Like the proverbial cat with nine lives, the story of the moribund Ajaokuta Steel Company Limited is the story of abandonment and neglect of Nigeria’s greatest investment. This is an expository on how the monument has outlived 16 administrations that have consistently paid lip service to reviving it.
Since the inception of the Steel Complex, which was inaugurated before Nigeria won her independence, the monumental complex has outlived the leadership of 17 heads of government and presidents and has seen billions of dollars in investment as each administration pays verbal commitment to completing the complex and sees it running.
Q: “However, the nation’s steel sector, which has the potential to promote technological growth, skills acquisition and development, infrastructural development, wealth creation through value addition to natural resources, and employment generation, amongst several other benefits, remains redundant.”
The complex has outlived the leadership of Tafawa Balewa as Prime Minister and Nnamda Azikiwe as President and Head of State from 1960–1966. It has outlived the short leadership of Aguiyi Ironsi, Gen. Yakubu Gowon (1967–1975), Gen. Murtala Muhammed (1975–1976), Gen. Olusegun Obasanjo (1976), and Shehu Shagari (1979–1983).
Other presidents it has outlived include Muhammad Buhari (1983–1986), Ibrahim Babangida (1985–1993), Ernest Shonekan interim government (Aug 1993–Nov 1993), Sani Abacha (1993–1998), Abdulsalami Abubakar (1998–1999), and Olusegun Obasanjo (1999–2007).
Umaru Musa Yaradua 2007-2010, Good Luck Ebele Jonathan 2010-2015, Muhammad Buhari 2015-2023, and now President Bola Ahmed Tinubu is in the realm, and we hope he leaves a legacy to be remembered.
The Ajaokuta Steel Company Limited (ASCL) located in Ajaokuta Kogi State is 38 km away from Lokoja, the State Capital of Kogi State. It was created in 1958 under the defunct National Steel Development Authority (NSDA). Following the enactment of Decree 60 in 1979, the FGN under Section 2 of the Decree created the Ajaokuta Steel Company, Delta Steel Company, and three (3) Inland Rolling Mills at Oshogbo, Jos, and Katsina, respectively.
The steel plant is known to have in place 26 housing estates, 95 km of transmission and distraction power lines, and 200 varying transformers for the housing estates and the steel plant. Internal, road network, captive power plant, and water treatment facilities for human consumption, amongst other facilities.
As of the moment, 40 out of the 42 plant units of the Ajaokuta Steel Plant have been completed but remain idle. This is despite the fact that the Federal Government, in its plan to revive the steel sector in August 2016, signed a renegotiated concession agreement with Global Steel Holdings Limited for the Nigerian Iron Ore Mining Company (NIOMCO), Itakpe.
By the new agreement, Ajaokuta Steel Complex had reverted to the Federal Government, effectively freeing the entity from all contractual encumbrances that had left it uncompleted and non-functional for decades, while GSHL retained NIOMCO.
The development of the plant is still in the first phase, even though some of the facilities for common services for the three phases are in place. The present phase is estimated to be over 98 percent technically ready as of 1994, based on the weight of equipment and steel structures as per the original design that were erected before the global contract with TPE was determined in 1996.
However, the nation’s steel sector, which has the potential to promote technological growth, skills acquisition and development, infrastructural development, wealth creation through value addition to natural resources, and employment generation, amongst several other benefits, remains redundant.
In 1979, the FGN signed the Global Contract for the Construction and Erection of the Steel Plant with M/S Tyazhpromexport (TPE) of Russia. Four decades later, the company tagged ‘Nigeria’s bedrock of industrialization’ has failed to yield all the benefits expected.
As a means of addressing this failure, the President Muhammadu Buhari administration 2020 inaugurated the Ajaokuta Presidential Project Resuscitation and Implementation Team (Apprit) to ensure the resuscitation of the Ajaokuta Steel Plant (ASP) based on the original design, ensure timely commissioning of the Ajaokuta Steel Plant (ASP) within a reasonable period to be agreed upon by the parties to the agreement, and recommend the primary tenure of a Build-Operate-Transfer (BOT) Concession.
Secretary to the Federal Government of Nigeria, Boss Jida Mustapha, recalled at the inauguration that previous attempts at implementation and force majeure situations had thwarted the completion of the Ajaokuta Steel Plant and protracted its resuscitation over the past four decades, thus resulting in avoidable massive foreign exchange losses and intolerable opportunity cost to the country.
He said it was to redress these avoidable challenges that had necessitated the presidential intervention at the time in order to allow national interests to prevail. However, again, like other leaders before him, Ajaokuta is still in a state of redundancy.
This challenge is unfortunately replicated across all of Nigeria’s major national investments and development assets, as witnessed at Delta Steel Company, Jos Rolling Mill, Katsina Rolling Mill, Oshogbo Rolling Mill, and Aluminium Smelter Company.
According to the minister of steel development, Shuaibu Audu, the government needs about N35 billion in funding to revive the company to help restart the light steel rod mill in Ajaokuta and begin iron rod production in the steel complex. In a country where billions and millions are often recorded being stolen by individuals in public office, it shouldn’t be a big deal to invest in Nigeria’s biggest economic investment.
The over-flogged story of the near-moribund state of Ajaokuta Steel Company Limited is one that every government and Nigerian should be worried about, noting that the revival of the steel plant can place Nigeria among the committee of industrial nations.
In the words of the Director General and Chief Executive Officer of the National Steel Raw Materials Exploration Agency, Kaduna Michael Ogumbi, the steel sector is the driver of the industrialization of the nation, so its contribution to the GDP will be enormous and far beyond the seven percent we are talking about.
Once production starts, the contribution will be enormous because there is nothing that is needed that cannot be produced. Most of the materials we import will come from engine blocks and car parts, and by that time we will be thinking that everything from the body of the car is produced in Nigeria.
He noted that the GDP is not in the range of 7 percent. “It will be huge. If you can imagine that it will drive the nation’s industrialization, then you can begin to imagine its contribution to the economy.”
In the document tagged “CONTRIBUTIONS OF AJAOKUTA STEEL COMPANY LIMITED TO KEY DELIVERABLES OF THE ADMINISTRATION OF PRESIDENT BOLA AHMED TINUBU GCFR” assessed by BusinessDay, it was noted that the problem of the Ajaokuta Steel plant can be attributed to policy failures and a lack of commitment to national goals and aspirations.
This challenge is replicated across all our major national investments and development assets. Further noting that in 1994, at the peak of activity, with a timeline for completion of the ASCL in sight, the TPE was forced to leave due to non-payments and a lack of policy direction by the Nigerian Government.
Subsequently, the Global Contract was determined and ended in 1996 through a cloudy debt buyback arrangement. It was noted that that was when the whole steel development plan and efforts got derailed, and subsequent efforts were either halfhearted or deliberately skewed not to work.
The document also noted that the policy of mining our raw materials for export without value addition, as encouraged by those who keep our productive sector down because they need the raw materials for export, is counterproductive to national development, and this took off efforts to develop a raw material road map for the steel industry, especially the Ajaokuta Steel Plant.
“Privatisation policy used to sustain the steel plant and others threw up its own challenges as all efforts put in ended up complicating the development and operation of the steel plant. All the concession agreements with SOLGAS and Global Steel failed because they were skewed in favour of the concessionaires, leading to losses and arbitration payouts by Nigeria.”
It further noted that the lack of political will is a key challenge because, apart from the Late Shehu Shagari Administration, all successive governments paid lip service to the development of the steel sector, even when studies and reports such as Vision 20-20 midwife by the government, which gave a defined road map for the development of Ajaokuta Steel Plant, and the industry were jettison.
Other challenges stated that the “influence of Western financial institutions is a great drawback to the development of the steel plant, knowing the efforts made by the World Bank and IMF in this direction.”
“It further stated that poor and unstructured funding, as well as complicated bureaucracy in government business, is a huge drawback as the business of steel production and development requires a robust and efficient bureaucratic framework for an organised delivery of services related to engineering and production.”
That a nation’s development can be measured by its level of industrialization, such that countries such as Germany, Japan, the United Kingdom, the United States, and China, among several others, continue to lead global economies with Africa playing catch up, begs the question: why is it so hard for Nigeria, the nation with Africa’s highest population, to put action to words to complete the process? (BusinessDay)
