Delta Steel: Communities Kick Against Pramod Mittal Comeback



delta-steel-company2Host communities of the Delta Steel Company Ovwian, Aladja 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 company.
There are indications at the moment that the “Mittal Brothers” trading under the name Global Infrastructure Nigeria, Limited, GINL who lost the plant following the cancellation of its sale to them in 2008 by former 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 is Dr. Sanusi Mohammed, Executive Secretary of African Iron and Steel Association who was quoted in the media citing their failure in Ajaokuta. “The GINL was brought in as concessionaries to Ajaokuta came in 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.”
He went on to elaborate that Delta Steel Company in Warri was also sold to the Pramod Mittal owned Global Infrastructure Nigeria Limited (GINL) for a paltry USD 30 million whereas the FG has already pumped in USD 1.5 billion into the plant at the time of the sale. GINL apparently stripped the company down and borrowed N 31 billion from Nigerian Banks using the assets of Delta Steel as collaterals. These loans became non-performing bad debts and therefore had to be eventually taken over by AMCON.
The sales of the Delta Steel Company was mired in controversy and in the past the Senate Ad-Hoc committee probing the privatization deals of the BPE was expressly displeased with the sale of Delta to Global. This had prompted the recommendation by the Committee on that the sale of the steel company to GINL be reversed.
It is also reported that several hundred retired Nigerian staff of the Delta Steel Company have died since 2005, awaiting their pension entitlements according to the Nigeria Union of Pensioners (NUP). NUP has said that of the N 11.709 billion owed to the senior citizens, the Delta management settled only partially.
The company’s expatriate workers also recently claimed that the company owed them 11 months salary dues, forcing them to live as destitutes in a foreign land. Media reports say that more than N 10 billion is also owed by Delta towards unpaid electricity bills.
Reports say that GINL cannibalized virtually all equipment at the Delta plant, as they were never committed to the development of the plant, eventually shutting down the plant in September 2011. The management owes N 31 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, paying salaries, payments for goods supplied and also increased 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 the GINL’s lack of concern for the children of the people and their education. DSC Technical High School was regarded as the one of the best schools in the country, servicing children of the company 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’s and non-staff’s children respectively. The fees of staff’s children in the primary schools were also moved from N300 to N12,000 and from N3000 to N20,000 in the case of non-staff. To add to the woes, two out of the four primary schools were closed and staff strength reduced drastically.
GINL was also awarded the concessions to operate the National Iron Ore Mining Company (NIOMCO) owned mines that are located in Kogi State and is capable of generating N 73 billion of revenues annually.
NIOMCO was concessioned to GINL for ten years wherein GINL was obligated to complete, rehabilitate and operate the mines’ equipment in a viable manner.
However, they 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 (IMC) to secure the assets of the company.
It is pertinent that Pramod Mittal’s business dealings in other parts of the world including India, Libya, Azerbaijan, Uzbekistan, Bosnia, Philippines etc have been controversial. In India, Pramod Mittal controlled Ispat Industries faced major issues with whopping losses and also involved in a notorious payout scandal involving government officials. Ispat was left with no funds to even buy raw materials, leave alone servicing massive debts owed to banks and others.
Nigerian steel industry for several decades now, is in a state of acute under development. 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 their management that has been the key factor of failure. The case of Global Infrastructure Nigeria Limited (GINL) is 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 (NIOMCO) in 2004. FG 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 exceptions. In Bulgaria, Pramod faced issues similar to Nigeria for breaching contractual obligations and failing to fulfill investment obligations.
Under the circumstances, industry stakeholders opine that the concerned authorities should resist any efforts 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, strong commitment and robust financial strength. The immense potential of Ajaokota, NIOMCO and Delta Steel should be fully realized to the benefit of all stakeholders in the country.

No tags for this post.