AJAOKUTA: MORE MONEY FOR THE DRAINS
It’s time to stop the drain by concessioning the steel plant
At an All Progressives Congress (APC) campaign in Lokoja, Kogi State, early last year, then presidential candidate, Bola Tinubu, pledged that if elected, he would revive the Ajaokuta Steel Complex—a project that has drained the economy for almost five decades. Last week, after conferring with the president, Minister of Steel Development, Shuaibu Audu, said reviving the Ajaokuta Steel Mill would cost the nation between $2 and $5 billion. And he pledged the administration’s commitment despite the humongous debts Nigeria is now saddled with.
The president, according to the minister, has approved fundraising locally to restart and rebuild the light steel mill of the plant estimated to cost around $80 million. The mill reportedly will produce about 400,000 tonnes of iron rods out of the seven million tonnes needed for the federal road construction project. “The Minister of Works, Senator David Umahi, has already written a letter to me, guaranteeing that they will be off-takers in the iron rods that are being produced,” said Audu. But the bill that perhaps raised more questions, including from the minister, has to do with electricity. Ajaokuta Steel Company has been disconnected from electricity supply over unpaid debts totalling N30 billion. But why should a company that is moribund be consuming so much electricity?
Almost half a century after it was conceived as a critical tool to the country’s industrialisation aspiration, the Ajaokuta Steel Mill remains a drainpipe. This is a sad commentary for a project that was said to have been 84 per cent completed as far back as 1983, and on which between $8 billion and $11 billion had been spent, depending on whose statistic is being quoted. In 2014, then Director of Steel and Non-ferrous Metals Department, Ministry of Mines and Steel Development, Mr. Also Abdullahi, said the federal government had spent about $6 billion on the plant, and that only $513 million was needed for completion. The estimates, according to him, were from the report of a technical committee set up by the federal government. Same year, another committee headed by Daniel Maddo said it would require $1.2 billion for the steel complex to come on stream.
Former President Muhammadu Buhari started the concession process of the Ajaokuta Steel Complex by first rescuing it from “legal disabilities.” He stated that the process had cost the federal government over $400 million, adding that after the 'legal rescue', the federal government was looking for a private investor that fits the “right profile.” It rankles that the country had to cough up a princely $400 million 'to rescue' the moribund national asset from 'legal disabilities’.
On the face value, President Tinubu, like his predecessor, has listed some of the expected benefits of the Ajaokuta project, which include the creation of over 500,000 jobs and some billion dollars in annual income to the Nigerian economy. But will Ajaokuta ever come to fruition?
Not only are we concerned on how the federal government will give practical expression to these high expectations but also by the proclivity to the waste of scarce resources in the country at a time the economy is in tatters. We feel that such national assets on which jumbo sums of money have been spent without results should be handed over to entities that can make the most of them so they can create jobs for our people. On that note, we support all efforts to concession Ajaokuta. We urge the relevant agencies to ensure that the terms of the concession already agreed upon are clearly defined and spelt out.
With billions of naira being expended to pay thousands of redundant workers, it is important that a solution be found to Ajaokuta Steel, which has since become a metaphor for waste.
With billions of naira being expended to pay thousands of redundant workers, it is important that a solution be found to Ajaokuta Steel, which has since become a metaphor for waste