Of Ajaokuta Steel and Dashed Hopes
Originally designed as a strategic industry, a job creator and a foreign exchange saver cum earner, the Ajaokuta Steel and Iron Company is now in ruins, Jonathan Eze reports
Thirty Nine years after it was birthed, Ajaokuta Steel and Iron Company, still bleeds. No thanks to the absence of strong political will; failed industrial policies and conflicting interests.
From one administration to the other, it has been a carry-over of failure and a politicisation of a national monument capable of providing jobs and sufficient enough to diversify the economy from its shameful oil dependency. The latest intrigue is between the House of Representatives and the federal ministry of mines and steel.
The Ajaokuta integrated steel complex was conceived and steadily developed with the vision of erecting a metallurgical process plant cum engineering complex with other auxiliaries and facilities. The complex was meant to be used to generate important upstream and downstream industrial and economic activities that are critical to the diversification of the economy into an industrial one.
The project was embarked upon as a strategic industry, a job creator and a foreign exchange saver and earner. It was envisaged that the project would generate a myriad of socio-economic benefits and increase the productive capacity of the country through its linkages to other industrial sectors. It was supposed to provide materials for infrastructural development, technology acquisition, human capacity building, income distribution, regional development and employment generation. While the project could have directly employed over 10,000 staff at the first phase of inauguration, the upstream and downstream industries that could have evolved also was capable of engaging no less than 500,000 employees.
The plant by 1994 was reckoned to be at 98% completion in terms of equipment erected. Some completed units of the Plant operated at different times but had to shut down due to non-availability of fund.
After many years of neglect and inactivity, the federal government again now seeks to concession what was concessioned during the administration of former President Olusegun Obasanjo but revoked by the late President Umar Musa Yar’adua.
The Minister of Mines and Steel Development, Kayode Fayemi, however, said the federal government will only concession the Ajaokuta steel company when an independent and verifiable technical audit is completed to ascertain the level which the project is currently on.
Fayemi said that Nigeria has spent $8 billion from the commencement of the project in 1979 which is why the federal government will not make any mistake of its predecessors in the process of concession.
He said about 14 steel companies from Russia, Ukraine, Belarus and other steel companies that have indicated interest in bidding for the revival of the steel plant, but have been asked to wait until the Independent audit is completed which was part of agreement the ministry ha entered.
“On August 4th 2016, we signed a modified Consensus Agreement with Global Infrastructure Holding Company in the aspect of ownership and auditing of the project which will be ready in the next six weeks so as to make the path clear from the controversies surrounding the steel that arose from the Obasanjo’s administration which did the concession and the Yar’adua administration that revoked the concession of the Ajaokuta steel,” he said
But the members of the House of Representatives led by Speaker Yakubu Dogara, disagreed with the minister after an on-the-spot visit to the plant and subsequently pass a vote of no confidence on Fayemi.
In his reaction, Fayemi said the vote of no confidence passed on him and the minister of state, for mines and steel development, Abubakar Bawa Bwari by the House and the subsequent attacks by some members of the house after visiting Ajaokuta steel and for not attending a sectorial debate in the house during plenary was unfair as there was a substantial reason for not attending.
“The attack on myself and my colleague regarding the Ajaokuta steel by the House of Representatives members is frankly unwarranted and uncalled for as the same national assembly that approved N2 billion for us in 2017 budget to implement the concessionary process are now attacking and passing a vote of no confidence on us. What is our offense please?, “he added.
He further added that the invitation was the fourth they were honouring as they had previously attended the committee hearing on Ethics, Privileges and Public Complaints as well as that of privatisation by the upper and lower chambers, adding that a clear explanation was written concerning their absence as he was the lead minister for the ERGP focus labs while his state counterpart was in Canada attending a steel conference.
On the heels of the face-off, 301 members jointly sponsored each of two bills aimed at stopping the concession of Ajaokuta Steel Company of Nigeria.
The first bill with the long title: ‘A bill for an act to provide for the Ajaokuta steel company completion fund for the speedy completion of the project and other related matters’, was presented on behalf of the 301 members by Nkem Abonta (Abia-PDP).
It seeks to provide funds for the speedy completion of the moribund Ajaokuta steel company.
The second bill titled; ‘A bill for an Act to amend the Public Enterprise (Privatisation and Commercialisation) Act to review the list of enterprises to be privatised’ was also presented on behalf of the 301 members by Mr. Abonta
This seeks to delete the Ajaokuta steel company from the list of enterprises to be commercialised. The two bills have scaled through second reading.
Speaker Dogara after visiting Ajaokuta said one of the reasons the steel company had not been completed was due to a leadership problem. He reportedly said that ”where there is competent leadership, ways to source funding for such a multi potential company will not be a problem.”
Mr. Dogara disclosed that there were many ways through which the $500 million said to be needed to complete the plant can be sourced, including the Sovereign Wealth Fund, Excess Crude Account and recovered financial crimes loot.
He said even if it means borrowing the required money, the 8th House of Representatives would make sure it becomes a reality.
The house recently organised a sectoral debate on the steel industry where the ministers of mines and steel development failed to show up.
Fayemi, through his spokesman, said he and the junior minister duly notified the house of their inability to attend prior to the debate.
He has also said that the ongoing plan to concession the plant was approved in the 2017 budget.
Unimpressed with the defence, the lawmakers described it as a ‘deliberate boycott’, and subsequently passed a vote of no confidence on Mr. Fayemi and his state counterpart, Bawa Bwari. However, the Nigerian Metallurgical Society (NMS) has cautioned against a second concession or privatisation of Ajaokuta Steel Rolling Company without adequate arrangement for infrastructure, noting that it could lead to its total collapse.
President of NMS, Prof. Benjamin Adewuyi, made this observation at the 33rd Annual Conference of the society in Warri, Delta State.
Adewuyi said the issues of infrastructure that brought the steel plant to a standstill without completion were being brushed aside.
According to him, the re-concession of Ajaokuta Steel without infrastructure can amount to burying the steel plant.
The president said that the company that had attained 98 per cent completion would require 400 million dollars to complete the remaining two per cent.
He also said that two billion dollars would be needed for infrastructure rehabilitation and operational cost for the plant.
“More than four decades after conceptualisation of establishing metallurgical plants in Nigeria, the debate on the viability of steel plant in the development of the country still rages on.
He said that development of Metal and Mineral Sector could be generally seen as a major index of national prosperity because of its enormous capacity to support and stimulate growth in virtually all sectors of the economy.
“The irony is that we want to develop, manufacture vehicles; we want efficient electricity and transportation system, yet any time revitalisation is mentioned in the metallurgical sector, there is always unusual apathy and nonchalant attitude.
“The role of steel in national development cannot be over emphasised; it is not only the pillar or bedrock of industrialisation, it is also a yardstick for measuring the strength of a country.
“The world’s steel development within the last decade has soared to an annual growth rate of seven per cent per year, and more significantly to a growth rate of about 27 per cent annually in China,’’ he said.
Adewuyi said Africa, and indeed Nigeria, remained the dumping ground for steel products and in most cases low quality steel.
“Since we cannot produce our own steel, we have to make use of whatever we are given. There can never be any economic development without industrial development that is linked to steel production.
He said avoiding mistakes of the past was the main concern of the society for the country, adding that the society’s intention was to use the conference to once again advise the government constructively on the way forward.
“It is high time for revival of the metal sector to bring about the much desired mass engagement of our youths in metal casting, forging, welding and fabrication. We must not fold our arms or keep quiet while things continue to degenerate. It is on that note that we are proposing an all- inclusive Mines and Metallurgy Council that will take care of central planning for all activities in ferrous and nonferrous metallurgy.”
According to him, many Nigerians are suffering today because of activities of few people who prefer self- interest above national interest.
He said as vital as the sector was, it had been toyed with for too long, noting that there was little to show government eagerness to reactivate the steel plant at Ajaokuta.
The Ajaokuta company was concessioned to Global Holding Infrastructure Limited (GHIL) between 2004 and 2005 by former President Obasanjo.
However, the Indian firm did not live up to expectations as it could not manage the company.
Following the failure of GHIL to manage the company, the federal government, during the regime of the late President Umaru Yar’Adua, was compelled to revoke the contract.
It is however hoped that the face-off between the ministry and the lawmakers would be over soon so that a national decision that would benefit the people and the economy takes place.