and the court ruled that they cannot throw me out until they have paid my entitlement. But for now we are suffering. So many houses in the estate are occupied, but in their wickedness, they came to my house and cut-off my electricity supply.” The quit notice suit filed at the Rent Control Court in Ikot Abasi, against Usen, over the premises located at No. 75 ALSCON Township, Ikot Abasi, was filed by Felix Udom, a counsel on behalf of his client and Managing Director of ALSCON, Dmitry Zavyalov.
Lamenting the complex fate of the company, immediate past Chairman of ALSCON Workers’ Union, and current Administrative Secretary of the Nigeria Labour Congress (NLC) in Akwa Ibom State, Comrade Sunny James said, “as a Federal Government outfit established for the benefit of Nigerians, it is very pathetic that the firm has not been able to fulfill its dreams. The Nigerian government, which invested over N3 trillion in the project has not been able to derive benefits from it.
“In 1999, ALSCON had a staff strength of about 1, 827 but by 2008, it had less than 800 workers. In 1999, it was shutdown for operational reasons, but was resuscitated in 2006. After it was privatised, it only manage to recruit only 700 workers within a nine-year period.
“What really bothers us as a people is how the Federal Government has shown lack of interest in the establishment. This is an establishment that is capable of employing over 20, 000 people and then over 20, 000 or 30, 000 casual workers. By the time we were 1, 827 workers, we had 4, 000 casual staff, so one should imagine what would have been the case between 1999 and now. Unfortunately the Federal Government did not supervise ALSCON’s privatisation the way it should be, and now it has been mismanaged by those in politics and those in power.
“I was there at Ladi Kwali Hall in Abuja, and in a transparent bid, BFIG of America won the bid and the Federal Government handed it over to the Russians for reasons best known to them. After that exercise, the workers demanded for N6.04b as entitlement. The Federal Government invited the labour leaders and an agreement was reached on how workers’ payment would be sorted out. I am a signatory to that agreement, which took place at the BPE in December 2011.
However, the government told us that the N6.04b was not realistic, and that if we agreed with it, the reviewed amount would be paid within one month. We went into a one-week negotiation with the BPE at the end of which N2.8b was agreed upon by all concerned parties, including the Federal Government. That amount was presented to the National Council on Privatisation (NCP), which gave its approval for N2.7b only. But from 2011 till today, only a paltry sum of N405m was paid to the workers in February 2013, representing 15 per cent of that benefit. As we speak, the Federal Government owes former workers of ALSCON, the sum of N2.3b.
On what the Nigeria Labour Congress (NLC) was doing to bail the former ALSCON workers from their predicament, the NLC chief said, “Within the last one year, the chairman of the state chapter of the NLC, has taken up the issue with the state governor, urging him to please appeal to President Muhammadu Buhari to release this money. The NLC National President, Comrade Ayuba Waba, also wrote a personal letter to the chairman of the NCP, who is the Vice President Osinbajo, to please look in our direction. In December 2017, we were informed that with the establishment of PTAD to handle workers indebtedness in the country, they would come to Ikot Abasi to verify the number of people that are left so that they can look into the matter with a view to paying us our entitlements.”
Efforts to get the management of RUSAL-ALSCON to comment on these issues failed as there was no positive response from the outfit.
DURING The Guardian’s first visit to the company on April 8, its public relations officer Ediomi Ntuk, asked that an application for an interview with Zavyalov be made. That was done. But the following day, the interview was rescheduled for a week as Zavyalov was said to be busy.
During the second visit on April 30, The Guardian was informed by the ALSCON spokesman that the managing director cannot comment on the issues raised, as there was no approval from RUSAL’s Headquarters in Russia.Whenever they are ready, The Guardian will hear and present their side of the story.A similar scenario also played out when the BPE was contacted to shed light on why BFIG was replaced with RUSAL, the N2.7b settlement package approved for the former workers, and the way forward for the embattled firm, spokesperson of the agency, requested that the talking points be made available to her by way of text message.As at the time of filing this report, she was yet to revert.
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