Nigeria reviews sale of steel plants to Indian firm

Lagos, Oct 31: Nigeria has launched a review into the sale of two steel plants to Global Infrastructure Ltd (GIHL) of India after complaints the process was fraught with irregularities, officials said.

GIHL bought control of Delta Steel Company for 30 million dollars in 2004 and won a 10-year concession for the 1.3 million tonnes a year Ajaokuta steel complex, which was converted to 60 per cent equity in May.

The deals under former President Olusegun Obasanjo were meant to revive Nigeria's ailing steel sector, but were widely criticised and some groups called for an official probe.

''The five-man panel to probe the two deals was inaugurated on Monday and it has six weeks to submit its report,'' a Ministry of Mines and Steel spokesman said yesterday.

The concession for the Ajaokuta plant was first handed to UK-registered Solgas Energy Ltd, but Nigeria terminated the 3.6 billion dollars deal after some weeks, saying the company failed to come up with the cash within the stipulated time.

Nigeria's BUA International had offered 31 million dollars for an 80 per cent stake in Delta steel and was named preferred bidder at an auction in the capital Abuja. The deal was cancelled weeks after and the mill handed over to GIHL, which was was not part of the bidding process.

Solgas and BUA had challenged the revocations in the courts.

The committee will determine GIHL's compliance with the terms of agreement and examine how the Indian firm won the bid for the 960,000 tonnes a year Delta Steel company, the ministry spokesman said.

The committee will also determine the amount of money GIHL has invested in the mills since it took control and establish if it has outstanding debts from the government.

The steel sector probe comes after President Umaru Yar'Adua in July revoked the fire sale of two key oil refineries by Obasanjo to a major financier of the ruling party.

The Ajaokuta plant was 90 per cent built by Russia's Tyazypromexport and designed to use local ore and imported coal. The Delta mill was commissioned by Austrian and German companies in 1981 and was grounded in 1996. Both plants are now operational.

The Indian firm also acquired the Nigerian Iron Ore Mining Company in 2005, to complete its take over of the country's metal-base industry.

The 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.

REUTERS
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