Nigeria cancels sale of steel plant to Ispat promoters

April 4th, 2008 - 5:16 pm ICT by admin  

London, April 4 (IANS) Nigeria has cancelled the proposed sale of its biggest steel plant to an Indian company, Global Infrastructure Holdings (GIH), after an inquiry accused the buyer of indulging in “unwholesome” practices, according to a report here Friday. The cancellation of the sale of the Ajaokuta Steel Co and National Iron Mining Co to the company led by Promod Mittal, the brother of Arecelor-Mittal’s Lakshmi N. Mittal, was ordered by Nigerian President Umaru Yar’Adua.

Global Infrastructure Holdings, now renamed Global Steel Holdings, is also one of the promoter companies of Ispat Industries, which is listed on Indian stock exchanges.

Yar’Adua cancelled the sale of several public sector assets that were “perceived to favour business allies of Olusegun Obasanjo, the previous president”, the Financial Times reported.

“This is a very worrying development from the new federal government of Nigeria, which has set alarm bells ringing throughout the global business community,” the newspaper quoted the Mittal Group as saying.

“It looks like the beginning of a policy of re-nationalising Nigerian assets, which we…have improved out of all recognition.”

The Nigerian government said it was rescinding a 10-year concession granted to the Indian company to run the mining company and Ajaokuta, which was acquired in 2004 for GIH by Pramod Mittal.

A panel set up by Yar’Adua found that GIH had made concession pacts in their favour, then indulged in “unwholesome” practices, the government said, adding the president has ordered criminal prosecution of officials and promoters of GIH for “asset stripping”.

The panel accused GIH of failing to submit a workable business plan in time and cannibalising and exporting machinery.

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