Virtually all national assets sold off by the Bureau of Public Enterprises had the dubious stamp of former president, Olusegun Obasanjo.
The question was so innocuously delivered it did not send warning signals to its audience. Sometime in 2004, representatives of BFI Group Corporation, a USA-based consortium headed by Dr. Reuben Jaja, a Nigerian, had visited former president, Olusegun Obasanjo, in Aso Rock, Abuja. BFIG was then bidding to buy the Aluminum Smelter Company of Nigeria, ALSCON, one of the many multi-billion naira national assets thrown up for sale by the Bureau of Public Enterprises, BPE.
In the course of discussion between the host and his guests, Obasanjo, TheNEWS scooped, turned to Jaja to inquire how much BFIG was putting in its envelope bid to buy ALSCON. Although the question caught the BFIG Chief Operating Officer off guard, he was quick on the recovery to remind the former president that such a request was supposed to be a trade secret. A naive, unsuspecting Jaja, so heavy in confidence in Obasanjo’s proprietorial supervision of the privatisation process, thought nothing sinister of his host’s curious question.
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These days, whenever Jaja, a scion of the historic King Jaja of Opobo in Rivers State, ruminates on Obasanjo’s inquiry of that day, he wishes he had detected the insincerity dripping from that voice. As events would later prove, Obasanjo was merely sending the America-based businessman on a wild goose hunt in the ALSCON bid.
BFIG, as purported by both Obasanjo and the BPE, was contesting for the purchase of the aluminum smelter plant with Rusal (Bratsk) Aluminum, a Russian concern. The BPE had, on 2 April 2004, written to both BFIG and Rusal to participate in the final bid after assessing applications from core investors for 77.5 per cent stake in ALSCON. BFIG, a consortium of five American companies, has in its fold engineers and experts from Alcoa, the world’s largest producer of primary aluminum, and Reynolds, which executed the deployment and commercialization of the P20S smelter technology deployed at ALSCON. BFIG also enjoys a working relationship with Daewoo International (America) Corporation through agreements signed on 19 July 2002 and in 2004.
Rusal, on the other hand, is the world’s second largest producer of primary aluminium, after Alcoa. It was owned by the Russian government but has since been purchased by Roman Abramovich, the young billionaire owner of Chelsea Football Club, England. But as it was found out, Rusal was only a front in the unpatriotic scheme to steal ALSCON from the Nigerian people. The real buyer was a certain Dayson Holdings Limited, a company registered in the British Virgin Islands specifically for the acquisition of the Nigerian smelter plant. Dayson, itself, is a shell corporation existing under Commonwealth Trust Ltd, a private trust. Some influential Nigerians, reliable sources said, are behind the establishment of Dayson, using as decoy one Martins John Parker as sole director. Figures fingered in the Dayson set-up to acquire ALSCON included an influential traditional ruler from south-western Nigeria, another powerful emir from the north and a well-wired retired general. Obasanjo’s own interest in the contentious scam is still unclear, but the partisan role he played in the bid process offers an illuminating insight into certain possibilities.
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That role began to manifest on 14 June 2004 when the two final bids for ALSCON were opened at Transcorp Hilton Hotel, Abuja. Before the bidding, Julius Bala, then Director-General of the BPE, had met with officials of BFIG and Rusal to instruct them that unconditional bids would not be accepted. The bidders were instructed to avail the BPE of their audited financial accounts for the year 2003, and were also clearly told that the preferred bidder (winner) shall dredge the Imo River channel. Additionally, they were intimated that the standard rule of bid price shall prevail. The rule requires that 10 per cent of the bid price be paid within 15 working days of signing the share purchase agreement, SPA.
Just before the bids were opened, a voice at the occasion called for an examination of certificates of compliance to ensure all was above board. But Bala had given his word that the two bidders had met all the requirements, so the voice was overruled, although the advice was noted. As it turned out, the voice was intuitive. Rusal submitted a bid of $205 million, with the condition it would pay $5 million within five days and spread the balance over 20 years. Rusal also declined, in a four-page letter to the BPE, to dredge the Imo River channel.
Incensed by Rusal’s effrontery to set its own bid rules, Mr. Akin Kekere-Ekun, chairman of BPE’s technical sub-committee, promptly disqualified the Russian company. As the chairman explained: “The Federal Government of Nigeria is operating by laws and those laws are to be obeyed by local citizens and by international citizens and the laws are not Nigerian laws but international laws which must be obeyed by international bidders. We do not accept conditional bids. The law is made by men for men and must be followed. They know it, they are international bidders all over the world.”
Obasanjo would have other ideas different from Kekere-Ekun’s that would later prove there was a method to Rusal’s insult. Meanwhile, BFIG emerged winner of the bid on the day with an offer of $410 million and willingness to dredge the Imo River channel. The result was later approved by the National Council on Privatisation, NCP.
At this stage, Obasanjo stepped in to show his hand. Rather than approve the sale, the former president cancelled it and, on 15 June, directed erstwhile Power and Steel Minister, Liyel Imoke, to open negotiations with Rusal officials on the offer. During the talks, which held the next day at Imoke’s official residence in Abuja, the Russian company further humiliated Nigeria by reducing its bid to $160 million, including $100 million it would use in dredging the Imo River channel. Rusal further dictated it would pay the money in two tranches of $80 million over two years. Kekere-Ekun, who had to be prevailed upon to be present at the negotiations, was said to have stormed out of the house in anger at the foreigners’ brazen abuse of the bid rules.
The development infuriated the United States Department of Justice, USDC, which wrote the Nigerian government a damning letter highlighting corruption and injustice in the ALSCON sale process. The letter seemed to have an effect, as the BPE, on 17 June 2004, wrote to Jaja approving “the bid price of $410 million for 77.5 per cent equity in ALSCON.” The approval was not without a catch though. Whereas the standard rule of bid price payment stipulates that 10 per cent of bid price be paid within 15 working days of signing the SPA, the letter sent by the BPE to Jaja directed the BFIG to pay the money “within 15 working days of receipt of this letter.”
BFIG officials have since been crying foul. The company frowns at how government’s favouritism for Rusal has continued despite the firm’s outrageous bid price reduction to only $160 million. This figure was used in government’s 2005 budget, setting the stage, as BFIG’s officials pointed out, for an improper and illegal behind-the-scene sale of ALSCON to Rusal in violation of BFIG’s rights as the official preferred bidder. That Rusal’s sum of $160 million was even considered at all was regarded intriguing as, during bidding on 14 June, the BPE declared that BFIG’s initial bid of $280 million was below the reserved bid price and required it to jack it up to $410 million.
BFIG accused the BPE of slotting in commercially unreasonable terms and conditions or “poison pills” in the SPA it drafted. Section 9.6 of the draft, for instance, restricts BFIG’s ability to borrow even after fully paying for the plant, and its right to change suppliers and auditors.
The BPE was also accused of favouring Rusal with information regarding a N1 billion debt ALSCON owes the Nigerian Gas Company, NGC, information hidden from BFIG. BPE, it was alleged, invited the gas company to discuss the debt problem with Rusal since it (NGC) has indicated payment would strictly be required before resumption of gas supply to ALSCON. The debt problem was understood to have been used to justify a lower sale price for Rusal.
The BPE letter of 17 June which tied payment of bid price to 15 working days of receipt of its letter is, indeed, questionable. Lawyers that TheNEWS spoke with were unanimous that the BPE acted in bad faith by shifting the goal post from the standard rule of “15 days of signing the SPA” to “15 days of receipt of this letter.” And in both cases, anyway, talks about signing any SPA were a ruse. It eventually didn’t seem there was any intention to sign an SPA with BFIG and, of course, none was ever signed. On 9 July 2004, Thomas Crehan, BFIG’s Chief Legal Officer, led other top officials to the BPE’s office in Abuja on the invitation of Bala, hoping to sign the SPA at last. Rather, what they got from the BPE chief was a letter of default terminating the preferred bidder status.
Jaja and other colleagues accused Bala and some unseen hands behind BFIG’s travails of deliberately plotting whatever default the BPE was alleging. Reference was made to the letter of offer which stated new, curious terms of payment but did not remedy the two-day loss caused mainly by government’s annulment of BFIG’s win of the bid. Discussions between the BPE and the BFIG on the SPA, around which the payment rate was supposed to revolve could only commence on 22 June 2004. BFIG directors hoped for a quick end to discussions and prompt signing of the SPA so payment tenure of equity shares in ALSCON could commence.
How wrong they were. Unfortunately, for three days, the two parties could not agree on the contentious section 9.6 that the BPE embedded in the SPA. BFIG directors, spurning BPE’s argument that the clause was inserted to curtail possible excesses of the core investors, maintained that the clause offends local and international trade practices.
The Obasanjo administration employed the payment extension clause in its privatisation of public enterprises as it suited it. While “enemy” bidders like BFIG and CIL, a special purpose vehicle registered by Chief Mike Adenuga in 2001 to operate a GSM licence, were controversially disqualified via the clause, some others got government’s long rope after default before they eventually paid. Folio Investments Ltd, which bid for Daily Times on the same day and same venue that BFIG bid for ALSCON, was accorded an extension before it finally paid. The BPE gave African Properties two extensions, which it could not meet, to buy Nicon Hilton (now Transcorp Hilton) Hotel; Ikeja Hotels, two concessions before it paid for Abuja Sheraton Hotel and Towers and Sino Africa three extensions to buy NAFCON. So why, it is being asked, the selective treatment against some bidders?
Chugbue, the BPE DG, admitted in an interview published in The Sun edition of 19 March 2007 that the Bureau, ‘‘did not quite get right the structure of the transaction from day, one.’’ She also admitted that the BFIG did offer a higher price, but added it was disqualified because it could not pay the initial 10 per cent promptly. She, however, would not admit that the BPE and Obasanjo himself altered the payment rule and deliberately contributed to the delay in payment.
‘‘We don’t normally compromise with the first payment... then first 10 per cent payment is never compromised,’’ Chigbue declared. Cases, however, abound of BPE’s compromise on some defaults on the first 10 per cent payments in sales it effected.
On Thursday 28 April 2005, the House of Representatives noted in its deliberation how Rusal was disqualified because the company did not comply
with the signed tripartite pre-bidding rules of the bid process.It also remarked that the “purported termination of the won bid was without any valid legal reason. From the negotiations that are going on now with Rusal, it is obvious that the interest the Presidency has in Rusal, warranted the termination of the hard-won bid of BFIG without any valid reason.”
The Reps pointed out that with Rusal’s initial conditional bid price of $205 million coming down to “a paltry sum of $160 million,” against the preferred bidder’s (BFIG) price of $410 million, “the nation is losing the sum of $250 million.”
Predictably, Obasanjo ignored the resolution of the House. BFIG consequently headed to the Abuja High Court praying it to determine 19 questions in its favour. The company wanted the court to compel the Nigerian government to respect its preferred bidder status, allow it sign the SPA and go on to acquire ALSCON. The case currently lies before the Supreme Court.
The BFIG directors have also gone to a court in the United States of America on the same issue. It was actually in the USA that more information on the convoluted method Rusal adopted in its bid to purchase ALSCON was further uncovered. Rusal and Dayson have been denying each other in sworn affidavits in the USA. Parker claimed he is the only director of the shell company and Dayson has no relationship with Rusal. So why would Obasanjo give a huge company like ALSCON to a shell entity with only one director to handle, analysts wonder.
BFIG’s lawyers are also known to have taken the matter to President Umaru Musa Yar’Adua in a petition dated 14 September and titled, “Fraudulent, illegal, unconstitutional, unconscionable, immoral and questionable sale of Aluminum Smelter Company of Nigeria Limited to Rusal Aluminum of Russia by Bureau of Public Enterprises after arm-twisting and unfairly jettisoning BFIG whose higher bid was accepted.” In the petition, the lawyers declared that “the purported sale under the guise of privatization was/is ... laden with fraud, deceit, corruption, falsehood, criminality and a host of other imaginable illegal, shady and unholy ingredients which vividly call to question the bona fide of the entire transaction and, in addition, amounts to deliberate confiscation of a very important and vital economic infrastructure of Nigeria.”
It is pertinent to mention that although the bid name bore Rusal and all references have been reflecting that Russian name, it is actually Dayson Holdings Limited, the company registered in the British Virgin Islands with some powerful Nigerians behind it that has actually acquired ALSCON. TheNEWS learnt the vast complex has been handed over to the company, although it has not confirmed paying a kobo to the BPE.
Obasanjo was understood to have directed the company to move to the ALSCON site at Ikot-Abasi, Akwa Ibom State in March this year. It was also gathered he mobilized the company with $120 million government funds for dredging of the Imo River channel without which work cannot commence at the smelter plant. Work is, however, yet to start at either the plant or on the channel.
Another curious concession the former president gave Rusal/Dayson was a subsidy of $11 million per year for 20 years on gas supply. The nation would be losing $220 million on this questionable charity. Although the Nigerian National Petroleum Corporation, NNPC (now Nigerian Oil Company), the NGC and Shell Petroleum were learnt to have protested strongly against this concession, Obasanjo ignored them. Yar’Adua, his successor, is, however, said to be having a studied look at the controversial sale.
The ALSCON deal could well be the second Obasanjo deal Yar’Adua will void. Barely a month in office, he had annulled the sale of two refineries to Bluestar Consortium, owned by multi-billionaire Alhaji Aliko Dangote and petroleum products marketing magnate, Femi Otedola. The two were very close cronies of former president Obasanjo and their companies emerged as core investors in some public corporations sold under the country’s privatisation programme during the retired General’s presidency. The sale of the refineries, particularly, to Bluestar Consortium raised a whirl of dust from the Nigeria Labour Congress, NLC, which made reversal of the sale one of the demands for the call-off of a nationwide strike declared by organised labour to protest increases in the prices of petroleum products. Many Nigerians also complained about a seeming lack of transparency in the process leading to the sale of the oil production facilities. The Senate had to establish an ad-hoc committee to look into the sale.
Explaining the process that led to the sale to the Bluestar Consortium during the hearing, Irene Chigbue, Director-General, Bureau of Public Enterprises, BPE, noted that prospective investors during the opening of financial bids for the two refineries on 17 May this year included Bluestar Consortium made up of Dangote Group and Zenon Oil and Transport, Oando Group, Essar Infrastructure of India and Refinee Petroplus of Sao Tome. Others were Global Oil and Energy, Indorama International, Linkglobal International and Mittal Investment. Bluestar Consortium emerged the highest bidder with a bid price of $561 million and $160 million for Port Harcourt and Kaduna refineries respectively. Chigbue maintained the sale was transparent and that due process was followed in spite of arguments to the contrary by other stakeholders in the industry.
To her, the price paid by the Bluestar Consortium was beyond the reserve price set for the refineries by the Bureau’s consultant, BNP Paribas of France. Bluestar Consortium was sold a 51 per cent stake in each of the refineries. To take care of labour issues, Chigbue said the BPE signed a Memorandum of Understanding, MOU, with the labour unions in the oil industry and asked them to conduct an independent verification of the status of the core-investor. The government also reserved 10 per cent equity each in the two facilities for the workers and the host community respectively, while the remaining 29 per cent was set aside for Nigerian investors.
The NLC was not convinced. The refineries should not have been sold for less than $2 billion, it insisted.
The labour body said the BPE did not consider the value of the finished products in the refineries, which were worth $150 million, and the storage tanks valued at over $700 million before it fixed prices for the oil facilities. But a more scathing opposition came from a direct industry stakeholder. The Pipelines and Products Marketing Company, PPMC, a subsidiary of the defunct NNPC, made an informed submission that tore Chigbue’s claims to shreds. Mr. A.B. Yar’Adua, Executive Director at NNPC and now acting head of the NOC, also alleged that the BPE did not follow due process in selling the refineries to the consortium.
The NNPC also faulted BPE’s sale of the refineries along with its assets which included pipelines and storage tanks. The company valued the total assets at $341 million. NNPC argued that BNP Paribas undervalued the refineries by not inspecting the state of the assets at the time of the sale to reflect additional investment in them. About $400 million was estimated to have been spent on them for a Turn Around Maintenance, TAM. The consultants admitted the blame, but accused the NNPC of not informing them of the additional cost after the initial evaluation!
Tony Chukwueke, Director, Department of Petroleum Resources, DPR, extricated the agency from involvement in the privatization process. Senator Bassey Ewa Henshaw, Chairman of the ad-hoc committee, agreed with the NLC that the Port Harcourt refinery was worth over $2 billion. But the BPE was not totally without support. Support for the BPE came from an expected quarter - Obasanjo’s daughter, Senator Iyabo Obasanjo-Bello, who contended that the price the refineries were sold for was right, given what she maintained was their state of decay and depreciation.
Critics also raised eyebrows over developments on the sale of African Petroleum plc, AP, which Otedola eventually bought. The BPE had originally sold AP to Sadiq Petroleum whose chairman is Chief Peter Okocha, a close ally of former Vice President Atiku Abubakar. The former VP is actually believed to be the major hand in Sadiq Petroleum. Obasanjo, obviously keen to hurt Atiku, who had become an arch political enemy, caused the NNPC to confiscate AP from Sadiq over an alleged N10 billion debt the oil marketing company owed it.
Sadiq claimed the BPE failed to disclose the debt overhang to it when it was buying AP on the privatisation window.
The BPE eventually sold it to Otedola who offered N17 billion. Why the BPE rejected a higher sum of N17.5 billion offered by co-bidder, Jimoh Ibrahim, only Chigbue can explain. A source confided in this magazine that what Otedola finally paid to acquire AP was N16.5 billion rather than the N17 billion announced by the BPE.
Dangote and Otedola also own huge shares in Transcorp, a favoured business concern midwifed by Obasanjo but which he handed over to a select group of very rich Nigerians to nurture. Obasanjo, himself, was discovered to have invested N200 million in Transcorp, although in the heat of a hail of criticisms that described his investment as totally bankrupt in moral capital, the former president claimed he had divested. Nobody can confirm that.
Obasanjo ensured a plethora of concessions to guarantee for Transcorp a smooth take-off. The company got four oil blocs, acquired the Hilton in Abuja, (a 5 Star hotel), received concession to build a power plant and was granted a license to build a refinery with a capacity to produce 400,000 barrels of oil per day. Transcorp also got an easy passage into the telecoms business with the acquisition of a 75 per cent stake in NITEL, the first national telecoms carrier, for a sum of $750 million.
Critics said that was a steal. In 2001, the BPE sold a 51 per cent equity in the troubled telecoms company to the International
Investments (London) Limited, IILL, at a cost of $1.1 billion. Unfortunately, IILL could not raise the sum and so forfeited the offer. But Chigbue maintained Nitel’s value has since depreciated tremendously it was difficult finding a buyer for it and wouldn’t have attracted the same worth last year when Transcorp bought it as in 2001.
What would amount to another act of double standard in the privatisation deals under Obasanjo came up when it was time for Transcorp to pay. The company was five hours (late) behind deadline in paying the part sum of $500 million to BPE as required. It would be recalled that in 2001, the BPE disqualified CIL, a company registered by Mike Adenuga to acquire a GSM licence, ostensibly because it was minutes late in paying the first tranche of the $275 million required for the purpose. Transcorp did not only arrive late, it could only garner $75 million as first-tranche payment. It asked for more time to put its act together, a request that was promptly granted.
Tongues are also still wagging on the concession agreement the Global Steel Holdings Infrastructure Limited, GHIL, signed with the federal government on 13 August 2004 to complete, manage and operate the Ajaokuta Steel Complex for 10 years. Less than three months to the end of the tenure of the last administration, the company sent a proposal to government through the BPE to change the arrangement into a sort of joint venture partnership in which the Indian company will own 60 per cent of the steel plant, the federal government, 30 and the Nigerian public, 10. GHIL hinged its proposal on the fact that the Ajaokuta steel complex is over 20 years old and that before the end of its 10 years concession period, the plant will be virtually useless. It argued that acceptance of this proposal will enable it make the necessary investment in the steel plant. The company said it will in turn build a new three million metric tonnes per annum steel plant within the existing plant to complement the existing 1.3 million tonnes.
In the proposal, GHIL asked the Nigerian government to fund its proposed shareholding in the complex by turning over some of the existing assets to the Indian company. The company also asked government for other sweeteners - support in form of finance or granting it the right to lift 160,000 barrels of oil per day, land allocation of 50,000 acres, supply of natural gas at subsidised rates and long-term rights to some iron ore mining plants located across Kogi State, the host of Ajaokuta plant. GHIL put the total assets of ASCL at about $300 million.
The Indian company, however, said in its proposal that if the assets of the steel plant are not enough to pay for government’s 30 per cent stake, the balance will be recovered later from government’s earnings.
But not all Nigerians are fooled by the strange proposal. Dr. Sanusi Mohammed, Secretary-General, African Iron and Steel Association, AISA, said it was ironic that the Indians were itching to take over the Ajaokuta steel plant when they have not even been successful in the primary function of turning the plant around for the production of liquid steel the facility was originally designed for. “Careful study of the proposal will clearly reveal that the objective of GHIL is not to produce liquid steel at all, but to take Nigerians for a ride. The emphasis of this proposal is just to get lifting rights to siphon crude oil as well as getting mining rights to be exporting raw materials like they have done with the iron ore concentrate they met stockpiled at Itakpe and Ajaokuta. If GHIL means business, they could have completed the 1.3 million tonnes annual capacity to its logical conclusion before veering into expansion of and/or new project proposal,” he said.
Characteristically, the Obasanjo government went ahead to approve the proposal in very unclear circumstances in the last days of its tenure. The BPE had denied few days before that there were such plans. However, this magazine gathered that the cannibalisation and vandalisation of the Ajaokuta steel plant have continued as the Indian investors get desperate to get funds to pay for their stake in the steel plant. It was gathered that the N25 billion they have invested in the steel plant so far was obtained from Nigerian banks, using the title deeds of Ajaokuta handed over to them by the previous administration as security.
Perhaps, there is no better testimony of the desperation of the Indians than the process which led to the destruction of the steel complex sintering plant. The plant is a raw material processing centre for onward feeding into the blast furnace where the process of producing liquid steel begins from. The furnace, according to experts, has not been completed and was not supposed to be operated unless there is a guarantee for the supply of raw materials which can sustain the operation of the plant non-stop for seven years. Though the raw materials are in abundant supply where the plant is located, it was, however gathered that it was not developed enough to sustain a continuous supply for seven years and the logistics for transporting the materials to the furnace is not in place. It was gathered it will take about two years to put the transportation infrastructure in place. Nevertheless, the Indian managers went ahead to put on the plant, using the small quantity of raw materials they met on the ground. “To confirm our fears, the sintering plant was operated for less than a year by the Indians and has now been totally destroyed. This led us to believe that the plant was started by the Indians with the iron ore and other materials on ground to produce sinter which they now export to raise as much money as they can, so that they can buy all the facilities in Nigeria, including the Delta Steel without bringing a kobo of theirs. Even the dollars they claimed to have raised were all raised locally,” a source within the company told this magazine.
Stakeholders in the industry are asking that the Yar’Adua administration must, as a matter of urgency, take another look at the arrangement entered into with the Indians by the previous government. Mohammed said a cancellation of the contract with the Indian company is desirable, especially since due process was not followed in the initial signing of the contract. He said GHIL did not take part in the bidding process, contrary to the procedure listed in National Council on Privatisation documents. The federal government, he urged, should set up a genuine, high-powered committee to investigate the entire privatisation exercise, especially as it relates to the metallurgical and steel industry.
This is the latest in the spate of controversies involving Pramod Mittal, chairman of GHIL. When news first broke in 2004 that government was bringing in from India a new foreign manager for the troubled ASC, there was skepticism from stakeholders. This was particularly fuelled by the name “Ispat”, which, to many uninformed, spelt the same as the respected Ispat International Limited, the number one steel conglomerate in the world, now renamed LNM. Advertently or otherwise, government officials in charge of the concessioning would not shed light on the name. But as it turned out, the new concessionaire at ASC is Ispat Industries, owned by Pramod Mittal, the younger brother of Laxmi who owned LNM. Compared to LNM, Ispat is a poor struggling cousin riddled by debts. One account of Ispat Industries’ advent into Nigeria indicated it came in through one of Obasanjo’s sons as a technical partner for Solgas, the former manager of ASC. According to sources, when Solgas was having problems in managing ASC, it found a willing helper in Pramod who was then globetrotting looking for opportunities to shore up his debt-ridden Indian steel empire. When Solgas was relieved of the management of the steel complex in 2004, Ispat was asked to take over.GHIL was then formed in 2004 mainly for the purpose.
The agreement government signed with Pramod Mittal on ASC has been drawing queries. This includes the power granted the company in sub-section 2.1 to extract and refine ore and other materials whether for self-consumption and/or commercial use. AISA considered the absolute control given the company over the “mine” which is described in the agreement as “Itakpe mine and infrastructure within the concession area, including without limitation the Ajaokuta deposits in respect of which an application is pending, and any other mine that the company may acquire in the future,” as “a grant of total monopoly from public to private hands.”
Also, while the concessionaire is to pay only 3 per cent of its annual turnover to the grantor (the federal government) annually, it was also given the liberty to determine the turnover. The agreement curiously points out that GHIL is a different entity from Ispat Industries, so in case of default, Nigeria cannot make claims on Ispat. The steel association also criticised the opportunity given the company in the agreement to recruit up to 30 per cent foreigners in its workforce. “With the expertise and experience of Nigerian staff in the mining and processing profession, there is no justification to allow foreigners dominate up to one-third of the workforce,” AISA noted in its observations forwarded to the Federal Ministry of Power and Steel and the BPE.
But how did Pramod Mittal get to know about the sale of the plant? He claimed to have known through his lawyers. He then came to Nigeria to see the President, making an offer to clear the outstanding workers’ salary and take up the running of the plant. For this reason, he was given a lease to the Ajaokuta Steel Company. But there was a trick: that Mittal would assume the losses accrued at the company. So through his company, Global Steel Company, he took over Ajaokuta in 2004, the same year he took over National Plant in the Philippines. The following year, he also acquired the Delta Steel Company in Aladja, Nigeria, same year that he acquired Kramtovtzi Steel Company in Bulgaria.
Surprisingly, Mittal is still declaring losses to the government three years after taking over the Ajaokuta Steel. Unconfirmed sources allege that while he keeps declaring losses, he is actually massively exporting products running into millions of dollars from the Ajaokuta and other steel plants.
Now Pramod is believed to be asking government to help him with funds to refurbish the steel plants, which he actually agreed initially to turn around by himself. There is a strong belief in high quarters that a deal may have been struck to give him two oil blocs as a form of financial assistance as he requested.
He, in reality, is living on bank loans, constantly borrowing from one bank to the other. In recent years, the share value of his companies has been plummeting, particularly in India, where the parent company, Ispat, declared losses of over $50 million in a year, and is now owned mainly by banks. Apparently, he currently owns less than 50 per cent of some of his companies and has only controlling interest in the steel plants, which can mean sometimes owning as little as 30 per cent shares. Sources hinted that he forms holding companies, registering them in offshore tax havens, then transfers ownership of his own personal shares to these SPVs to protect those shares, while he continues to dilute the remaining shares by borrowing more and more.
With Pramod Mittal’s controversial business pedigree, stakeholders in the industry are asking whether any good can come out of Nigeria’s romance with him. Indeed, when the leadership of AISA sought and got an audience with Obasanjo on the matter, querying why former Steel minister, Liyel Imoke, a lawyer, will agree to such a dubious deal, Obasanjo in annoyance threw them out of Aso Rock, saying the deal was irreversible and that those opposed to it were talking nonsense.
Obasanjo apparently had confidence in Pramod Mittal to have entrusted him with such a responsibility. But how genuine and devoid of any personal, pecuniary interest that confidence is remains the core question to be pondered over.
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