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Imo River dredging: Russal to pay $120 million

By Luka Binniyat

ABUJA -Russal Aluminium Company Limited, the core investor in Aluminium Smelter Company, ASLCON, Ikot Abasi, Akwa Ibom State, must refund $120 million to the Federal Government coffers with all interests and charges accruable, three years after it reneged on a contract to dredge the Imo River.

This is part of the decision of the House of Representatives and the Bureau of Public Enterprise, BPE, have agreed by the two bodies during a hearing by the House Committee on Privatisation and Commercialisation, headed by Hon. Brimoh Abass, in Abuja recently..
The 40-km wide Imo River could be a very vital inland water way that could stimulate trade and commerce within its catchments basin, but only when dredged to hold large barges.

The amount is part of the $250 million controversial Share Purchase Agreement, SPA by the company and the BPE in which $120 would be used to dredge the Imo River in 2006.

However, Russal, which said that paying the sum is not a problem, argued that in the separate agreements with the BPE, no deadline was attached to the dredging of the river.

But the Director of Industry and Services, BPE, Mr. Allwell Ibe, noted that when Russal emerged as the core investor for ALSCON in February, 2006, the Russian aluminum giant attached several conditions built into the SPA.
“It insisted that the Imo River, by which ALSCON lies in Ikot Abasi, must be dredged”, he said.
Accordingly, he said the BPE, based on technical findings then agreed that it would cost $120 million to dredge the Imo River, up to 150 metres deep to allow bigger ships berth at ALSCON.

He said that on getting the report from Biometric Pre-dredging Survey and Volumetric Analysis, consultants to the river in October 2006, the BPE got the approval of the Presidency, to advertise the job to interested companies. According to him, of all the four companies that bid, the least was Westminster Nigeria Limited which bided for $149 million

“And all the companies came up with other conditions attached, which would mean extra-financial burden on us. When Russal saw the result of the bid, it said it could do it for $120 million and with none of the obnoxious conditions attached. We then had to add the dredging of Imo River as an addendum to the SPA in November, 2006,” he said.

He noted that Russal is a reputable Aluminum company, but he had no idea if it was also into dredging, saying, “But, we thought that maybe they had a subsidiary that was into dredging, since most of their plants are by the river banks.”
But with about three years gone now, it is clear that Russal has breached the contract.

“Rusaal must pay the Federal Government $120 million and all calculated interest and sundry charges, or go on and dredge the river without reviewing the contact and must finish the job in three months,” he delared.

But, the Managing Director of ALSCON, Mr. Andrey Terentyev, told the committee that Russal had commenced preliminary study of the project, adding that the contract was not time bound, but that the company would study the options open to it.But the Committee Chairman insisted that the only option left to Russal, was to start the process of paying the $120 million with three years interest to the Federal Government.

“You must go back and start looking for that money. We are going to look for funds and appropriate for that project. Don’t take Nigerian for a ride please,” he warned.

In February 2007, RUSAL purchased a 77.5 percent shares in ALSCON, a 193,000-tonne smelter (reduction, anode-producing and casthouse areas), a port on the Imo River, and a power-generating station. Germany’s Ferrostaal AG and the Government of Nigeria remain minority shareholders with 7.5% and 15% blocks respectively.

ALSCON produced its first metal in 1997, but was never fully completed before it suspended production in 1999. Its output during the short period of operations totalled 40,000 tonnes of aluminium.


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