FEDERAL GOVERNMENT TAKES DECISION ON SALE OF AJAOKUTA STEEL FIRM AND ELECTRICITY INFRASTRUCTURE IN NIGERIA
THE Federal Executive Council (FEC) has rescinded the concession agreements between the Federal Government and Global Infrastructure (Nigeria) Limited (GIHL) in respect of the Ajaokuta Steel Company (ASCI) and the National Iron Ore Mining Company (NIOMCO), accusing the firm of non-compliance and asset-stripping.
In addition, President Umaru Musa Yar'Adua, after reviewing the Economic and Financial Crimes Commission (EFCC's) interim report on the concessioning/sale of ASCL, NIOMCO and the Delta Steel Company, has ordered the criminal prosecution of indicted officials of the Federal Government and promoters of GIHL for alleged asset-stripping.
Also, the Council directed the Central Bank of Nigeria (CBN) to establish the amounts of money borrowed by GIHL from Nigerian banks, determine the amounts actually utilised locally and those taken abroad.
FEC had deliberated on the report of the administrative panel of inquiry set up by the Yar'Adua administration to review the concession agreements and determine the extent of compliance by both parties.
The Council agreed with the finding of the panel that the agreements "were largely skewed in favour of the concessionaire to the detriment of the Federal Government of Nigeria."
The panel had put the statutory obligations outstanding against GIHL at N350 million, saying that instead of investing external funds on the completion of both projects as expected, the firm embarked on massive borrowing from local banks, pledging the assets of the Delta Steel Company as collateral.
It also submitted that following the "massive borrowing" from Nigerian banks, GIHL now owes the banks about $192 million.
The panel said in its report, which was adopted by the Council that "the general impression is that GIHL has been diminishing the values of ASCL and NIOMCO to buoy up its fortunes."
The Special Adviser to the President (Communications), Mr. Olusegun Adeniyi, also noted in a statement that "the aforementioned actions notwithstanding, the Federal Government wishes to assure all law-abiding investors of the safety of their investments in Nigeria."
Adeniyi, obviously allaying the fears of investors, reaffirmed the commitment of Yar'Adua to due process, transparency and the rule of law, adding that "the administration will continue to respect the sanctity of all proper and legally-binding agreements."
According to Adeniyi, "the Council also agreed with the panel's conclusion that any benefits that might have accrued to the government and people of Nigeria from the implementation of the agreements have been thwarted by breaches and unwholesome practices by GIHL.
"The Administrative Panel of Inquiry indicted GIHL for breaches of the concessionary agreements, including failure to submit a workable business plan within the specified time-frame, non-payment of concessionary fees as well as the cannibalisation and exportation of plants and equipment.
"In deciding to rescind the agreements, the government also noted that the purported Share Sale Purchase Agreement (SSPA) between it and GIHL in respect of ASCL is technically not in force because the transfer of shares to the buyer was never effected.
Adeniyi stated that interim managements would be set up by the Federal Government for the Ajaokuta Steel Company and the National Iron Ore Mining Company pending the determination of all issues arising from the government rescinding the agreements with GIHL."
Also, the FEC approved the report of the Presidential Committee on the Accelerated Expansion of Nigeria's Electricity Infrastructure on the strategy for increasing the current power generation and supply to 6,000 megawatts (mw) in the next 18 months and an additional 10,000mw by 2011.
Minister of Information and Communications, Mr. John Odey and Minister of State for Energy (Power), Fatimah Balaraba Ibrahim, flanked by Minister of State Information and Communications, Alhaji Ibrahim Nakande and the Executive Secretary of National Electricity Regulatory Commission (NERC), Ransom Owan, said that "the Council, in view of the administration's seven-point agenda as it relates to energy supply and generation, considered that it is necessary to take measures in the short-term and medium-term to ensure that additional capacity is generated, transmitted and distributed to consumers.
"Therefore, the Council at its meeting approved the measure being put in place to increase the current electricity supply in the country to 6,000 mw in the next 18 months (short-term) and to add a further 10,000mw by 2011 (medium-term) as recommended by the presidential committee."
Inaugurated by the President on February 15, 2008, the committee was charged with formulating strategies to boost Nigeria’s power supply capacity by 6,000 megawatts within 18 months, with an additional 10,000 megawatts by 2011.
The Council also approved the price variation on the on-going contract for the rehabilitation of four injection sub-stations providing power to the State House and Asokoro District, by AY Electrick in the sum of N247, 061,920.58 and another award of contract for design, manufacture, supply and installation of 11KV underground cables and overhead lines and 11 RMU in Asokoro District in favour of Messrs Renacs Engineering Coy Ltd/AK-AY Electrik, in the sum of N94, 554,169.13. This brings the total revised cost of the rehabilitation of the projects to N1, 104,616,637.70 with a completion period of 12 months
