The Bizarre Sale: From $700 Million to $30 Million
In a shocking revelation, Ayodeji Gbeleyi, the Director General of Nigeria's Bureau for Public Enterprises, disclosed that the Delta Steel Company, valued at over $700 million, was sold for a mere $30 million. This massive undervaluation of an essential state asset has stirred a wave of controversy, especially considering the stakes involved. Gbeleyi made this disclosure during his appearance before the House of Representatives Committee on Public Assets in Abuja, where he detailed the steps leading to the controversial transaction.
The sale of the company took place in 2005 under the Federal Government’s privatization policy, which allowed the company to be sold to Global Infrastructure Nigeria Ltd. Under this arrangement, 80% of DSC was transferred to Global Infrastructure Nigeria Ltd, while the government retained a 20% stake. This privatization decision set the stage for a series of complications that would unfold over the following years.
The Use of Assets as Collateral and AMCON’s Role
Following the privatization, the new owners of the Delta Steel Company reportedly used the company’s assets as collateral for a loan from Ecobank, raising further concerns about the legitimacy of the sale. These assets, which included valuable industrial equipment and residential buildings, were meant to be leveraged for securing financing, but their subsequent handling became a focal point for scrutiny.
In 2015, due to non-performance and the company’s inability to honor its financial obligations, the Asset Management Corporation of Nigeria (AMCON) intervened, acquiring the company’s assets. AMCON’s role in stabilizing distressed assets has long been controversial, but the handling of Delta Steel’s sale to Premium Steel and Mines Ltd has attracted the most attention.
AMCON’s sale of the Delta Steel assets to Premium Steel and Mines Ltd was valued at N32 billion, approximately $82 million—an amount that seems out of step with the original asset valuation of over $700 million. Notably, AMCON failed to properly seek clarification from the BPE about the transaction, a point Gbeleyi raised in the hearing. This lack of transparency further compounded the growing concerns surrounding the entire privatization process.
The Estate and the Harassment of Residents
An intriguing aspect of the controversy revolves around the residential buildings and land associated with Delta Steel. These assets were initially used to settle workers and pensioners, in line with contractual agreements. However, as AMCON and Premium Steel and Mines Ltd took over, tensions began to mount, particularly with the residents of the estates.
The Association of Concerned Residents of Camp 2, 4, and 5 in the Delta Steel Company estate raised alarms over their ongoing harassment. These residents, who had been living in the estate for years, claimed they were subjected to constant intimidation and forced to vacate their homes by police and army personnel, allegedly acting on the instructions of AMCON and Premium Steel and Mines.
Speaking on behalf of the residents, Dr. David Emomotimi and Richardson Osifor emphasized that the assets acquired by AMCON were strictly collateral linked to the loan taken by Global Infrastructure Nigeria Ltd from Ecobank. These assets, however, did not include the residential properties where the petitioners lived, which were previously allocated to workers.
The Sale Transaction: Where Did the Money Go?
Questions regarding the financial transactions surrounding the Delta Steel sale have been raised during the parliamentary investigation. AMCON's representative, Chukwuemeka Umunakwu, explained that the corporation acquired the distressed assets of Delta Steel to avoid the collapse of the company, purchasing them at N22 billion (approximately $57 million). However, AMCON later sold these assets to Premium Steel and Mines for N32 billion, netting a profit of N10 billion (approximately $25 million).
The Office of the Accountant General of the Federation has also been involved in the investigation, confirming that BPE received N3 billion in proceeds from the sale of the 80% stake in Delta Steel to Global Infrastructure Nigeria Ltd. However, the AGF could not confirm the full amount of N32 billion claimed by AMCON as the payment for the assets sold to Premium Steel and Mines Ltd, citing the lack of sufficient documentation from the Central Bank of Nigeria.
A Deeper Look Into the Role of the Ministry of Finance Incorporated
While the Ministry of Finance Incorporated (MOFI) is responsible for overseeing the management of assets in Nigeria, it withdrew from involvement in the Delta Steel sale due to the mounting controversies and unclear financial dealings surrounding the privatization. Dr. Armstrong Takang, the Managing Director/CEO of MOFI, lamented the lack of transparency and accountability in the handling of the asset, stating that the situation raised doubts about the future of Nigeria’s industrial sector.
The House Committee’s Investigation
As part of its mandate to oversee the management, use, and disposal of Federal Government assets, the House of Representatives Committee on Public Assets is actively investigating the sale of Delta Steel Company. The committee’s chairman, Ademorin Kuye, confirmed that the investigation would delve deeply into the specifics of the sale, focusing on whether the transaction was conducted in the best interest of the Nigerian people.
The committee has also directed AMCON and Premium Steel and Mines Ltd to cease any further harassment of the estate residents until the investigation is concluded, highlighting the importance of protecting the rights of workers and pensioners who were originally settled in the company’s residential areas.
The Ongoing Struggle
As the investigation into the Delta Steel privatization continues, the question of accountability remains a pressing issue for both the Nigerian government and its citizens. With the company having been undervalued, assets mismanaged, and residents harassed, the need for greater transparency in privatization processes is evident. The case highlights the vulnerabilities of state-owned assets and the complexities involved in privatization deals that ultimately affect local communities and national industries.
