By Sebastine Obasi

The Federal Government Tuesday terminated agreements with Unites States’ BFIG Corporation for the acquisition of the Aluminum Smelter Company of Nigeria, ALSCON, which has been in the control of Russia’s AC Russal.

The termination followed the National Council on Privatization, NCP’s withdrawal of its offer to purchase 77.5 percent of ALSCON, following the Corporation’s inability to pay the sum of $41 million being 10 percent of the bid offer within 15 days.

In a statement obtained by Vanguard, NCP said BFI Group Corporation was unable to pay the agreed 10 percent of the offer price within 15 working days of the execution of the Share/Sales Purchase Agreement (SPA) as directed by the Supreme Court of Nigeria.

“The deadline for the execution of the SPA and payment of the 10% of the offer price elapsed at midnight Nigerian time on the 18th day of March 2013 and as at that deadline date, the BFIG had neither executed the SPA nor made the initial mandatory 10 percent of the bid amount”, NCP stated.

According to NCP, “As you may recall, the Supreme Court of Nigeria, in a July 6, 2012 judgment awarded ALSCON, located in Ikot-Abasi, Akwa-Ibom State, Nigeria, to BFIG Corporation.

“In compliance with that judgment, the Bureau of Public Enterprises (BPE), as a responsible and a law abiding government agency, transmitted an offer letter and the Share Sales/Purchase Agreement (SPA) in respect of ALSCON to BFIG. This followed the directive of the National Council on Privatization (NCP) chaired by the Vice President, Architect Mohammed Namadi Sambo, which met at the Presidential Villa, Abuja on January 22, 2013.

Supreme Court ruling
The NCP also recalled, “BFIG, the plaintiff in the suit at the Supreme Court, was expected to execute the Share Sales/Purchase Agreement (SPA) and pay the agreed 10% of the offer price of $410 million (which is $41 million) within 15 days of the execution of the SPA as directed by the Supreme Court. The BFIG, in total disregard of the apex court, drafted and executed an agreement that was different from the one ordered by the Supreme Court.

The Supreme Court in its ruling in July, 2012, had stated among other decisions that: “an order of specific performance is hereby decreed mandating the respondent  to provide the mutually agreed share purchase agreement for execution by the parties to enable the plaintiff pay the agreed 10% of the accepted bid price of US $410 million (i.e, the sum of US $41 million) within 15 working days from the date of the execution of the Share Purchase Agreement in accordance with agreement dated 20/5/2004 and the 90% balance of bid price shall be paid within 90 calendar days.

”It is declared that the defendant is bound to accept payment of 10% of the bid price from the appellant (BFI Group Corporation) within 15 days from the date of signing the share Purchase Agreement (SPA) by the parties.”

Protracted process

The privatization of ALSCON has lingered since June 14, 2004, when the bid was held and BFIG emerged the preferred bidder with a bid offer of $410 million subject to the approval of the National Council on Privatization (NCP.) The Federal Government approved their bid and on June 17, 2004, the Bureau of Public Enterprises (BPE), conveyed the approval of the Federal Government to BFIG Group.

Prior to the bid, BFIG which was pre-qualified as one of the two core investors for the 77.5 per cent Federal Government equity in the $3.2 billion plant, was declared winner by the NCP after offering $410 million, which was higher than the $160 million offered by UC Rusal of Russia.

Besides, BFIG was said to have met the conditions spelt out in a resolution held during the May 20, 2004 technical bid conference by all participants in the bid process.

Some of the conditions included the payment of $1 million cash bid bond, submission of a list of preferred banks in Nigeria and overseas where the bond could be procured, and a court of notarization of the bid bond.

Other conditions included written guarantee of the commitment by all bidders to abide by the stipulated guidelines covering presentation of the Year 2003 audited financial accounts of ALSCON by May 24, 2004; plan to dredge the Imo River Channel, the gas purchase/supply agreement, the export processing factory status, and the bid price payment schedule.

Despite satisfying the laid down conditions and winning the bid, BFIG was  disqualified by the BPE on July 9, 2004 through a letter signed by the then Director General, Julius Bala, on allegation that the consortium failed to meet the deadline stipulated for the payment of the mandatory 10 per cent of the total bid offer.

The offer was thereafter given to AC Rusal which had earlier been disqualified by the Technical Committee of the NCP during the financial bid opening on June 14, 2004. Rusal was accused of submitting a conditional bid in contravention of the stipulated guidelines.
Despite the disqualification of the Russian firm, the Federal Government under former President Olusegun Obasanjo gave ALSCON to RUSAL, thereby setting the stage for the long drawn legal battle, which culminated in the Supreme Court judgment of July 6, 2012. Notwithstanding the judgment of the apex court, Rusal has held on to ALSCON till date.