Tags:
Journalism of Courage
NEW DELHI, JUNE 18: Indian promoters of joint venture ICS in Senegal have opposed appointment of the new chief executive for the fertiliser project by the government there, saying that due process of consultation was not followed and a fait accompli had been forced on the promoters.
Cooperative giant IFFCO and another Indian petrochemical company SPIC, who along with financial institutions funded the $250 million expansion project of Industries Chemique Du Senegal (ICS), have decided to formally oppose the move at the joint venture board meeting on Wednesday in Senegal, highly placed sources said.
Stating that Indian partners, who own about 30 per cent stake in the project, were not consulted, sources said that the issue was being brought before the board after the appointment was made and it could affect the prospects of the ongoing project.
The Senegal government which has 35 per cent holding in the project, had decided on May 18 to appoint D Ngom as new chief executive officer in place of P B Kama and the board agenda for June 21 meeting includes nomination of a new CEO.
Meanwhile, the government is taking views of the External Affairs Ministry on the issue keeping in mind the friendly relations with Senegal, official sources said.
Three members of the Indian promoters would oppose the move at the Wednesday meeting of ICS and are likely to be supported by the three nominees of the financial institutions, sources said and pointed out that the joint venture board has a strength of 12.
IFFCO has invested $ 20 million in the expansion project which envisages doubling annual production capacity to 6.7 lakh tonnes of phosphoric acid. IFFCO has an arrangement to buy-back 5.5 lakh tonnes per annum of the product for its Kandla fertiliser plant.
The Indian promoters are opposing the move, saying it would affect the smooth implementation of the expansion project, sources said. They are also of the view that change at the top level during the project implementation is not good for the company which is doing quite well at present.
Financial institutions such as Nissho Iwai of Japan and EIB of France are also not in favour of the change in management as they have provided a huge sum to the company for its expansion project, sources said.
According to the joint venture agreement, ratification of the appointment of the CEO is done by the board with majority voice. No party has any veto power or rotation arrangement to nominate their representative for the top post of the company, sources said. The joint venture was set up in 1990 by the Senegal government and Indian Consortium consisting of the Government of India, IFFCO and SPIC.
The Senegal government holds about 35 per cent equity in the company while IFFCO has a stake of 16 per cent. Other Indian promoters – SPIC and Government of India – hold two per cent and 12 per cent stake respectively. Rest of the equity is held by banks and financial institutions.
The company’s expansion project started in September 1998 and it is scheduled to commence commercial operation in January 2001. Currently, IFFCO is importing 2.5 lakh tonnes of phosphoric acid from ICS for its Kandla fertiliser plant. It has also planned to import about three lakh tonnes of the produce from the expansion project.
