bribed ASCL employees in order to prevent Solgas from legally motivating ASCL employees and management to concentrate on the production of steel and generally interfered with the concession agreement by soliciting and negotiating with companies to replace Solgas.
In the statement of relief sought, the company is asking for all sums it would have received, as well as its expenditure in reliance on the government's contractual promises to it.
Solgas is also seeking the recovery of all amounts it may become liable for as a result of the alleged breach of contract and all costs and legal fees it spent.
The statement said: " Despite FGN's failure to deliver on its obligations, Solgas continued to push forward in its efforts to get the plant on line and increase its efficiency. Among other things, Solgas negotiated a deal with ASCL's insurers, who had never been paid for many years of coverage."
In the concession contract with FGN and ASCL, Solgas was to, among other responsibilities, provide finance for the steel plant.
It was also to appoint, supervise, monitor and control all the subcontractors at site.
On its part, the Federal Government was to pay the salaries of the staff of the plant until it was commissioned. The government was also to settle any debt or invoice incurred prior to the effective date of the contract.
Again, the government agreed to facilitate fiscal policies and incentives favourable to the local production of steel, to enhance the plant's ability to compete in the global market.
It was also to provide exemptions from taxes, including an import duty waiver for materials and equipment; liaise with other government agencies, to ensure full cooperation with Solgas; and to assist Solgas in whatever way it could to achieve the desired results under the agreement.
But, the Senate had on November 15 last year unanimously passed a resolution urging President Obasanjo to probe the Solgas deal.
The Assembly also asked the president to mandate the Economic and Financial Crimes Commission (EFCC), and the Independent Corrupt Practices and Other Related Offences Commission (ICPC) to investigate alleged fraudulent activities in the operation of the steel company by the U.S. company.
The Senate resolved that the concession pact with Solgas should be terminated on the grounds that the company lacked the capacity for power generation, distribution and gas processing.
The resolution to terminate the contract was contained in the report of the Senate Committees on Power, Steel Development and Metallurgy, as well as Judiciary, Human Rights and Legal Matters, which jointly investigated the concession agreement.
Senator Arthur Nzeribe, the Chairman of the Senate Committee on Power, Steel Development and Metallurgy, who presented the joint committee's report, stated: "Solgas Energy Nigeria Limited is not capable and does not possess the financial strength, managerial and technical capacities to handle the concession agreement in any of its ramifications."
He added: "The project cost of US $3.6bn as claimed in the estimate is well above the ambit of Solgas Energy LTD and Solgas Nigeria Limited. It is in excess of what is required to execute the project."
Nzeribe continued: "The combined effect of our findings and conclusion is that Solgas Energy Nigeria Limited is not ready, willing and capable to deliver steel, power and gas as demanded in the concession agreement in order to rehabilitate, complete, commission and operate the Ajaokuta Steel Company Ltd. (ASCL) Plant in the interest of the parties to the agreement in order to safeguard the Nigerian tax payers fund, and provide other trickled down dividends and benefits from the project."
The report highlighted that "whereas Solgas Energy Nigeria Ltd was incorporated in 2001 with a capital of only N1m, the parent company, Solgas Energy Ltd was registered in the Isle of Man in the UK in 2000, with a net worth asset of $60 million only. Nigeria's investment in this project is now in excess of $10 billion, which is about N1.5 trillion. The project is now 34 years old without production and should not be allowed to be buried.
"Conscious of the fact that the Concession Agreement is for US $3.6 billion, about N5.4 trillion, and the government has entrusted the tax payers money to that magnitude to Solgas, it became imperative that we turn in a report that is factual in all respects, that cannot be faulted and that we observed all democratic principles particularly Section 36 of the 1999 Nigeria Constitution, in respect of fair hearing.
"We gave Solgas every opportunity to answer all enquiries. Solgas failed to demonstrate that it has the muscle to shoulder such a huge financial investment. Besides, the amount required for the job is less than US $3.6 billion.
The estimated project cost is in the magnitude of US $1.5 billion.
"The thrust of our investigation established that Solgas Nigeria Limited does not have the capacity for power generation, distribution and gas processing. It confirmed positively that the company does not have the managerial and technical expertise in steel production to handle such a gigantic project. We found that it is an energy-based company and knows next to nothing about the steel business and industry."
Describing Solgas as "a Teflon organisation on which nothing positive sticks," Nzeribe noted that, "all the negative assertions were substantiated. Whereas Solgas was not able to put up a defence, not one shred of defence was produced to the contrary, in favour of Solgas.
"The committee therefore finds ample and numerous justifiable reasons to implore the Federal Government of Nigeria to suspend further negotiation or action on the agreement between Federal Government of Nigeria and Solgas Energy. Our findings are not in favour of the decision of government to award the contract to Solgas. It is not prudent politically and not sound commercially. We are confident that the project as conceived will not succeed under the care of Solgas."
The report however alerted the Senate that, "Solgas at the moment is trying to sell or subcontract their concession agreement. Solgas is in negotiation with yet another foreign company in order to transfer their franchise at a price, a commission or a fee. In fact, there is an MOU between Solgas and the foreign company.
"The foreign company is presently assessing the feasibility and viability of the project with the view of working with Solgas and paying off Solgas. Solgas should be prevented from abusing the concession agreement. They are now sorting and touting the project in the international market without success. Solgas is bad news to all stakeholders including labour. It continues to misrepresent itself to government and all stakeholders."
The committee therefore recommended that, "government should terminate the Solgas contract and seek to enter into contract with a viable partner with a demonstrated and proven financial capacity to execute the project. Solgas should have no stake whatsoever in this arrangement."`
