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BPE Probe: Rusal told to return $120 million to the Federal Government

By on August 10, 2011

The Bureau of Public Enterprises (BPE) yesterday in Abuja told the Senate that only the sum of N146 billion was realised from the sale of public companies since 2000.

It was also revealed that Aluminium Smelter Company of Nigeria (ASCON), IkotAbasi, Akwa Ibom State which is worth $3.2 billion (N460 billion) was sold to Rusal, a Russian company by BPE, for only $250 million in 2006. The bureau asked the company to pay $130 million and use the balance of $120 million to dredge the Imo River for the movement of its goods.

The Senate asked Rusal to refund the $120 million to the federal government since the company failed to dredge the river and instead opted to be routing its goods through Onne Port in Rivers State.

These were the high point of disclosures made at the public hearing on thecommercialisation and privatisation activities of the BPE organised by the Senate Ad-Hoc Committee investigating the process.

Speaking on oath on the first day of the hearing, the director-general of BPE, MsBolanle Onagoruwa also said the BPE was not responsible for the concession of the Ajaokuta Steel Company as it was done by the Ministry of Power and Steel in 2006 by fiat.
She told the senators that the sum of N146 billion was computed after deduction of labour liabilities. Her submission was against the backdrop of major protest at the National Assembly complex by the Association of Contractors owed by NITEL/M-TELL. The president of the association Kabiru Musa and secretary, Sylvanus Onwuna submitted that investors must stay off the sale of NITEL/M-TELL until their debt was paid in accordance with a subsisting law suit seeking the liquidation of the troubled company.

On ALSCON, Onagoruwa explained that the valuation of the company took into cognizance the over-inflation of the contract of constructing the company, meaning that the $3.2 billion spent to set up the gigantic project may not have reflected the actual value of the company at the point of sale.

However, she told the lawmakers that the problem of the company currently was gas supply by the Nigeria Gas Company (NGC).
Nonetheless, the deputy managing director of Rusal, Mr. Vitali Kuznetsov submitted that since 2008 ALSCON has witnessed six stoppages, which has resulted in complete loss of production adding that in every case, to restore the situation to its state required total re-conditioning which comes at a huge investment. He further stated that Rusal has so far invested about $91 million in the project, which is yet to operate at full capacity.

In the same vein, a former managing director of Delta Steel Company, Aladja, Senator Fred Brume alleged that the company bought by Global Infrastructure in 2005 did not comply with due process. The company then, he said, was valued at $30 million with the buyer having controlling share of 80 per cent while the federal government controls 20 per cent.

Declaring the public hearing open, President of the Senate, Senator David Mark, lamented the state of the privatised companies after the sales.

According to him; “It has been indeed of great concern to the Senate that most of the privatised companies are under- performing. That is our own perception and that is the perception of so many Nigerians. But let me from the onset say that it is not every Nigerian that is on this same wave length. I have read some articles, where people feel that the privatised companies or privatisation exercise went very well and that everything was working very well.

“So, most of you, who are members of this committee, please, don’t think that everybody agrees with you. The chairman has noted that the privatised companies have not been working well. It is not a matter of one or two privatised companies that are doing well. The issue is whether the whole privatisation exercise has achieved its intended objectives. I think that is the thrust of the matter. If one or two companies are performing well and about hundred other companies are not performing well, it means that the exercise has been a failure.

“Nigerians expected that most of the exercise would provide employment opportunities, add to government economic activities and that government would be able to benefit from the functional activities of these companies The question is whether these objectives have been achieved or not. It has also been widely reported that many privatised enterprises are not performing, thereby leading to loss of jobs and financial deprivation to many Nigerian families. I believe that some of the companies have not even taken off.

“May be there was no proper understanding between government and investors or those who purchased these companies. I have been given a list of the privatised companies, the ones that are assumed to be performing well and the ones that are not performing well. But take this typical example. The Volkswagen of Nigeria is privatised or commercialised or PPP, but the Volkswagen of Brazil works better. I don’t think that the Volkswagen of Nigeria can even produce tyres. Have we really succeeded?

“The issue is that if we don’t examine ourselves very well, we would be building our economy on a weak foundation. It is well and fine for all of us to say Nigeria would be one of the 20 biggest economies by the year 20:20. But how are we going to get there if our economy is not built on a sound foundation. And government truly has no business in all these commercial enterprises because it has failed. Every time it has tried it, it has tried it and it has failed because the orientation and attitude of a civil servant is quite different from that of commercial organisation”, he said.

Meanwhile, the Chairman of the Committee, Senator Ahmed Lawan has directed theBPE to furnish it with audited account of all the privatised companies. He also said that the former DG of BPE, Mallam Nasiru El-Rufai would appear before the committee on Thursday as he was said to be out of the country on medical treatment.

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