The National Assembly Joint Committee on Steel Development yesterday passed a resolution to probe the $496m paid by the Federal Government to an Indian firm that failed to revitalise the Itakpe Iron Ore Company after three years.
The Global Infrastructure Holding Limited (GIHL) took over the National Iron Ore Mining Company (NIOMCO), Itakpe in Kogi State in 2016 and got its agreement terminated in 2019 due to non-performance.
GIHL dragged the Federal Government to court for breach of contract and it was awarded damages to the tune of $496m which had been paid.
The failed concession agreement came to the fore yesterday when the Minister of Steel Development, Shuaibu Audu, led officials of his ministry to the National Assembly to defend his 2024 budget.
Audu told the panel that the concession was terminated because the concessionaire was not living up to expectations.
He said, “The firm was supposed to be producing iron ore and transfer it to Ajaokuta for steel development but it was busy exporting the commodity.
“Before the exit of the last administration, the Federal Government went through litigation, and a settlement was reached. The Federal Government paid $496m to the Indian firm for breach of agreement.”
He, however, said President Bola Tinubu had asked him to revive the two steel firms in Itakpe and Ajaokuta.
Audu said, “Historically, iron ore used to be produced in Itakpe. They have a lot of staff that are producing iron ore. Some of the production lines in Ajaokuta were also working. We are still paying the staff there because the agreement has been terminated.”
Audu’s submissions infuriated a member of the Committee chaired by Senator Natasha Akpoti-Uduaghan, who queried the rationale for paying N1.5bn annually to the staff of a firm that had been concessioned.
Akpoti-Uduaghan also wondered why the termination of the agreement was done in private without the public being aware of it.
She also asked whether there was a penalty for the breach of the agreement by the Indian firm because it was on the wrong side of the law.
She demanded for details of the litigation and urged the committee to probe the entire concessioned deal.
She said, “The Indian firm could not perform, they denied Nigerians, access to the iron ore company for three years. Instead of them being penalised, for depriving Nigeria, of its social and economic growth, we compensated them further by paying them $469m.
“This committee would like to see the court papers that penalized Nigeria. Mr Chairman (of the Committee) let us concentrate on the budget defence now and organise a public hearing on it later. This is because we cannot continue to enrich some people at the detriment of our dear country.”
Officials of the ministry who accompanied the Minister to the Budget defence session also confirmed that the salaries of the workers at the firms, amounting to about N1.5bn annually were being paid by the Federal Government during the three years of the concession.
The co chairman of the committee, Dr. Zainab Gimba, agreed with the submission of Akpoti Uduaghan.
The committee there resolved to hold a public hearing to probe the concession agreement at a later date.
*N’ Assembly defers Niger Delta Ministry budget defence, summons two ministers over funding issues
The Joint Committee of the National Assembly has stepped down the consideration of the 2024 budget of the Ministry of Niger Delta Development
The joint panel had also summoned the Minister of Finance, Mr Wale Edun, and his counterpart in the Budget and Economic Planning ministry, Senator Abubakar Atiku Bagudu.
The federal lawmakers asked the duo to appear before it in furtherance of the budget defence for the Ministry of Niger Delta Affairs.
The summon was sequel to the appearance of the Minister for Niger Delta Development, Abubakar Momoh, to the joint committee yesterday.
A member of the committee, Senator Seriake Dickson raised a motion to adjourn the sitting indefinitely until both ministers of Finance and Budget and Economic Planning appear with the Minister of Niger Delta Affairs.
He said they would shed more light on the poor budgetary envelope for the ministry fund releases for projects among others.
The Minister shared with the joint committee, the 2023 budget performance and answered questions about project execution, project abandonment, fund releases, and a commutative debt portfolio of the ministry totalling over N50bn.
Momoh said for the 2023 budgetary provision of N11bn only N4bn was released from the capital budget which represents about 37 per cent which he described as a merger and inadequate to meet the challenges of the region.
He said, “This gross inadequate budget has led to project abandonment and unpaid projects and so, this paucity of funds can lead to the derailment of the mission and vision of the ministry.”
While answering questions on training and empowerment for women and youths in the region, the Minister said there was nothing the ministry could do, if money is not released for training and empowerment and as such, the training and acquisition of knowledge is slowed down.
He said, “We have signed a performance bond with the president but with a paucity of funds there’s nothing we can do. The purse of the nation is in your hands as lawmakers, we need you to empower the ministry to deliver.
We do hope that with your approval, you will give us support for more and better funds release in the 2024 budget”.
On whether Mr President was aware of the situation in the Ministry of Niger Delta Development, the Minister said, “I cannot say he’s aware – it would be pretty difficult for the president to know all the details of happenings in all the ministries”.
Momoh agreed with the legislators on why the government cannot award contracts without payments amidst a litany of abandoned projects.
He said, “I share your view. The government cannot continue to award contracts to people and would not pay. The system of securing cash is cumbersome. Sometimes you award a contract without knowing how much you have in your purse.
“I am talking of a cash plan system which is giving a lot of headaches. If a contractor completes his job, it’s expected that within one or two weeks they should get payment but you have to apply for it and upload it to the Ministry of Finance, which delays the system. You need to intervene in this regard.
“When I was outside, I saw things the way you’re seeing it now but now that am inside, I now understand. On the poor budget performance of 37 per cent, I agree it’s poor. It’s a statement of fact. I also share the issues you raised on the procurement process.
“I agree with that in entirety. I want to say one thing – we are in a transition year, and you cannot expect performance to be higher than 40 per cent.
“I came on board in August when they were still running the 2022 budget and not quite a while ago they started running the 2023 budget.
“Once the National Assembly passes this appropriation, we will start work in earnest. You can be sure of speedy completion of projects”, he promised.
On the 2023 budgetary provision of N10bn, the minister said, “This sum cannot construct 3km of road in the heart of the Niger Delta.
“We need to also ask if there were adequate resources for all of these- the answer is no. We have requested additional funding even through Sukuk, but we are still waiting for a reply.
“The staff in the ministry know how I operate. If you give me money today to complete a project, give me three months and see action if I will not deliver.
“On the 2024 budget, I will monitor to make sure they are executed and I will hold my directors responsible if anything fails.
“On signature projects- we need to ask ourselves what we mean. The Ministry of Niger Delta has a star project which is the East-West Road which was my focus when I came on board.
“I was told that since 2021 it has been reversed to the Ministry of Works which should be a star of signature project for the ministry. This is an interventionist ministry such as maintaining peace in the region which doesn’t signify a signature project.
“Left to me, the sum of N18bn being the envelope for the year 2024 can be put on three signature projects and I will ask the president to come and commission projects but we cannot do that because being an interventionist ministry handling nine states, we have to spread the projects”.
Momoh concluded by saying, “What I can assure you is that with me in the Ministry of Niger Delta Development, things will be done differently, I can tell you authoritatively,” he assured.
Senator Seriake Dickson, said, “You’re a very experienced person and we know that with you, the ministry is in good hands. We are ready to encourage and support you.”
He moved the motion for the suspension of the budget defence and it was seconded by Senator Mudashiru Lukeman.
The joint committee was chaired by Senator Jide Ipinsagba. (This Nigeria)
