07:46 a.m. May 03, 1999 Eastern

By Dulue Mbachu

LAGOS, May 3 (Reuters) - Nigeria's Ikot Abasi aluminium smelter, hard pressed for working capital since it began operation, could get a new lease of life from the expected visit of President Jerry Rawlings on Thursday.

A company statement on Monday said Rawlings would be visiting the smelter in Nigeria's southeast with outgoing military ruler General Abdulsalami Abubakar as part of a two-day visit.

``The visit to the plant is seen at ALSCON (Aluminium Smelter Company of Nigeria) as confirmation of the importance the government attaches to ALSCON...even as the company awaits its approved working capital,'' the statement said.

ALSCON which currently operates at about 20 percent of its 193,000 tonne a year installed capacity is owned 70 percent by the Nigerian government. Germany's Ferrostaal (MANG.F) owns 20 percent and Reynolds (RLM.N) of the United States holds 10 percent.

Construction of the gas-powered plant, now on the list of state firms marked for privatisation, was said to have exceeded its original budget by industry experts.

ALSCON officials said the smelter, which began operation in 1997, earned $45 million running at less than 30 percent capacity in its first year of operation and required about $100 million as working capital to improve significantly on the record.

But they said the smelter's financial situation was now so desperate that the company may be forced to shut down if it did not improve soon.

``The situation is very bad. We know the head of state (Abubakar) has approved release of the working capital. But so far nothing has happened,'' a company spokesman told Reuters.

``Perhaps the government just wants to keep the company alive for the incoming government to decide its future,'' he added.

Abubakar is scheduled to step down on May 29 to make way for former military ruler General Olusegun Obasanjo, who won February 27 presidential elections to end 15 years of military rule in the West African country of 108 million.

It was expected that Abubakar would use the visit to make a definitive policy statement on the company, which officials hoped would be positive.

Company officials also said they were encouraged Abubakar will be visiting with Rawlings since Ghana also has an aluminium smelter, Volta Aluminium Company (VALCO), with which ALSCON has a working relationship.