On Monday the Federal Government of Nigeria inaugurated a committee for the resuscitation of Ajaokuta steel that has been in the pipeline for decades. This is coming after the Russian government showed interest in the project once again. The Russian government has been working with the African Import and Export Bank to raise over $1.4 billion for the revival of the steel making plant that has been in ruins for long.
President Buhari has in October 2019, reached a deal with his Russian counterpart, Vladimir Putin. According to BusinessDay, the Russians are investing $460 million in the project while Afrexim is doling out the larger sum of $1 billion.
Russian company TyazhpromExport designed the Ajaokuta Steel Company Ltd on June 4 1976, with the aim that it would be producing 1.3 million tons of steel per year. Ever since then, the 44 years old company has failed to make use of the mineral resources in the country to live up to the expectation.
The Secretary to the Government of the Federation (SGF), Boss Mustapha, who inaugurated the committee, said the development will present Nigeria with the opportunity to diversify its economy, especially in the face of dwindling oil revenue that has grossly affected the country.
“Revamping the Ajaokuta Steel Plant, clearly presents a unique opportunity to make us West Africa’s largest fully integrated steel producer and most importantly accelerate our industrialization especially in the steel related industry,” he said.
However, there is a legal issue involving Global Steel Holdings Limited, an Indian firm, concerning the past concession agreement which is said to have given the rights of Nigeria Iron Ore Mining Company (NIOMCO) to the Indian firm. The legal battle has posed a challenge to commencement of work at the Ajaokuta Steel Company.
But the Minister of Mines and Steel, Olamilekan Adegbite said the legal challenge will not stop the project, that Nigeria will not surrender its ownership of Ajaokuta Steel Company and NIOMCO to the Indians.
“Yes, the legal issues are there, but now that the Russians who built the place have shown interest, all the legal issues will be resolved. Steel was produced from Ajaokuta in the past but with imported billets. Now we are working with the Russian government to commence local production using the abundant raw materials available in Ajaokuta.
“The beauty of this proposal is that it does not involve Nigeria putting money; the project will pay for itself. It is taking a while because of government bureaucracies involved. It is worth it and we will get it right,” he said.
He shed some light on the legal challenge while explaining the process of the deal. He said the office of the vice president is handling the legal matters.
“It is a situation whereby a contract is given to somebody to perform and got terminated but not according to the rules. The corporate body went to arbitration. We are trying to extricate ourselves. It won’t affect the Russian deal. We are trying to do a coordinate settlement on that. The legal issue is being addressed by the office of the vice president and other issues of revitalization ongoing.
“There have been lots of correspondences and they have asked several questions and we have responded. Afrexim is bringing the money, the Russians are bringing in the technical expertise and we are bringing in mineral resources which we have.
“Essentially, what the deal said is that the Russian government would help us nominate a body that have the engineering skills to complete the work and possibly the same body to run and manage it for a number of years. We agreed on of course with a reasonable profit and revert back to Nigeria’s ownership on complete manage and transfer terms,” Adegbite said.
The committee named Ajaokuta Presidential Project Implementation Team (APPIT), is made up of the SGF who will chair the team, the Minister of Mines and Steel Development (alternate chairman), the permanent Secretary, Mines and Steel Development; Permanent Secretary, Ministry of Finance; Solicitor-General of the Federation/Permanent Secretary Ministry of Justice.
Others are; the Sole Administrator, Ajaokuta Steel Company Ltd; Sole Administrator, National Iron Ore Mining Co. The members are made up of industry experts; Vincent Dogo, Elegba S.B and the director-general of ICRC, Godwin Adeogba.
According to the SGF, the committee is tasked to develop a work plan that involves a quarterly report of progress besides developing concession contract terms.
The Ajaokuta Steel Company has been a bone of contention through successive administrations for over four decades. So much resource has been invested on efforts to revitalize the plant. It is hoped that this approach by the Buhari administration will drive in the nail that will seal the loopholes that have prevented the steel company from working for years.