Chairman, Senate Committee on Mines and Steel Development, Senator Tanko Al-Makura last weekend said it will cost Nigeria N3 billion to hire Russian experts to reactivate the 21 plants of the Ajaokuta Iron and Steel Company located in Kogi State.
According to Al-Makura, the steel company’s lot will get worse should the N3 billion not be provided in the 2021 budget as some staff will go without pay. This will have far reaching consequences.
Ajaokuta Steel Company, though touted as potential catalyst of the Nigeria’s industrialization has been comatose for decades.
For over four decades, Ajaokuta steel project has been a dream for Nigeria, a country which inarguably has one of the hugest deposits of iron ore in Africa.
Efforts by diverse administrations to give life to this investment of more than $8 billion continually fails even as the machines are rotting away.
The dashed hopes
Hopes were high when former President Olusegun Obasanjo attempted to make the company work.
In June 2003, Obasanjo conceded it to Messrs Solgas Energy of USA on a 10-year tenure. The following year (2004), the government terminated the Solgas agreement citing non-performance.
Between 2004 and 2005 government again, granted another concession to Global Infrastructure Nigeria Limited (GINL), an India company for the operation of Ajaokuta steel and the Nigeria Iron Ore Mining Company (NIOMCO) in Itakpe.
The Indian company also did not live up to government’s expectations. Obasanjo’s successor, the late President Umaru Yar’Adua revoked the contract in 2008 without meeting the requirements of the clauses built into the agreement.
The Indian company took Nigerian government to arbitration court in London, which also crippled the two firms.
President Muhammadu Buhari was able to bring the parties to a round table, thereby ending the legal tussle.
Government therefore, signed a modified concession agreement with GINL to enable the company to retain the National Iron Ore Mining Company, Itakpe.
The modified seven-year concession agreement was signed on August 1, 2016, while the federal government took over the Ajaokuta steel.
While the federal government was planning to reconcession Ajaokuta steel again, stakeholders in the Nigerian Metallurgical Society urged it to complete the remaining two percent and operate the plant for few years before concessioning it.
The stakeholders also urged government to provide clear and articulated plan for the development and growth of metal production sector as the struggle for functional steel company in Nigeria continued. This is where the whole thing is stuck.
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A big loss
Ajaokuta steel company with a capacity to produce 1.3 million tonnes of steel per year was designed and built as an integrated plant by the Russian Steel Company, TyazhpromExport, in 1976, after reaching an agreement with the Nigerian government.
By 1983, the project had reached 95% completion and was commissioned by President Shehu Shagari at the time.
The agreed plan was that the remaining 5% of the project would be financed using profits generated by the company.
However, after almost five decades of several concessions and legal disputes with foreign private companies, Ajaokuta steel company remains non-operational.
Sadly, this is a company with massive infrastructure. It has 68km road network and 24 housing estates. Some of the estates have over 1,000 homes.
It has a seaport and 110mw power generation plant with 43 separate plants and capacity to create 500,000 jobs.
The lamentations over Ajaokuta
Those bothered with the matter have always lamented the rot and neglect of such a huge and promising investment for a country yearning for industrial turnaround.
Senator Al-Makura lamented that some employees of the firm working in Mining Cadastral Office, will not get their monthly salaries from January as the World Bank which is responsible for the payment has already informed the federal government of its resolve to stop financing the staff beginning from January 2021.
According to the senator, the money has not been included in the 2021 budgetary proposal for the ministry.
Almakura said, “Nigeria has spent a lot on the Ajaokuta project than to allow just N3 billion to make her decades old efforts, a mirage. Resuscitation of Ajaokuta is key to Industrial development of the country.
“The Mines, Steel and Solid Minerals Ministry appealed to us during the budget defence, to add N3 billion to its allocation.
“Since we cannot on our own as joint committees on Mines, Steel and Solid Minerals increase the envelope presented to us by the ministry, we pushed the appeal to the appropriation committee for the required appropriation.
“The N3billion is very necessary in saving the Iron and Steel project from being comatose.”
Almakura explained that contract staff whose monthly salaries are paid from interventions from the World Bank will be in dire straits as the World Bank plans to end the intervention this year.
It is left to be seen if the Buhari-led administration can break the jinx and get Ajaokuta to be what it should be.
