Host communities of the Delta Steel Company Ovwian, Aladja, Delta State have threatened to take over the land, equipment and facilities of the plant should the government of Nigeria allow the return of the Indian steel magnate, Pramod Mittal, to the country.
There are indications that the “Mittal Brothers”, trading under the name, Global Infrastructure Nigeria Limited, who lost the plant following the cancellation of its sale to them in 2008 by late President Umaru Yar’Adua for alleged assets stripping, are now mobilizing to re-take the plant.
In a clearly worded open letter signed by key stakeholders, the Chairman of Udu Council of Chiefs of behalf of the 32 communities that make up Udu, the Otota of Udu Kingdom, Chief Sam Odibo, warned that while the people might not be against privatization, they would not guarantee peace if the same characters that reduced the company to its current status show up again.
“If for any reason the management led by Pramod Mittal is allowed to takeover Delta Steel again, the host communities of Ovwian and Aladja will take over the entire land, including places occupied by the company’s staff quarters. In short, the host communities are determined not to allow any access to the defaulting promoters of Delta Steel under any circumstances in the future,” said the statement.
Also opposed to the return of the GINL to Warri, Delta State is Dr. Sanusi Mohammed, the Executive Secretary of African Iron and Steel Association, who was quoted in the media.
Mohammed cited the failure of Pramod Mittal at the Ajaokuta Steel Rolling Mill.
“The GINL was brought in as concessionaires to Ajaokuta through fraudulent arrangements. The Global Infrastructure group also failed to resuscitate the Ajakota Steel Company that was provided to them after FG’s investments of a whopping USD 5 billion,” Mohammed said.
He went on to elaborate that the Delta Steel Company in Warri was also sold to the Pramod Mittal-owned GINL for a paltry $30 million, whereas the Federal Government had already pumped in $1.5 billion into the plant at the time of the sale.
GINL apparently stripped the company down and borrowed N31 billion from Nigerian banks, using the assets of Delta Steel as collateral.
These loans became non-performing bad debts and therefore had to be eventually taken over by AMCON.
The sale of Delta Steel Company was mired in controversy.
The Senate Ad-Hoc committee probing the privatization deals of the Bureau of Public Enterprises was also displeased with the sale of Delta Statee to GINL.
This had prompted the recommendation by the Senate committee that the sale of the steel company to GINL be reversed.
It is also reported that several hundreds retired Nigerian staff of the Delta Steel Company have died since 2005, awaiting their pension entitlements, according to the Nigeria Union of Pensioners.
NUP has said that of the N11.709 billion owed to the senior citizens, the Delta Steel management had only settled a small fraction.
The company’s expatriate workers also recently claimed that the company owed them 11 months salary, forcing them to live as destitutes in a foreign land.
Media reports say that more than N10 billion is also owed by Delta State in electricity bills.
Reports have it that GINL cannibalized virtually all equipment at the Delta Steel plant as it was never committed to the development of the plant.
It eventually shut down the plant in September 2011.
The management owes N31 billion to the banks and also several millions to its suppliers, workers and other service providers.
It is reported that as soon as AMCON filed its litigation on Pramod Mittal for non-payment of multi billion Naira debts, the company stopped meeting all its financial obligations including paying salaries, payments for goods supplied and also increased the cannibalization efforts.
Some vital equipment seems to have been demobilized and shipped out of the country, including a giant transformer.
The communities are also frowning at GINL’s lack of concern for their children and their education.
The DSC Technical High School was regarded as the one of the best schools in the country, serving children of the company’s workers as well as non-workers.
Before Pramod Mittal took over, children of workers were paying N1,000 per term while those of non-staff paid N5,000.
In a shocking move, GINL increased the school fees to N25,000 and N30,000 for staff and non-staff children.
The fees of staff’s children in the primary schools were also moved from N300 to N12,000 and from N3,000 to N20,000 in the case of non-staff.
To add to the woes of the community, two out of the four primary schools were closed and staff strength reduced drastically.
The GINL was also awarded the concession to operate the National Iron Ore Mining Company-owned mines that are located in Kogi State and is capable of generating N73 billion annually.
NIOMCO was concessioned to GINL for 10 years wherein GINL was obligated to complete, rehabilitate and operate the mines’ equipment in a viable manner.
However, the company allegedly not only defaulted in all these areas, but also indulged in cannibalizing the Beneficiation Plant, hence the termination of the concession agreement in 2008 and setting up of an Interim Management Committee to secure the assets of the company.
Also of concern to those who are interested in the survival of the Delta Steel Plant is the fact that Pramod Mittal’s business dealings in other parts of the world, including India, Libya, Azerbaijan, Uzbekistan, Bosnia and the Philippines have been controversial.
In India, Pramod Mittal-controlled Ispat Industries faced major issues with whopping losses and was also involved in a notorious payout scandal involving government officials.
Ispat was left with no funds to even buy raw materials, let alone servicing massive debts owed to banks and others.
The Nigerian steel industry for several decades now, has been in a state of acute underdevelopment.
The steel industry forms the critical core for any economy seeking infrastructure and industrial growth.
Nigeria, with its vast iron ore reserves and surging demand for steel, has failed in its efforts to create a sustainable industry for steel manufacturing.
In the Nigerian steel industry, it is not the lack of resources but management that has been the key factor of failure.
The case of Global Infrastructure Nigeria Limited appears to be another testimony to the unending woes of the industry.
GINL and the Federal Government executed a sale/concession agreement to take over the management of Ajaokuta Steel Company and the National Iron Ore Mining Company in 2004.
The Federal Government terminated the agreements following allegations that the company was engaged in asset stripping of the plant and a series of other defaults.
Pramod Mittal seems notorious for building mountains of debts with his companies and diverting funds to other ventures that have failed without exception.
In Bulgaria, Mittal faced issues similar to Nigeria for breaching contractual obligations and failing to fulfill investment obligations.
Under these circumstances, industry stakeholders in Nigeria are of the opinion that concerned authorities should resist any effort of compromise and re-entry by GINL into Nigeria’s steel industry and should find a credible foreign or local investor who has considerable experience operating in Nigeria, a strong commitment and robust financial strength.
The immense potential of Ajaokota, NIOMCO and Delta Steel, they reasoned, should be fully realized to the benefit of all stakeholders in the country.
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