By Our Correspondent
The recent agreement the Federal Government entered to reclaim Ajaokuta Steel Industry and hand over Nigeria Iron Ore Mining Company, NIOMCO to Global Steel Holding Limited, GSHL is said to be without any business plan.
Human Rights Activist, Lawyer and Social Enterprenuer, Natasha Akpoti in this interview revealed why GSHL is unworthy of the new deal and why the original builders of plant should be called back
Excerpt:
What’s the background information about Ajaokuta concession?
Global Infrastructure Investment, it is part of a Holding Company which is called Global Steel Holding Company, so when you hear GSHL or GIHL, it is one and the same company. The Chairman is Pramod Mittal is the younger brother of Lakshmi Mittal but Lakshmi Mittal is the world renowned guru, he is an amazing person. If it is the person we are dealing with, we won’t have problems because all along, every business Laskshmi Mittal has touched is a success story. He is a big steel player in South Africa, England, every. He is amazing and very honest.
He was in a good relationship with his brother (Pramod Mittal) but they fell apart because of Prammod Mittal business tactic which did not go well with Lakshmi. At that point, Pramod Mittal set up Ispat Steel Company. This company was exiting before GSHL. Ispat got into huge amount of debt in India, he borrowed and borrowed until he got himself into a very big Corporate Debt Restructure. CDR is such that you will go into a place in the guise of going to revive industries, takes loan, sell assets and until it becomes messy and fraudulent.
The same thing he did in Itakpe and Ajaokuta is the same thing he did in India. In 2010, he owned India banks, 18 banks over 800 million euros. That was the time that the Indian government said enough is enough. In 2003, the Indian government took Ispat from him and gave it to another company to manage. That is when he registered GSHL and came to Nigeria to operate.
In June of 2003, Solgas Energy Limited, a limited liability company incorporated under the laws of the Isle of Man, entered into a concession agreement with the federal government of Nigeria and Ajaokuta Steel Company Limited. The concession obligated Solgas to complete, refurbish and expand the Ajaokuta Steel Plant in Nigeria and to build a gas processing plant to supply the steel plant with electrical power.
When Solgas could not handle the deal, in 2004, it began searching for a subcontractor to assist it in performing its obligations under the Concession. Solgas asserts that a subcontractor was sought to increase the efficiency and profitability of the steel plant. Solgas finally got GSHL and in May of 2004, both companies entered into a Confidentiality Agreement. On July 18, 2004, Solgas and Global Steel entered into a memorandum containing the terms pursuant to which the parties intended to pursue the fulfilment of the Concession obligations. Part of the deal was for Global Steel to develop and expand Ajaokuta for 10 years.
However, in 2008, late President Yar’ Adua terminated the contract and ordered the arrest of Prammod Mittal and his cronies for alleged assets stripping; indebtedness to Nigeria banks and breached of contract. At that time he left Nigeria and in April 1, 2008 they took Nigeria to the London Court of Arbitration. Eight years after, Nigeria decided to sign a new deal with the same company that took the country court after late President Yar’Adua terminated their contract and order for their arrest.
The new agreement is meant to put the steel industry back on track, does it not?
The agreement in view and the view of most Nigerians is like taking one step forward and two steps backward. So in way it is a retrogressive agreement but the bright side is that we could say for once in eight years, Ajaokuta is free. That means it is off the hostage of the agreement that it has been entrap in the past eight years by by the Indians and it now belongs to the Federal Government and the government can invest or seek investors to invest in Ajaokuta.
But on the retrogressive part, I think it is quite disdainful that it is the same company that late President Yar’Adua terminated their concession. So I wonder why Nigeria would actually reengaged the Indians on the same grounds whereby we have clear proof that there was fraud and mismanagement of resources. So are we expecting something different? And we know that leopard rarely change their spot. I am quite hopeful and prayerful that some how the Minister will be able to convince us that he has been able to negotiate a better package for Nigerian.
Before re-negotiating, was there any clear business plan?
One would have expected that a government that preaches transparency, due diligence and accountability, and here we have Nigeria signing on with Global Infrastructure Steel Limited, GISL Itakpe without a business plan. They are about just now to start drafting a business plan for the iron ore company. What if the business plan they are going draft in 105 days is not with our needs of the diversification plan. Are we going to be caught up between the devil and deep blue sea and the next thing to think is to save Ajaokuta. Let us not forget that Ajaokuta is nothing without Itakpe and Itakpe is actually the meat. Ajaokuta was actually created because of Itakpe.
So if Nigerians is going to give out the most important part, the battery of the life of Nigeria’s iron and steel industry in the hands of people who are known world wide for their renowned bank defaulting technique? What do we expect?
One of the ways we could advert this is to ask and demand for clear transparency over the terms and condition which was entered into this concession because right now it is tight and nobody has seen it but I have been preview to the previous concession agreement which was supposed to have been signed in by the previous government of Jonathan with the same company.
In the last eight years, ever since they took Nigeria to arbitration court in London, they sat quite tight on Ajaokuta and Itakpe and they said the only way they could relinquish hold on Ajaokuta is if they were settled. They actually put forward a billion dollar request but it was turned down but they dropped it and actually took $250 million. Like I said earlier, I have seen the previous agreement and there is no much different from what we have signed now. In that agreement, they actually stated that they will want Nigeria government to rehabilitate Itakpe back to the state it was and that is going to cause us a lot of millions of dollars and they added that the federal government should also clear all the debt. That means the government will pay all the workers that were working at that time about N8 billion. That is what is required by the federal government to settle the workers.
There is a whole lot much more that Nigerians don’t know that are been tied into this agreement. We will appeal that the Minister actually speaks up. If you are trying to tie Nigeria destiny to a particular foreign company, we need to know what you are tying our destiny to.
But the Vice president, Minister and the ministry of Justice were present; could they not have secured a better deal for the country?
I can not say whether that is the best case but what I do know on the face is that it was clearly a weak negotiation. Nigeria should not have succumb to that because at the end of the day what was the essence of wasting eight years if we know that we were going back to the same people. When you said that if the terms were negotiated in favour of Nigerians, I will like to see that the Indians are held responsible for the economic lost of the eight years.
Let me explain this. Ajaokuta and Itakpe were held down for eight years and we are giving them back on the same terms. Who is going to pay for the years it deteriorated? I have seen the terms; the only difference is the concessionary fee that they are going to pay Nigeria which was increase from three percent to four percent. This is after giving them the whole resources, and after the second year of operation that is when they will begin to pay Nigeria four percent after royalty and taxes. That’s it! So it is practically the same. Like I said it will be interesting for the minister to speak up, let everybody know what they are tied to. It is our common resource; such agreement should not be held to the detriment of Nigerians in darkness.
Talking about what I will like to see in the agreement is that the Indians or somebody should be held accountable for dragging Nigeria into this mess in the first place. There is no accountability, people are silent on that and there is somebody that should be held accountable and he is not just a ghost. Secondly, I will like to see who is going to be held accountable for the deteriorated state because Ajaokuta and Itakpe was shut down and we all know that technology deteriorate with age. Who is going to pay for that, for the economic lose? If Ajaokuta and Itakpe was producing for the eight years that it was tied down, that means Nigerian has lost billions of naira every year.
Talking about what I will like to see in the agreement is that the Indians or somebody should be held accountable for dragging Nigeria into this mess in the first place. There is no accountability, people are silent on that and there is somebody that should be held accountable and he is not just a ghost. Secondly, I will like to see who is going to be held accountable for the deteriorated state because Ajaokuta and Itakpe was shut down and we all know that technology deteriorate with age. Who is going to pay for that, for the economic lose? If Ajaokuta and Itakpe was producing for the eight years that it was tied down, that means Nigerian has lost billions of naira every year.
Does the current agreement not take care of it?
No! I saw the previous one which was supposed to been sign in 2004 and it wasn’t and I tell you it is not much difference. Nobody is been held accountable for the economic lose and the deterioration of assets
But it was in arbitration, wasn’t it?
Even if it was in arbitration, I expected Nigerian lawyers, our SAN should have stood up and ask. I am a lawyer and I take part of the blame. Why didn’t we the so called human right activists put a counter claims to the Indians. It is wrong for Nigerians to seat back and watch a foreign company hold our natural resource hostage for eight years, no country would have done this.
What would have happened in arbitration?
If I had take it up myself, what I would have done was to counter sue on behalf of Nigerians, on behalf of the host communities, it would have taken a case of economic crime, suing the Indians for economic crimes, asset stripping. That is one thing that would have happened.
Many Nigerians do not know that there is a particular right that they have over their national assets which supersede every international agreement. There is a United Nation declaration which vest on the indigenous people of Nigeria the right to enjoy their natural resource and no international law or whatsoever can deprive Nigeria from that and Nigerians have been deprive for eight years. But people do not read broadly to understand their right and they forget that the freedom we all seek is written in books. I just discovered this three months ago that there was actually such a privilege. I was with a certain professor who heads the United Nations Committee on International Business Law. He said: “Why are Nigerians quiet over this? How could you seat down? Do you have lawyers that actually folded their arms to watch Nigeria assets being held hostage by arbitration? No country would have done that and not even a prominent Indian company!
But arbitration is give and take
Laws are man made and are not final and I most state this clearly that most of the laws that governor international transaction were not done in favour of the black race, it is true, it is a fact. We forget the fact that laws are dynamic, humans can change law that is why you see every now and then there are amendments. I thought that this would have been ‘Local Classical’ if Nigerians had pushed on and approached the international court of arbitration that tell them that our people are suffering, and these assets are vital and more over we have clear proof that this company has engaged in fraudulent malpractice not only in Nigeria but in other countries like Bulgaria, Libya even in Indian, this company has been banned from operating so why are we opening ourselves to them. If we put our case forward, I believe the International Court of Arbitration will seat back and revaluate it and this would have been an opportunity for Nigeria to set precedent for every other country who have had it asset manipulated and trampled upon by powerful countries.
The Minister said there is going to be an open bid for Ajaokuta, what is your take?
Nigeria is a country of high political grounds because today something is said and tomorrow someone counters it. To the very best of my knowledge which the Minister is aware of; on the 8th of July the Minister’s office receives a memo from the President approving (a) That he should conclude the arbitration with Global Infrastructure and (b) He should engaged the Russians and finalise negotiation to reactivate Ajaokuta. It was specific.
A few weeks later, I started hearing that there is actually going to be a bidding process so that they could fulfil all righteousness. It a normal procedure when you are starting a project. Let’s not forget that Ajaokuta was completed 98 percent by the Russian before they left. So why do you want to bring a new technology, a new brain to something that has gone that far? We have tried two concessions and have failed. The Russians left 22 years ago, shouldn’t we know what is right to be done?
Remember, every still plant TechnoPromExport, TPE of Russia has built, they have a long term service and expansion relationship with the company.
Why are you pushing for the Russian?
Ajaokuta was already 98 percent completed by the Russians. They have already finished it. Infact 40 out of the 42 units was completed and there is this blast furnace which is the engine room of Ajaokuta steel plant. That was what the Russians refused to start because when you ignite the blast furnace it is meant to run non-stop for 15-20 years until only shut down for service. Shutting the blast furnace for maintenance and starting it again cost lots of money and all the raw materials needed for the service must be made available.
The Russians left because of lack of funding from the Federal Government and infrastructure connecting the rail track from Ajaokuta to Onne Port which was the deep sea port as at the time. The Russians needed all of these in place to support the function of Ajaokuta. Since these infrastructures were not available, it was needless for the Russian to start the blast furnace. If you take a look at Ajaokuta, it has two power plants. This means that Ajaokuta was built in such a way that it will lack nothing to operate effectively.
We are pushing for the Russians to come back, they are the original builders of the plant. They do businesses that are clean and different. So why bring in another technology to something that is 98 percent completed? Why are we running away from the Russians? Our founding fathers brought the Russians to develop the country. Are we wiser than our founding fathers? People who ensured that we had better economy and fought for weaker African countries!
We should be happy that the Russians are happy and willing to come back and we should take advantage of it.
The very first two emails I sent to TPE they did not respond. They thought it was fraudulent until I have to prove myself. And when I approached them, I realised that they have such a robust package for Nigeria. They told me that they are not just interested in reviving Ajaokuta, they were interested in coming down here in setting up a number of factories and industries that will utilise the steel which in turn will ensure that Nigeria recovers and gain a substantial amount of investment. This entire package was part of their initial plan before they left. They were to make Nigeria the industrial hub of Africa.
Russia came to Nigeria because countries like England, US, Japan, Canada turned down our offer to help develop our steel industry and steel is very crucial in international politic. Any country that get’s its steel industry right it becomes almost a power in the world and talking about Africa, Nigeria is the most populous and talented black race. So it was more of a danger to the Western world for Nigeria to get it steel industry right. Russia gladly offers to help develop our steel industry.
China can set up a steel plant, they can do other things but why do we have to bring in a different party with a different technology into a place that is already 98 percent completed? Engineers will understand these things better. It is like an Iphone and a Blackberry, the two devices are fine but you cannot build an Iphone to 98 percent and get the Blackberry to complete it. It will not fit.
But the bidding exercise is not to exclude the Russians
Let’s be honest with ourselves because we know how the bidding process goes. The winner is always pre-determine before the act, in most cases you can quote me on that. For the fact that Nigeria is where we are right now, which is a rich country that is been controlled by few people. That tells you that there are powers that always manipulate and control the resources of the common man.
Earlier this year, the Egyptian Steel engaged the same Russian TPE who built their steel plant is 1973 to expand and modernise. They did not have to go and open a bid. If you know what you want and you know that there is proof you can get the same service that you demand, why do you have to go and look for someone else.
The Russians have shown more interest to come back and they expect the Minister to get to in touch with them and that was the instruction President Buhari related to Dr. Fayemi that once he has resolved the Itakpe arbitration, the next step to is to engaged TPE and that is what we should be expecting.
The minister does not have the next five years plan for Itakpe. Itakpe was given back to the Indians without a business plan.
