BPE PROBE: $3.2BN ALSCON SOLD FOR $130M
Senators heard on Monday how government-owned Aluminium Smelting Company of Nigeria (ALSCON), set up with $3.2 billion, was sold to a Russian firm, Russal, for a paltry $130 million.
Also, Delta Steel, which was established in 2005 at the cost of $1.5 billion, was sold to Global Infrastructure for $30 million.
The Bureau of Public Enterprises (BPE) sold ALSCON to Russal under the privatization programme in 2006. The lawmakers were also told that another $120 million provided to ALSCON for the dredging of the Imo River was diverted, even as Senate President, David Mark, said that the privatization programme is a failure.
Details concerning the sales of public companies were unveiled at the public hearing of the Senate Ad-hoc Committee on the privatisation and commercialization activities which opened in Abuja yesterday.
Ms Bola Onagoruwa, Director-General of the BPE, told the panel that only N146.4 billion was realized from the sales of 122 government companies.
The BPE boss told the Senate panel that 66 per cent of the privatized companies are performing well while only 33 per cent 'have done badly.'
Kicking off the public hearing, Committee Chairman, Senator Ahmed Lawan, lamented that the privatization programme has not been successful.
He noted how '80 per cent of privatized agencies are not performing. This has resulted in both job and economic losses which will jeopardize Nigeria's quest to achieve Vision 20:2020.'
In his testimony before the committee, ALSCON Deputy Managing Director, Vitaly Kuzrestov, told the panel that from 2008 till date, the company has experienced six stoppages and 'each stoppage results in complete loss of production,' he said.
The committee chairman retorted: 'The sale is like dashing out the company. With an N800 million subsidy by the Federal Government and a waiver, I think, as a Nigerian, I am grossly short-changed in the sale of ALSCON.'
The senators also heard how $120 million, released for the dredging of Imo River, was never carried out by the company .
Kuzrestov noted that 'the dredging was on the condition that gas supply would be provided regularly,' a condition that was not fulfilled by the BPE.
The BPE boss quickly contradicted Kuzrestov's statement, saying that there was no such condition in the purchase agreement.
This prompted Lawan to ask for the whereabouts of the $120million for the dredging project to which Kuzrestov replied that it was being used for 'Environmental Impact Assessment.'
He referred the committee to the agreement which did not stipulate any time frame for the dredging, adding that the dredging could not be done because of 'global economic problem.'
Also at the public hearing yesterday, the Association of Contractors appealed to President Goodluck Jonathan to intervene in the payment of N500 million debt owed them.
The contractors expressed disappointment that after the BPE had signified intention to pay the debt from an outstanding N16 billion being the balance from the payment of disengaged staff of NITEL/MTEL, the move was allegedly stopped on the orders of Vice President Namadi Sambo.
'Upon the last verification exercise, the BPE agreed to release the contractors' money on Thursday, August 4. But on getting to the BPE on the appointed date, the contractors were told to wait for the outcome of a scheduled meeting between the Vice President and some prospective buyers of NITEL/MTEL.
'Curiously, with the meeting over, the BPE informed the contractors that Vice President Sambo had ordered that the payment to contractors be put on hold.
'According to the BPE, the Vice President had directed that his office would be forwarding a different 'list of contractors' to whom the money should be paid', the contractors stated.
They urged President Jonathan 'to strive to preserve the integrity of the system' with the payment of the debt.
In his opening remarks, the Senate President bemoaned the failure of the privatization programme, adding that if two privatized companies have performed well while over 100 others do not, it means that the exercise is a failure.
'Nigerians expected that most of the exercise would provide employment opportunities, add to government economic activities and that government would be able to benefit from the functional activities of these companies,' Mark said.
The Senate President told stakeholders at the Senate Hearing Room 1 that government simply has no business running companies.
'I have been given a list of the privatised companies, the ones that are assumed to be performing well and the ones that are not performing well but take this typical example. The Volkswagen of Nigeria is privatised or commercialised but the Volkswagen of Brazil works better, I don't think that the Volkswagen of Nigeria can even produce a tyre. Have we really succeeded?
'Government truly has no business in all these commercial enterprises because it has failed. Every time it has tried it, it has tried it and it has failed because the orientation and attitude of a civil servant is quite different from that of commercial organisation and I think that linking the two in my candid opinion is not the best and I think that government should hands off all these commercial organisations.
'Basically, the idea behind this public hearing is that something has gone wrong with the implementation.
The ad-hoc committee that is holding a public hearing today is basically set up to ensure that stakeholders participate fully and those, who strongly believe that the exercise was successful will have the opportunity to express their view.
'Let us also hear from those who feel that the exercise has not been successful. I urge the committee to be very transparent, honest and open-minded, to be courageous and above all, in whatever they do, to be above board in their findings.'
Meanwhile, a former Federal Capital Territory (FCT) Minister, Mallam Nasir el-Rufai, is scheduled to appear before the committee on Thursday.
In a letter by his legal counsel to the panel, the former minister, who was the BPE boss from 1999 to 2003, said he was out of the country and would be back by tomorrow (Wednesday) when he would be ready to answer any question concerning his tenure.
The public hearing continues today.