The ALSCON privatisation controversy is still on.

The privatization of the Aluminum Smelter Company of Nigeria, ALSCON, Ikot Abasi, Akwa Ibom State may well be one of Nigeria’s longest attempt to privatise a public asset by the Federal Government. But, it is a transaction mired in controversy and steeped in executive intrigues and corruption. Here are some 14 facts Nigerians should know about ALSCON and its privatization by the Bureau of Public Enterprises, BPE and the National Council on Privatization, NCP.

The $3.2billion (N480 billion) plant, incorporated in 1989, was closed mid-1999 after it was bogged down by operational problems including capital, barely five years after it began operation. It was one of six public enterprises in the steel and aluminum sector slated for partial privatization in year 2000 by the Olusegun Obasanjo administration.

The process to privatize ALSCON began in 2001. After five postponements, involving six prospective investors, namely Glencore of Switzerland;BHP/Bilton of Australia; RUSAL (Bratsk) Aluminum of Russia; ALCOA Incorporated of America; Ferrostaal AG of Germany and ALCAN of Canada, RUSAL was the only company left to bid for the plant. But, after Obasanjo went to the U.S. to personally invite Nigerians in the Diaspora to show interest in his administration’s privatization programme, BFIGroup, the Nigerian-American consortium headed by Rueben Jaja, a Nigerian later joined.

Though RUSAL initially indicated interest to bid for ALSCON, Dayson Holdings Limited of Cayman Island, a shadowy incorporation existing under the Commonwealth Trust Limited, a private blind Trust incorporated in Tortola, British Virgins Island, with alleged links to some powerful Nigerian elites and political office holders, including former President Oluegun Obasanjo, actually signed the share purchase agreement, SPA, with BPE to acquire ALSCON.

During the commercial bids opening ceremony on June 14, 2004, BFIG emerged the winner and was declared the preferred bidder with an offer of $410million (N62 billion), after RUSAL was disqualified by the National Council of Privatisation, NCP, for submitting a conditional bid in violation of both the bid guidelines and the irrevocable understandings and agreements on rules for the bid reached by all parties at a pre-bid technical conference organized by BPE on May 20, 2004.

The origin of the crisis that has delayed the completion of ALSCON privatization exercise has been the June 17, 2004 letter by BPE, which unilaterally altered the agreed payment schedule for the initial 10 per cent of the bid price from “15 working days after the signing of the share purchase agreement”, as stated in the May 20, 2004 MoU, to “15 days of the receipt of the letter of notification as bid winner.” Several requests by BFIG for a meeting to clarify these discrepancies in the letter were ignored by BPE, which went ahead to cancel BFIG’s win on July 9, 2004 without signing the SPA on allegation that the preferred bidder was unable to pay for the initial bid price before the deadline. BFIG went to court to enforce its contractual rights.

President Obasanjo later directed BPE and NCP to recall RUSAL and open discussions with them on how to sell ALSCON on “willing-seller willing-buyer basis”. At the end of negotiations, ALSCON was sold to RUSAL for $250million (N37.5 million), with huge waivers and concessions for Imo River dredging and gas supplies, after all legal titles, licenses, permits, land ownerships, and 16 per cent of ALSCON’s equity were lodged in a London escrow.

On February 3, 2006, Dayson Holdings Limited, rather than RUSAL, signed the SPA with BPE and NCP, for RUSAL to take-over full control of ALSCON. The plant was re-commissioned by RUSAL management on February 22, 2008.

Prior to the bid, ALSCON’s total asset base as at December 2004 was N127.14billion and N126.4billion in 2005. At take-over by RUSAL in 2006, total asset base of ALSCON was valued at N129.9billion, or $1.03billion, according to the financial statement prepared by PriceWaterHouseCoopers Limited and filed at the Corporate Affairs Commission, CAC. Within a year of taking over, RUSAL devalued ALSCON’s total asset base by about 77 per cent to N30.98billion, or $261million, by December 2007, representing a loss of about N99billion. RUSAL further devalued ALSCON to N25.19 billion ($169 million) in 2008; N19.35 billion ($128million) in 2009; N14.85 billion ($96 million) in 2010; and N14.5 billion ($91 million) in 2011; representing a cumulative loss of N115.15billion ($939million) in four years of take-over.

After eight years of legal battle, the Supreme Court upturned an Appeal Court ruling by upholding that BFIG had a subsisting contract that was binding on BPE. The Supreme Court in a unanimous judgment on July 6, 2012 reversed the sale of ALSCON, sacked RUSAL and ordered the reinstatement BFIG as the authentic winner of the June 2004 bid, restoring its right to acquire ALSCON. For eight months, BPE refused to abide by the order of the Supreme Court to invite BFIG and conclude the negotiations that begun in 2004 and establish a mutually agreed SPA for execution.

On January 29, 2013, BPE issued another controversial letter to BFIG, entitled: “Offer to Purchase 77.5% shares of the aluminum shelter company of Nigeria, ALSCON”, which was rejected by BFIG as illegal, as it offered to sell the shares of a non-existent company. The offer letter was also accompanied by an ‘illegal’ 16-page SPA, dated May 20, 2004, for execution by BFIG. Requests by BFIG to BPE seeking clarifications on the “invitation to acquire the aluminum shelter”, instead of Aluminum Smelter Company of Nigeria for which it was declared the preferred bidder, were ignored.

Frustrated, BFIG executed the 58-page SPA that was duly transmitted by BPE to BFIG on October 8, 2012 for review and approval. The agreement jointly negotiated by all parties in 2004, was offered to RUSAL to execute on February 3, 2006 after its negotiation with BPE and NCP. It covered a list of 17 key items, including financial statements, post-acquisition plan, liabilities, facilities, and gas sales and purchase agreements.

The executed SPA was returned by BFIG to BPE on February 13, 2013 with a proviso for it to sign the appropriate columns and return same within five working days, indicating its designated bank’s details for the transfer of the initial 10 per cent purchase price for ALSCON as directed by the Supreme Court.

On March 19, BPE revoked its January 29, 2013 offer to BFIG despite the obvious discrepancies in its letter and SPA, claiming that BFIG was unable to pay the agreed 10 per cent of the offer price within the deadline for the execution of the SPA.

The privatization of ALSCON has survived three administrations, spanning more than 11 years, including the administrations of Mr. Obasanjo, late Umaru Yar’Adua and President Goodluck Jonathan. It also involved five Directors-General of BPE – Julius Bala, Irene Chigbue, Christopher Anyanwu, Bola Onagoruwa, and Benjamin Dikki. By the time ALSCON is finally sold, the legal battle would have been won and lost in several courts in the U.S., London and Nigeria, to the detriment of over 2,000 highly skilled Nigerians, and over 20,000 other secondary smelters nationwide, that would benefit from job opportunities in the company.