Nigeria: Tension Grips UC Rusal Over Alscon Ownership

________________________________________
Daily Independent (Lagos)
Nigeria: Tension Grips UC Rusal Over Alscon Ownership
26 August 2009
________________________________________
Lagos — Management of United Company (UC) RUSAL is under tension over report that the National Council on Privatisation (NCP) may recommend the termination of its business presence in Nigeria for failing to meet the terms of agreement as the core investor in the Aluminium Smelter Company of Nigeria (ALSCON).
Similarly, a recent accident, which occurred on August 17, 2009 during repair work at Russia's largest hydroelectric plant, which led to the death of at least 10 workers, has further heightened tension in the workforce of the aluminium giant.
A source, who craved anonymity, told Daily Independent on Tuesday that the five-member committee set up by NCP to investigate the terms of agreement of UC RUSAL as the core investor in ALSCON and address all issues associated with delay in the dredging of the Imo River channel by RUSAL has submitted its report.
The source said: "UC Rusal, for almost 42 months, has been unable to meet the target set for it by the Federal Government. Nothing meaningful has happenedat the plant;employees and community morale are low due tolow salary andbenefits; power plant is poorly managedwith outages that have damagedactive pots from 97 when managed by the Nigerian Government to less than 30 per cent since RUSAL took over." Adding, the source said: "Also, Failure to dredge Imo River/Opobo Estuary despite huge gas incentive, substandard equipment andoverall poor management as observedby the committee investigating UC Rusal, has shown that the fate of the management is hanging in the balance."
He queried how the organisationcan export aluminium ingots from ALSCONwhen the River Channel needed to receive raw materials; and also export finished goods when the channel has not been dredged. He said no ship can enter the channel until thechannel is properly dredged in accordance with local and international laws and the treaties in its agreement with the Federal Government.
"UC Rusal management is aware that the Presidential Committee would definitely recommend the cancellationof its contract and so has been working extremely hard to overturn the report by trying to influencesenior officialsto changethe recommendations. What the Russians do not know however is that the Secretary to the Government of the Federation, Alhaji Yayale Ahme led-committee is a hard nut to crack," he added.
According to him, it was a grave error in the first instance that the UC RUSAL emerged core investor in ALSCON, when American firm, BFIG, offered to pay $410 million more than the $250 million offered by RUSAL to the Bureau of Public Enterprises (BPE) in 2006.
He however called on the BPE to investigate other illegally sold government companies, as was done in the then nation's communication giant, NITEL.
Meanwhile, workers in ALSCON are afraid of losing their job over the recent decision by UC RUSAL not to expand aluminium production till mid-2011 when it plans to start first capacity at Tayshet and Boguchany Aluminium Plants, while expecting the supply-demand balance in the international market to recover. This is also in connection with the accident that occurred in UC RUSAL Russian main plant and its caustic soda alumina refinery in Guinea.
A senior staff member of the company said: "Recent development in UC Rusal company locations worldwide is a pointer that the company is facing hard times. We are afraid because our management team in Nigeria gets daily instructions from Russia and now that the financial empire of UC Rusal is facing financial crisis, the hope of workers retaining their job is near melting point.
"The financial crisis rocking the company clearly demonstrates that there is no future for ALSCON as Rusal openly declaresthat no expansion in production until 2011."
On the investigations by the NCP, the staff added: "We are aware that President (Umaru) Yar'Adua has given an undertaking to investigate whether Deripaska and Rusal violated Nigerian law, and broke their financial commitments, when they took over ALSCON after a privatisation auction in 2004 and two years of subsequent negotiations."
He however said the committee appointed by the government is due to report to the Executive Council on Rusal's management of the smelter, and its compliance with the production and investment terms of the takeover.
The five-man committee chaired by Yayale Ahmed has Humphrey E. Aba, the Minister of State for Commerce and Industry; Dr. Christopher Anyanwu, the Director General of the Bureau of Public Enterprises (BPE); A. A. Gulak of the Vice President's Office; and the General Counsel of BPE as members.