$6bn Ajaokuta Steel plant assets depreciates 3% as FG dilly-dally on completion
Nigeria’s steel import bill hits $3.3bn
QUALITY OF ASSETS AT THE $6 BILLION Ajaokuta Steel Company Limited (ASCL), Nigeria’s largest steel plant, has suffered three percent depreciation as the federal government continues to politicise its completion.
A report on the latest technical audit sighted by business a.m. indicated that the steel complex, has depreciated to 95 percent completion from its previous 98 percent with only $652 million additional Investment needed to complete it and make it fully operational.
business a.m. checks show that Ajaokuta Complex has the capacity to produce one million metric tonnes of steel, one million metric tonnes of coal, manganese and limestone, among others.
Due to lack of operations at Ajaokuta Steel, Nigeria today imports steel valued at $3.3 billion every year. An average of steel products such as standard plates, hot-rolled coil, cold-rolled coil and rebar is estimated at $464.7 using Chinese prices, which means that Nigeria imports roughly 7.1 million metric tonnes of steel annually. The number could have been one to five million metric tonnes lower had Ajaokuta been producing and expanding operations since 1979, experts say.
Contrary to prior information that the equipment in the ASC are obsolete, the technical audit report indicated that equipment and facilities are robust, rugged and designed with 25 per cent safety factor similar to plants in Russia and Ukraine that have been running for over 100 years.
“The situation in the Steel Plant’s equipment and facilities are satisfactory. Mechanically, the Steel Plant equipment and facilities are generally in good condition, though they also indicated that some facilities like the electrics, instrumentation and insulation needs to be replaced, upgraded and modernized” the technical audit report indicated.
Highlighting the potential of the completed, the report showed that the plant would create no fewer than 10,000 direct and over 500,000 indirect jobs in its first phase, when fully operational.
The plant would also boost the nation’s foreign exchange earnings; offer great opportunity for varied capacity building; vastly increase economic opportunities for the host communities and diversify the economy.
Though completion of the complex holds enormous potential for Nigeria’s technological advancement, experts say the completion of the Ajaokuta Steel plant has been slowed by lack of political will of successive governments after former president Shehu Shagari brought the plant to 84 per cent completion between 1980 and 1983; as well as personal interest of major political officer holders in the steel company
Babajide Suru, general manager, Engineering Services at the Ajaokuta Steel Company maintains that the plant has reached the point where completing it is inevitable.
Explaining during a recent tour of the facility, Suru maintained that no nation can develop technologically without steel, noting countries like Japan, Germany, South and North Korea all developed because of steel.
According to him, the equipment in the plant is still available to be used despite all the misinformation that the plant is obsolete.
He said about 72 per cent of steel made globally still utilize the blast furnace method. US, China, Japan are all utilizing blast furnace technology
“It is possible to complete this place. All the raw materials required to make steel are available in Nigeria within 80 kilometre radius to Ajaokuta. Japan the highest producer of steel today, but has none of raw materials locally. They import all the raw materials to make steel.
The steel plant is sitting on an 8 kilometre square of land. Land area, 24,000 hectares, within the steel plant we have 68 kilometres of good roads, 57 kilometres of rail roads, 24 kilometres underground cables tunnels.”
“About $6 billion has been sunk into the steel plant till date and what is needed to complete it is $652 million and this has been dragging for over 30 years despite that there could be $652 million somewhere in one politician’s hand, or buried in a soak away somewhere.”
“I don’t believe it is the $652 million that is the problem but the political will.
L-R: Baldwin Nwankwa, co-head, Thomson Reuters Refinitiv West Africa; Jonathan Owens, head, investment, advisory and wealth, middle east and Africa; Candice Dott, head of market development; Ini Ebong. winner of the People’s Choice award; and Sonwabise Sebata, head, corporate communication, Africa, at the Refinitiv (formerly Thomson Reuters) excellence award to customers in Victoria Island, Lagos, recently