Lawmakers demand N18b refund from Russian firm

The House of Representatives Committee on Privatization and Commercialization, recently asked the management of UC Rusal to immediately refund the sum of $120 million (about N18 billion) for breach of its Share Purchase Agreement (SPA) with the Federal government.

The Russian company is the controversial core investor in the $3.6billion Aluminium Smelter Company of Nigeria (ALSCON) in Ikot Abasi, Akwa Ibom State.

Under the agreement, signed in February 2007 in the wake of a disputed privatisation process by the Bureau of Public Enterprises (BPE).

However, when presenting a progress report at the public hearing by the House Committee in Abuja, BPE Director, Industry and Services, Allwell Ibeh, disclosed that despite the disbursement of $120million by the government for the purpose and more than three years later, the Russian firm is yet to commence work on the dredging of the Imo River.

"The initial contract period was eight weeks," Mr. Ibeh said.

"But, after the completion of the pre-dredging survey, the completion deadline was put at three months. But, more than three years after, they (Rusal) have not taken any positive step towards the dredging project.

"We (BPE) do not agree with them that they have spent $300million on the modernization of ALSCON, including the dredging of Imo River channel.

"They could have done that without our consent when they are still in possession of the Federal Government $120million."

Terms of agreement

Following the privatisation process, which began in 2001, BFI Group, the American firm that offered a superior bid of $410million for the 77.5 per cent Federal Government equity in the plant, was in 2004 declared the preferred winner by the National Council on Privatisation (NCP) only to be disqualified in circumstances that are still the subject of legal debate in Nigeria and the United States.

Under the terms of the SPA, BPE accepted Rusal to pay $250 million for the plant, despite several conditions the company gave the government, including wavers on price of gas supply and dredging of Imo River channel to accommodate bigger vessels for transportation of imported raw materials as well as export of finished products.

As part of the agreement, the Federal Government paid the sum of $120 million into an escrow account in the United Kingdom to facilitate the execution of the dredging contract.

According to Mr. Ibeh, although Rusal is known to be one of the world's leading aluminium companies, there are no records to show that dredging was part of the core competence.

Rusal accepts no liability

The Managing Director of UC Rusal, Andrey Terentyev, who, in his response, blamed its slow performance in the modernisation of the plant on the global economic crisis, said the company was not under any obligation to accept any liability for the delay, as there was no deadline by the BPE for the completion of the dredging projects.

The chairperson of the House Committee, Abbas Braimoh, said from the presentation of the Rusal management "it is clear that they are arrogant and unserious.

"This is not a circus show. We are not clowns, but members of the Nigerian Parliament," he said.

"We would not entertain any more gimmicks. Imo River must be dredged. ALSCON has not collapsed for the past three and half years it has operated without the dredging of Imo River. As you go back to Ikot Abasi, or wherever you are, begin to prepare on how to refund the $120million to the government with interest.

"If the money has already left the shores of Nigeria, you must find a way of redirecting it back to Nigeria, because that is enough to invest somewhere, to create jobs for some Nigerians."

The president of BFI Group, Reuben Jaja, told NEXT on the phone that he was "not surprised at what is happening."

"The reality of the fraudulent manipulation of the handover of ALSCON by BPE to the Russians over our superior offer of $410million is just beginning to unravel," he said.