RUSAL faces tough choices over ALSCON acquisition

All is not looking good for RUSAL, a Russian firm that acquired the multi million naira Aluminium Smelter Company (ALSCON) in Ikot Abasi, Akwa Ibom State.

The company appears to be in a fix over mounting challenges and unresolved issues relating to its acquisition of Nigeria ’s only smelter plant.

A check by Businessday in Uyo, the Akwa Ibom State capital, showed that the company was considering various options, while awaiting the report of the Senate investigation into the privatisation exercise in which RUSAL was alleged to have paid an amount considered below the market value of the plant, to acquire ALSCON.

Furthermore, the company’s predicament seems to be compounded by its inability to assume full production, due to shortage of gas supply, in addition to the non commencement of the dredging of the Imo River , to aid the importation and exportation of raw materials and finished products respectively.

The company is also facing labour crisis among its workforce who are demanding the payment of severance benefits amounting to N5 billion, having given the management of the plant repeated ultimatums, following which they say they would down tools and shut down the plant.

According to a check by Businessday in August, one of the companies that bided for the acquisition of ALSCON, the BFI group of America, is claiming that the Bureau of Public Enterprises (BPE) fraudulently sold the company to RUSAL, against its own rules.

In a document made available to the media, Reuben Jaja, head of the BFI group, alleged that the administration of former president Olusegun Obasanjo had predetermined to sell ALSCON to RUSAL.

“RUSAL failed to provide a required $1 million bid bond complying with government rules for participating in the ALSCON bid process, yet RUSAL was still allowed to bid,’’ Jaja said in the statement.

The BPE has however denied any wrongdoing, saying BFI failed to pay the required 10 percent bid price within the 15 working-day stipulation.

But the director of public and government relations of the company in Nigeria , Albert Dyabin, in a telephone interview, denied that the company was considering pulling out of Nigeria, maintaining that it was committed to working at ALSCON.

“I do not know where you got the information, we are working and committed to working at ALSCON, our biggest challenge remains the gas issue which is being addressed, Dyabin said.

The company acquired majority stake in ALSCON in 2007 and had planned to attain full capacity of 197,000 tons per annum, in 2010, envisaging an investment of $300 million in the modernisation of the smelter, including the dredging of the Imo River.

But this has yet to be achieved, four years after it acquired the plant, limiting the capacity of the plant to create 1,900 jobs, and generate about 20,000 related jobs in Akwa Ibom State from small and medium businesses supporting the smelter and the development of basic social infrastructure in the host community.

Though the Akwa Ibom State government says it has completed a 69-kilometre pipeline from Uquo in Esit Eket Local Government Area, to Ikot Abasi, to deliver gas to ALSCON under a public private partnership with Septa Energy, at a cost of $33 million, observers say another sticky point remains the unresolved issue of appropriate gas pricing.

Analysts say the quick resolution of the contending issues affecting the smelter would determine the readiness of the company to continue in Nigeria and “implement its strategic goal of creating a full production cycle in Western Africa, as well as once again proving the company’s ability to develop business in five continents.’