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December 02, 2008


Global Steel files lawsuit against Nigerian government

Independent.co.uk reported that Global Steel Holdings has filed a lawsuit at the International Court of Arbitration over the Nigerian government's decision to renege on its sale of its largest iron and steel plant.

Nigerian government, in addition to canceling the concessions and halting the sale, the government has accused Global Steel Holding of asset stripping and of borrowing almost USD 200 million from local banks by pledging the plants' assets. Global Steel Holding has denies both accusations. Global Steel is fighting the decisions and has now lodged a lawsuit at the arbitration court of the International Chamber of Commerce to have the concessions reinstated and the sale completed.

The report quoted Mr Pramod Mittal vice CMD of Global Steel Holding as saying that "This is a very wrong decision. We have expended so much effort in restarting plants which have not operated for 20 years, if at all. We are absolutely dismayed by these decisions from the new federal government. They have set alarm bells ringing throughout the global business community because it appears there is now in place a firm policy to confiscate all assets which have been bought in good faith by major businesses."

As per report, Global Steel Holdings has invested USD 450 million in the Ajaokuta Steel Company and National Iron Ore Mining Company over the past 4 years, making a USD 192 million down payment on stakes in them. The report cited a company official as saying that Ajaokuta Steel Company went from zero production when it became involved 4 years ago to producing 1 million tonne of steel per year now and was due to be upgraded to produce 5 million tonnes a year.

Global Steel is not the only international company to experience difficulties since Mr Umaru Yar'Adua was elected as Nigeria's president in 2007. The new government has reversed sales of several state assets believed to favor business allies of Mr Olusegun Obasanjo the former president, including assets belonging to Shell, ExxonMobil and Chevron.