Can the Vaswanis breathe life into Aladja Steel?

For decades, the Delta Steel Company Limited (also known as Aladja Steel) has been lying comatose, in spite of government’s efforts to bring it back to life. Having failed in this regard government decided to sell it off to private investors, whom it hoped would do better at sustaining it.

The first investor was unable to meet the conditions set out, compelling the Asset Management Corporation of Nigeria (AMCON) to take over the multi-billion naira investment.

In the hope that a new breath of air will be injected into the steel company, to bring it back to life, AMCON has struck a deal with Premium Steel & Mines, a company owned by Mr. Sunil Vaswani and other institutional investors, to take over the company in a new multibillion naira deal.

AMCON and Premium Steel, it was learnt from sources conversant with the transaction, closed the sale in March this year, paving the way for the new owners to take over the steel plant and all of its non-core assets such as workers’ quarters, schools and hospitals.

The deal, according to a source, was struck after Premium Steel offered to pay a sum higher than what was paid by Global Steel Holdings Limited (GSHL), promoted by Mr. Pramod Mittal, to the federal government through the Bureau of Public of Enterprises (BPE) almost a decade ago.

BPE had sold Delta Steel in 2006 under controversial circumstances to Pramod Mittal, the younger brother of Lakshmi Mittal, an Indian multibillionaire and Chairman/CEO of ArcelorMittal, the world’s largest steel manufacturer.

However, the administration of President Umaru Musa Yar’Adua reversed the privatisation of Delta Steel when it was discovered that GSHL breached the terms of the sale by failing to inject equity into the company.

Instead, it borrowed heavily from Zenith Bank Plc and other Nigerian banks, but failed to repay the banks, thus forcing them to sell their non-performing loans (NPLs) to AMCON between 2011 and 2012.

It was on this basis that AMCON, with the approval of the Federal Ministry of Mines and Steel, undertook to sell the steel complex.

An initial attempt by AMCON to sell the plant in 2013 was botched when a Nigerian consortium failed to meet the payment terms.

AMCON then reopened the process to sell Delta Steel last year under which a Chinese consortium fronted by Nigerians and Premium Steel emerged bidders for the steel plant.

During negotiations with AMCON and its advisers for the sale, Premium Steel was said to have offered more than the Chinese consortium to emerge as the preferred bidder.

Although the source declined to disclose what Premium Steel paid for the Delta plant, he said AMCON sold it at a loss since the NPLs it took over from the banks, including interest charges, were valued at N35 billion on AMCON’s books at the time of the transaction.

However, AMCON felt that it would be better to transfer the plant to new owners with the expertise and financial capacity to inject capital, revitalise Delta Steel and create thousands of jobs.

Vaswani holds dual Indian and Nigerian citizenship, and along with his family owns Stallion Group, an African conglomerate specialising in automobile manufacturing and sales, agriculture and agro-processing, real estate, financial services, steel manufacturing, logistics and shipping.

Efforts to reach Vaswani, to comment on the transaction were unsuccessful.

The Managing Director/CEO of AMCON, Mr. Mustafa Chike-Obi, was also unavailable for comment.

Delta Steel, a fully integrated steel complex, was set up by the federal government in the 1980s under its industrialisation policy. However, like the Ajaokuta Steel Company in Kogi State, Delta Steel has been lying moribund for decades.

In a statement issued by the company yesterday, Premium Steel said it had established a

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