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Russia urges Nigeria row back on Rusal asset transfer

12 July 2012, 12:55

Moscow - Russia's Foreign Ministry warned Nigeria on Thursday of potential damage to bilateral relations and urged action against a court decision that stripped the world's largest aluminium producer, Russia's Rusal, of its core African asset.

The supreme court ordered last week that Rusal, which owns 85 percent of the formerly state-run Aluminium Smelter Company of Nigeria (ALSCON), should cede its ownership, because the assets should have gone to another bidder, U.S. based BFI Group, when ALSCON was privatised five years ago.

Rusal said the ruling was against the Bureau of Public Enterprise (BPE), which handled the privatisation and gave Rusal the green light to acquire the stake for $205 million in 2007. The decision would thus not affect its ownership of ALSCON, the company said.

"The ruling could ... to a significant extent undermine Russian-Nigerian investment and economic cooperation and incur negative consequences for the whole scope of bilateral ties," the ministry said in a statement on its website www.mid.ru.

"We urge the Nigerian government to take the necessary actions in order to prevent potential damage to the existing fruitful and mutually beneficial relations," the statement said.

BFI, headed by American-Nigerian Reuben Jaja, took BPE to court, saying the agency breached its contract. The supreme court ruling last week ordered that BPE revert to the original preferred bidder and BFI Group pay the agreed price of $410 million for ALSCON.

Oleg Deripaska, the controlling shareholder of Rusal, is a billionaire who has long enjoyed close ties with the Kremlin. The aluminium giant received billions of dollars in state bailout funds after the 2008 global financial crash.

ALSCON is one of Rusal's key African assets with annual project capacity of 120,000 tonnes, however its operations have been hampered by regular electricity cuts allowing ALSCON to produce only 15,000 tonnes of aluminium last year, a company spokeswoman said.

Nigeria is like Russia plagued by rampant corruption. Both share 143rd position in the 2011 corruption perception index of 182 countries compiled by Transparency International.

- Reuters


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