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ALSCON - Accusations, Self-Adulation Confuse Reality At Privatised Aluminium Plant

Author: nick on 1-09-2013, 19:58, views: 1 956

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Uyo — Sundry allegations of improprieties against Rusal, embattled managers of the Aluminium Smelter Company of Nigeria, Ikot Abasi, and self-praise responses from its management seem to be the only products at installed capacity at the company whose ownership and hitch-free operation remain dogged by protracted litigation.

 

Amid allegations of asset-stripping by some groups of the Aluminium Smelter Company of Nigeria (ALSCON), Ikot Abasi, Akwa Ibom State on one hand, and strident denial by its managers on the other, the Supreme Court will next month, once again, decide who should own the troubled aluminium plant.

At war over ALSCON's ownership are its current managers, the Russian company, AC Rusal and BFIG, an American company, which a judgment of the Supreme Court in July last year favoured to have won the bid to buy ALSCON. On June 14, 2004, the BFIG Group won the bid to buy ALSCON from the Bureau of Public Enterprise, government's privatisation agency. But the bid was controversially cancelled and management of the plant handed over to Rusal. BFIG has since been in court to gain controlling ownership and management of ALSCON.

 

Enforcement of the apex court's judgment has undergone curious twists and turns, with Rusal digging in, the BPE finally cancelling in January this year BFIG's successful bid, and the BFIG crying conspiracy and once again relying on the Supreme Court to reclaim what it affirms is legitimately its property through its victorious bid process and the apex court's decision last year.

The Russian firm told Sunday Trust correspondent it remained unpertubed by the crisis. Rather than be distracted by the protracted litigation over ownership of the aluminium plant, its spokesperson said, it has been striving to overcome production challenges and executing some corporate social responsibility projects for the benefit of its host communities.

 

But the purported beneficiaries in Ikot Abasi, especially community leaders and the youth, seem unimpressed by Rusal's CSR claims. To them, Rusal has been stripping its assets for sale, with a view to rendering it a carcass in the event a new owner eventually comes in. In a letter the community, under the aegis of Mboho Ikot Abasi, addressed to the managing director of the company, Mr Stanislav Kruglyashov, it expressed its displeasure with what it alleged was Rusal's dismantling of anodes stems for sale, the proposed melting of aluminium components also for sale as ingots, as well as the sale of stem nipples to a contractor it said had been identified as standing by for the deal.

 

The letter, dated August 2, 2013 and signed by the president general of the group, Donatus Uko and general secretary, Elder Agenesis Udoh, referred to the September court hearing date at the Supreme Court and mentioned unsubstantiated "indication" to the effect that RUSAL plans "to vandalise valuables in the plant and cripple production if the decision of the court does not favour them."

 

The petitioners said the "action of the company was not in the best interest of the plant and the community" and is not an indication the company was overcoming its travails. It urged Rusal to discontinue "the stripping of the plant, including the re-bagging of alumina and coke, as well as dismantling of electrical bussbars assemblies for sale."

 

The letter further read, "You will recall that we expressed deep concern regarding what appears to be the systematic cannibalisation of plant facilities in place of the outright procurement and replacement of any faulty or failed parts. It is certainly clear that this practice is not in the best interest of the plant particularly in terms of its long term profile".

 

The community leaders expressed the hope that the management of the company would see the issues raised as of grave concern to the Ikot Abasi community who proudly acknowledge ALSCON as their inheritance. It appealed to the management to cooperate with the community members "to sustain the mutual cordial relationship which has existed between both parties."

 

It also called on the ALSCON managing director to comprehensively address the various areas of concern, including arranging a facility tour of the plant for members of the community to enable them see things for themselves. With the tour yet to be arranged for the community members to observe first-hand the situation within the plant, the allegations against the ALSCON management have become more strident.

 

The company's workers, under the aegis of the Metal Products Senior Staff Association of Nigeria, MPSSAN, have reinforced the Mboho Ikot Abasi allegations. The workers were quoted in media reports to have alleged Rusal was dismantling, for sale, stem rods and anodes, vital components of the plant used in the manufacture of steel ingots.

 

A spokesman of the workers association was reported to have told newsmen in Abuja that the Russian firm was also cutting and melting the bussbar/risers used in transmitting electric current to the production pots for melting aluminium for sale as ingots.

 

The reports quoted the association's spokesman, who pleaded that his identity be protected to avoid being victimised, as saying the cut stem rods and anodes were often sold to some Chinese customers.

 

The bussbar/risers, which were said to never have been used since the completion of the plant in 1998, are estimated at over N1 billion, while each of the about 4,200 stem rods and anodes at the plant are valued at over $100,000.

 

An aggrieved worker was quoted to have lamented: "The Russians have put everything in place to siphon the remaining coke and alumina from the silos for sale. When they took over the plant in 2007, they inherited over 8,000 metric tonnes of alumina; 5,200 pieces of anode blocks; 5,820 pieces of cathode blocks; over 8,000 anode stems; over 200 tonnes of cryolite and over 170,000 tonnes of cast iron. Why they now want to sell even cast iron blocks, together with the pots, is mind boggling."

 

BIFG Group has also accused Rusal of devaluing ALSCON's assets from N130bn in 2006 to N30bn. There are also stories of questionable loans that have endangered the finances of the aluminium company.

 

But Tatyana Smirnova, ALSCON's director of public and governmental affairs dismissed the allegations as misleading and not corresponding to reality. What is happening at the plant, she explained, is that "ALSCON is cleaning its territory from unrealizable assets, obsolete and not suitable for use equipment which cannot be utilised for production of aluminium." She emphasised that "the acquired equipment is the property of Rusal and makes a part of a modernisation programme that was implemented from 2007 till 2012. Rusal, she disclosed, has invested about $159.4 million into the plant.

 

While not denying the company is facing challenges, Smornova maintained it is still striving to meet its social contract with the host communities. The challenges were not of its making, she said. According to her, the company was acquired by Rusal based on an agreement that the federal government would provide reliable and sustainable gas supply to run the plant at full steam. Unfortunately, after six years of operation, the federal government is yet to solve the problem of adequate gas supply, leading to substantial loss of revenue and raw materials, and low capacity utilisation.

 

"The only source of gas supply available to the company is the Nigeria Gas Company whose supply is grossly inadequate to run the plant and produce at full capacity," she said. The plant was said to have survived more than six gas outages, which cost the company over $60m in terms of restoration works, substantial loss of revenue and raw materials.

 

Early this year, ALSCON announced temporary suspension of its production and embarked on a staff reduction programme, citing uncertainty over the legal ownership of the plant and insufficient gas supply as reason for its action. Losses from that suspension was put at $1.4m.

 

Smornova said though management has intensified efforts to solve the problem of provision of reliable gas supply, the company requires urgently an additional gas pipeline to reduce the risks of production losses it has experienced over the years to enable it produce at installed capacity. The quick completion of the gas pipeline being constructed by the federal government from Esit-Eket- Ikot-Abasi, according to her, remains the viable option to guarantee continuous survival and growth of company.

 

Amid these challenges, the company maintains it has been addressing the critical social needs of the people and the host communities. She claimed the sum of $229 million was invested into a modernisation programme to execute some social projects.

 

She mentioned the projects to include provision of reliable water supply to over 30,000 residents in Ikot-Abasi where the plant is situated, educational development through donation of a monthly financial support to three schools and an annual scholarship programme for undergraduates drawn from host and neighbouring communities. Others include the provision of health facilities, construction of youth secretariat and sports.

 

The director said the company has implemented its 2013 scholarship programme for indigenes of Ikot-Abasi and neighboring areas, with over 52 students benefiting from the programme. The figure brings to 211the total number of students who had benefited from the programme since it started in 2009.

Beside, the company is providing monthly financial support to three schools and allowances to over 80 students. It has also initiated a new scheme called "Choose your career with ALSCON" where students who visit the plant are trained on careers provided by the plant.

 

ALSCON said it has also created 900 indirect jobs by means of a network of contracts for supply of goods and services. These jobs, according the company, represent a high contribution of the plant to the support and development of the host communities.

 

The company is also implementing projects for clean and potable water supply for the indigenes of the area. More than 14 water projects have been commissioned. Speaking at the commissioning of two water projects and a youth secretariat at Ikot-Abasi, Smornova said "the water projects are part of 14 such projects which provide clean water to over 10,000 people in Ikot-Abasi."

 

As the company grapples with its challenges, only the speedy resolution of the legal issues bordering on the ownership of the plant, and the completion by the federal government of the gas pipeline from Esit-Eket-Ikot Abasi will help restart full production and get the company back on steam.

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