Will Ajaokuta Steel Mill Ever Work?

Business News

 

“President Muhammadu Buhari has said the Nigerian government will not spend any money on Ajoakuta again.”

 

Since inception over 49 years ago, Ajaokuta Steel Company Limited (ASCL), Kogi State, is yet to fulfill the yearning of Nigerians to have localized steel products to boost the manufacturing industry despite successive administration’s continuous follow-ups, but heavy lips service.

The Ajaokuta Steel complex conceived in 1976, was aimed at establishing a metallurgical process plant and engineering complex with other facilities, which is meant to generate important upstream and downstream industrial and economic activities that are critical to the industrialisation of Nigeria has been marred by one controversy to another. From the legal tussle of NIOMCO and taking over of operationalization of Ajaokuta by Indians at a certain point back to the Nigerian government whose interest in resuscitating the mill is fading every day.

Since the country’s returned to democracy in 1999, Ajaokuta has witnessed several tourist visits by appointed Minister and committees set up to revitalize the moribund steel plant without success.

The necessity to reposition the steel in Nigeria has geared up to be part of this worthwhile aspiration, as history is yet to reveal a nation that ever industrialized without a viable steel sector. Nigeria cannot be an exception.

Ajaokuta has gained more prominence in the present administration led by President Muhammadu Buhari, who five years ago appointed Mr. Kayode Fayemi, the current Ekiti State governor, to promote his non-oil economic development through the mining sector.

Fayemi, in one of his interviews, noted that the president’s appreciation for diversification and the place that mining sits in the diversification agenda, the ministry was the juiciest aside Agriculture and Trade.

His predecessors, couldn’t deliver Ajaokuta

Despite his policies and programmes together with a robust road map to ensure that the foundation is rebuilt and that the mining sector becomes a driver of the economy, like his predecessors, couldn’t deliver Ajaokuta.

A good aspect is that the federal government and the ministry of Solid Mines and Steel Development have expressed commitment to the resuscitation and effective operation of the steel plant to help produce the much-awaited iron ore.

It was envisaged that the project would generate innumerable socio-economic benefits and increase the productive capacity of the nation through its linkage to other industrial sectors, but government recent pronouncements about not spending a dime on the project henceforth unless on what it termed, ‘Build, Operate and Transfer’, leaves much to be desired.

Ajaokuta is making a business case

Presently, the project is said to be making a business case and the current Minister of Mines and Steel Development, Mr. Olamilekan Adegbite, informed that the Nigerian government will not spend any money on Ajaokuta anymore, adding, that the project was making a business case. President Muhammadu Buhari has said the Nigerian government will not spend any money on Ajoakuta again.

“So Ajaokuta is making a business case which has been accepted and once it is resuscitated and producing it can pay back its loan. So the whole essence is that they will build and operate it for a while upon agreed terms and at the end of the term when the loan is paid with interest, the plant will be reverted back to Nigeria and at that time a decision will be taken on who will manage it.”

The minister stressed that essentially the project on the collaboration with Ajaokuta is the “build, operate and transfer with the Russian government and that President Muhammadu Buhari and President Vladimir Putin, sat together at a bilateral and agreed on a government to government cooperation to resuscitate Ajaokuta because the Russians built Ajoakuta when they where the Soviet Union in collaboration with the Ukrainians and that is why we have gone back to them, the whole essence is for them to come here, access the plant and access the job to be done that is what we call a technical audit, the Russian government will have nominated a contractor who will do the job.”

The funding is coming from two sources

He added, “The funding is coming from two sources, the Russian export centre, which is a Russian sort of Nexim bank, called the Russian Export Centre, they are providing $450m for the project and of course from the Afrexim bank will be providing $1billion so we have a total of $1.45billion, but the whole essence is that the Russian technical experts will come, do the audit which will lead to them giving us an exact figure of how much it will cost to resuscitate Ajaokuta and National Iron Ore Mining Company (NIOMCO), the two are tied together and once this is done, of course, there will be negotiations, we won’t just take whatever they give us, there will be negotiations and at the end of the day, a sum will be agreed and the contract formed and that is the basis that we will proceed.”

60 percent of local content

He further stated that the Russians will bring its experts to fix the plant, and that, the Nigeria government is working on what he called, ‘local context’, “right now we proposed 60 percent local content, everything that is required in Ajaokuta and NIOMCO that is obtainable in Nigeria must be sourced from Nigeria, we don’t want everyone to come here and dump everything on us, only those things that we cannot provide can be brought from outside so right now we are at that stage of 60/40 of 60 percent local content and 40 percent foreign.”

Culled from ThisDay

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