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Nigerian MPs want steel sale to Indian firm revoked

Nigerian MPs want steel sale to Indian firm revoked
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First Published: Wed, Jan 16 2008. 10 22 AM IST
Updated: Wed, Jan 16 2008. 10 22 AM IST
Abuja: Nigeria’s House of Representatives on 15 January called on the government to revoke the sale of a steel firm to India’s Global Infrastructure Ltd (GIHL) because the process was full of irregularities.
GIHL acquired control of the 960,000 tonnes-a-year Delta Steel Company (DSC) in 2004 for $30 million, but the deal was challenged by local firm BUA International.
The Nigerian company offered $31 million for an 81% stake in the firm and was named preferred bidder by the Bureau for Public Enterprises (BPE) at an auction in the capital Abuja.
The deal was cancelled weeks after and the mill handed over to GIHL, which was not part of the bidding process.
“There is clear evidence of arbitrariness in the sale of DSC to GIHL and BUA International, an indigenous company, was unfairly treated in the process,” the House Committee on Public Petitions said in a report.
“DSC should be handed over to BUA which won the rights to DSC in an open competitive and transparent bidding,” said the report which was adopted by the House.
Lawmakers also asked the Economic and Financial Crimes Commission to probe the transaction and the source of funds the Indian firm used for the purchase.
Resolutions by parliament are not binding on the executive and it was not clear if the government would reverse the deal with GIHL, which also won a 10-year concession for the 1.3 million tonnes a year Ajaokuta Steel Complex, which was converted to 60 percent equity in May.
The Indian firm also acquired the Nigerian Iron Ore Mining Company in 2005, to complete its takeover of the country’s metal-base industry.
The deals under former President Olusegun Obasanjo were meant to revive Nigeria’s ailing steel sector, but were widely criticised and the government set up a separate committee in October to probe the transactions.
The concession for the Ajaokuta plant was first handed to UK-registered Solgas Energy Ltd, but Nigeria terminated the $3.6 billion deal after some weeks, saying the company failed to come up with the cash within the stipulated time.
Solgas and BUA have also challenged the revocations in the courts.
The steel sector probe followed President Umaru Yar’Adua’s revocation in July of the fire sale of two key oil refineries by Obasanjo to a major financier of the ruling party.
The steel plants were among dozens of white elephant industries built by Nigeria’s military rulers in the 1970s to transform the world’s eighth biggest oil exporter into an industrial giant.
Successive governments poured billions of dollars into the mills, before Obasanjo decided to sell them.
Privatisations were a key element of Obasanjo’s liberal reforms, but the former leader was accused of selling some key state assets to his cronies, charges which he denied.
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First Published: Wed, Jan 16 2008. 10 22 AM IST
More Topics: Nigeria | Steel | GIHL | Abuja | Delta |