Will Nigeria do the right thing in Aluminium co. privatisation?

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Laolu Akande
New York
The controversy over the sale of Aluminium Smelter Company of Nigeria, ALSCON, could possibly become a sore diplomatic issue between Nigeria, Russia and the US.

This is likely because the American company which won the bidding process for the company has now passed on its protest to the US Department of Commerce, alleging that President Olusegun Obasanjo was manipulated in a grand conspiracy with the Russian firm to drop it after winning the bid.

Also, from Oklahoma, the former US Congressman J.C. Watts, who is known to be close to President Obasanjo is said to be championing the cause of the US firm in the US Congress with a view to mount pressure on the Nigeria government to follow due process and be transparent in the ALSCON matter.

The US firm- BFIG- is alleging discrimination and lack of transparency on the part of the Nigerian Bureau of Public Enterprises, BPE, over the ALSCON sale.

As it is Nigeria may be caught in a diplomatic web betwen two old foes over issues of technology acquisition. ALSCON was built by the Americans, but the Russian firm, it is now being alleged, is interested in reviewing the technology via the purchase of ALSCON.

The US firm is alleging that the Russians are after the American technology behind the construction of ALSCON.

The US firm is led by a Nigerian businessman, who is based out of California, Dr. Ruben Jaja, with a team of American experts in aluminum, power, and financial corporations. BFIG bidded for ALSCON with a plan to rehabilitate, operate and manage the company. But Russal firm was suddenly offered the purchase after BFIG won the bidding process.

BFIG expressed concern that the pattern of events in Nigeria regarding the purchase and sale of ALSCON "betray an extreme anti-American bias among certain Nigerian officials particularly certain individuals within the BPE working against BFIGroup in favor of Rusal."

The US firm stated that it's only request was to get the Nigerian government honor the bidding process and have the company proceed as "the proper, qualified, winning bidder for ALSCON and to take possession of the facility, complete it, and get it running."

Although "approximately $3.6 billion" has been expended on ALSCON, yet the facility was never completed and is presently staffed with maintenance crews. In furtherance of the Obasanjo administration's plan to privatise, ALSCON was placed on the market with the hope that the company can resume production and benefit the Nigerian economy.

Although there were two main bidders for the purchase of ALSCON on June 14, the BFIGroup won the bidding process edging out the only other bidder- Rusal (Russian Aluminium), which, it was believed, got disqualified for presenting a conditional bid-a conditional payment of $5 million to be followed in installments up to a total of $205 million.

On the other hand BFIG's winning bid was for $410 million.

The US firm is claiming that it was unfairly sidestepped after winning the bid fair and square.

According to documents sent to the US Commerce Department: "We have been informed that on June 15, 2004, high-level employees of the Nigerian Bureau of Public Enterprises (BPE), the organization overseeing Nigerian privatizations, contacted officials of Rusal and met in secret to develop ways of derailing BFIGroup."

The letter continued "BPE officials contacted
President Obasanjo and provided him with false information very negative on BFIGroup.Responding to this, President Obasanjo moved to drop BFIGroup and renew bidding discussions with Rusal."

Revealing details of what it said went on behind closed doors after it had won the bid, BFIG claimed in their petition that "Agents of Rusal were called into acquisition discussions in Nigeria in violation of the terms of the ALSCON RFP--but the Russians reduced their bid from $205 million to $160 million."

Although BFIG conceded that it had a slight delay in re-assembling funding, it alleged that that has been incorrectly used by "BPE (the same individuals who provided President Obasanjo with inaccurate information to derail BFIGroup) to attempt to disqualify BFIGroup yet again."

BFIG is now aleging that recently the conspiracy against it within BPE surrounding agreed-upon payment terms is now being expanded as the BPE has sought to disqualify BFIGroup by preventing BFIGroup from signing a required
share-purchase agreement andD paying $41 million (10% of the $410 million purchase price.

A signed agreement of May 20, 2004 (signed by BPE, BFIGroup, and Rusal) indicated that payment terms would involve a 10% payment within 15 working days following execution of the share-purchase agreement and not 15 working days following notification of preferred bidder status.

The BFIG is petitioning that the "Russians are clearly after the aluminum production as well as the advanced American technology that was used to build ALSCON."

The US firm- BFIGroup, documents showed, expressed worry that it is "now in danger of being improperly removed as the same individuals in the BPE and others continue their anti-American activities."

The controversy over the sale of ALSCON is now becoming the subject of a joint hearing involving the Nigerian Senate and House of Representatives. There has also been court cases planned both in Nigeria and here in the US by the US firm to protect its bid.

Business observers say if BFIG takes over the ALSCON, trade impacts on the U.S. will be in the billions of dollars, involving major contracts with American firms and suppliers.
Besides, the majority of ALSCON's vital aluminum production is projected to go to the United States.