For years, what had been hitherto branded a white elephant project in Kogi state would soon become the industrial engine room of Nigeria’s quest for technology as ELEOJO IDACHABA writes on the underground work going on to revamp Ajaokuta Steel Company.
For years, Nigeria has been on the lane towards industrialisation even though all indicators look like a mere tall ambition. In pursuant to this, the military regime prior to the Second Republic of 1979 nurtured the idea of an industrialisation drive culminating in the establishment of Ajaokuta Steel Company where huge quantities of iron ore deposits were found.
Consequently, the late President Shehu Shagari administration began the construction of what has today been tagged a white elephant project even though it was conceived to be the driving engine towards Nigeria’s industrialisation.
The steel company located on a large piece of land in Ajaokuta along the bank of the River Niger in Kogi state would have been for the country what oil had been for the country in the last 20 years, if the political will was there; however for several inexplicable reasons, that dream is yet a reality until recent attempts by the present administration to revitalise it.
Govt’s promise
According to the minister of mines and steels development, Olamilekan Adegbite, the steel company would function to capacity before the end of the current administration. The minister stated that the federal government had already advanced in efforts towards bringing back the original Russian company that built the steel company with a view to conducting its technical audit, overhaul certain things and eventually complete it.
According to him, the Russian team would have long arrived in the country for the assignment, but Covid-19 pandemic distorted the entire arrangement, thereby requiring a re-plan.
This reporter could recall that the agreement to revive the ailing steel plant was reached in 2019 during a meeting between President Muhammadu Buhari and President Vladimir Putin in Russia. Thereafter, the Russian government nominated TPE, the original builder of the steel, to conduct a technical audit in order to ascertain the level of work that remains to be completed, just as sources from Ajaokuta indicates that the complex was 95 percent completed before work was stopped.
The main purpose of building the plant, the minister noted, was to produce liquid steel, adding that the National Iron Ore Mining Company (NIOMCO) was set up also at Itakpe in Kogi to feed the steel plant with iron ore. He therefore reiterated that when completed, cars, aeroplanes and various brands of engines could be manufactured in the country.
“Ajaokuta Steel Company has not been able to produce liquid steel since it was built because there are little hurdles we need to address.
“The steel company has worked in the past whereby billet were imported to produce reinforcement but that was not what Ajaokuta steel was built for,” he had said.
He, however, disclosed that not too long ago, the ministry trained some youths in metal sub-sector on national development to ensure that human capital development are trained with special emphasis on vibrant metals operators.
This he said was an appropriate strategy towards mainstreaming the youth into the steel sector.
The Chinese model
However, worried by the delays in completing the steel project, industry watchers are of the views that the federal government can adopt the model used by China in its steel industry to resuscitate the ailing company.
One of those industry watchers is the chairman, Basic Metal, Iron and Steel and Fabricated Metal Products sector of the Manufacturers Association of Nigeria (MAN), Dr. Kamoru Yusuf.
Yusuf said the process of resuscitating the steel company which is Nigeria’s heritage was not properly structured as owners of existing steel plants were not consulted.
He said, “What the Chinese people did was to adopt a policy of naturalisation of the country’s steel sector by making the indigenes to have 75% shares, while the government holds only 25%.
“This created opportunities for the local investors and ensured that the wealth remained within the country without repatriation of capital as well as dividends. This led to the development of local skills and other multiplier effects that finally resulted in what the world is witnessing today in China.”
Speaking further, he said, “Any attempt to invite foreign investors to resuscitate the Ajaokuta Steel Company would result in the foreign interest depriving us of our national heritage as any proceed realised from the sales would be repatriated by such interests to their countries and would consequently have negative effects on government’s policy of backward integration and the corresponding objective of conserving the scarce foreign exchange with dare consequences on the current and future well-being of our economy.
“It is only indigenous investors that can make it happen so that the procedure can remain here in Nigeria and we can re-invest this into the economy. This we have all seen, was the case in the cement industry and with Nigeria now taking another giant stride in refinery and petrochemicals.
“There would be no reason for the government to borrow money to bring Ajaokuta back to life. We have the resources as a nation and we also have experts who can make it work. We don’t need foreign investors to do it. Ajaokuta can be back again to produce machines that are needed by other steel industries in their production processes.
“You would agree with me that with the gigantic size of Ajaokuta, the complex should not focus on the middle-steel production, which is massively available around Nigeria and West Africa. Rather, it should focus on the configuration of a high-class production of steel products such as slab caster, hot rolled coils and plates, and foundry for the production of the required machinery and tools in the country, since 50 per cent requirement for this high-class configuration is already available in Ajaokuta.”
In the meantime, investigations this reporter showed that from 2016 to 2021 despite the company’s comatose state, the federal government had expended the sum of N20.4 billion on it. This information is on the website of the Budget Office as the yearly appropriations reveal.
Allocations so far
According to the statistics, in 2016, the sum of N295.1 million was allocated with N135.2 million released by October of that year.
In 2017, the total allocation was N4.3bn with recurrent expenditures at N3.9 billion and capital expenditures at N354.1 million. For the recurrent expenditures, total personnel cost was put at N3.8 billion, while total overhead cost was put at N75.3 million.
In 2018, the total allocation was N4.3 billion with recurrent expenditures at N3.9 billion and capital expenditures at N354.1 million.
For the recurrent expenditures, total personnel cost was put at 3.8 billion while total overhead cost was at N75.3 million.
Further breakdown showed that salaries and wages cost N2.9 billion, allowances and social contribution cost 895.3m, uniforms and other clothing cost N2.5 million, refreshments and meals cost N1.8m and purchase of bus cost N41.3 million.
Funds were also budgeted for certain projects such as the maintenance of power facilities for N106.3 million, construction /provision of water facilities for N196.5 million, lighting and security of Ajaokuta steel plant at N10 million and purchase of a 30-seater bus at N413 million.
In 2019, the total allocation was N3.6 billion with recurrent expenditures at N3.3 billion and capital expenditures at N262 million.
For the recurrent expenditures, total personnel cost was put at N3.25 billion while total overhead cost was put at N75.3 million.
Further breakdown showed that salaries and wages cost N2.5 billion, allowances and social contribution cost N793.6 million, uniforms and other clothing cost N2.5 million, refreshments and meals cost N1.8m while purchase of bus cost N41.3 million.
In 2020, the total allocation was N3.7 billion with recurrent expenditures at N3.6 billion and capital expenditures at N147.2 million.
As for the recurrent expenditures, total personnel cost was put at N3.5 billion while total overhead cost was put at N51.5 million.
Further breakdown showed that salaries and wages cost N43.3 million, allowances and social contribution cost N5.4 million, uniforms and other clothing cost N273, 684, and refreshments and meals cost N1.6 million.
Funds were also budgeted for certain projects such as the maintenance of power facilities for N43 million, construction/provision of water facilities for N94.2 million, and lighting and security of Ajaokuta steel plant at N10 million.
In 2021, the total allocation was N4.2 billion with recurrent expenditures at N4 billion and capital expenditures at N253.9 million.
For the recurrent expenditures, total personnel cost was put at N3.9 billion, while total overhead cost was put at N72.3 million.
Further breakdown showed that salaries and wages cost N3 billion, allowances and social contribution cost N846.5 million, uniforms and other clothing cost N2.5 million and refreshments and meals cost N1.8 million.
Investigation however revealed that fund was budgeted for only one project in 2021, which was the construction/provision of water facilities for N80 million.
Attempts , failures
As at 1994, report had it that construction of the steel plant was 98 per cent complete with 40 of its 43 plants having been built before it got stuck. The remaining two percent for external infrastructure like waterways and viable ports were the only thing left.
However, in spite of the regular budget, 42 years after, the company is yet to take off; no wonder various attempts at concessioning and privitisation.
For example, in a bid to revitalise the company, Global Steel Holdings Limited, an Indian company won the concession for a 10-year period. However, for technical reasons, the agreement was revoked as Nigerian government accused the Indian firm of asset stripping.
Recent moves
In 2019, the President Muhammadu Buhari ordered the completion of the company. This was also followed by the Senate resolution in 2020 urging the federal government to expedite action on the project.
Already, the federal government has inaugurated the Ajaokuta Presidential Project Implementation Team that would enact a pact reached between President Buhari and President Vladimir Putin towards completing the project on a Build-Operate-and-Transfer basis.
Mines and steel minister, Adegbite said Afreximbank would fund the project with $1bn, while the Russians would offer $460m, even as he assured that a Russian firm, MetProm Group, would ensure the completion and operation of the steel company.
Concerns
But according to Dr. Olalekan Aworinde of Pan Atlantic University, the steel complex is a waste of government resources even though he said the company has all it takes to scale down unemployment rate, increase industrialisation, economic growth and boost the country’s foreign reserves.
“I believe it is just a waste of government resources because if you go there you would see that there are a lot of workers receiving salaries without any corresponding input.
“The only solution is to update the technology and equipment. The government should be ready to do a total overhaul of the establishment by bringing in the right people and right technology.
“If the government is able to revamp the establishment, it can reduce the rate of unemployment to a reasonable level and this would contribute immensely to the Gross Domestic Product growth of the country and also lead to the appreciation of the naira as we are going to demand less of the dollar to get some of the items we currently buy in hard currency. This is because all those steel we import into the country require foreign exchange to get them.
“A functional Ajeokuta Steel Company would mean improved economic growth, reduction in unemployment and stabilisation of forex market/improvement of our foreign reserves.”
On his part, a former president of Nigerian Metallurgical Society (NMS), Professor Benjamin Adewuyi, said the problem with Ajaokuta is internal.
“Ajaokuta Steel Company has a problem that is internal but it is not that it cannot be revived; it can be revived.
“The greatest problem is that those people who have benefitted before in the corruption of Ajaokuta would not allow it to function,” he said.
He specifically stated that the company would function within a short period if government allows the Ajaokuta Presidential Project Implementation Team to function.
“We have told the government several times that in less than six to eight months, Ajaokuta would start functioning if a steel programme is put in place and government allows the team it appointed to look at the situation in Ajaokuta to function. I am sure very soon we would see the difference between the moribund industry and the functioning industry.
“If Ajaokuta begins to work, it would require a steel university to bring out manpower for the steel plant to function well.”
As a precursor to the full take off of the steel complex, the Senate recently passed the Nigerian Steel University Bill after the adoption of the report of the Senate Committee on Tertiary Institutions and TETFund.
Senator Sam Egwu, who presented the report of the committee on behalf of the chairman, Senator Ahmed Kaita, said the university, when established, would provide the required manpower for metallurgical, industrial and technological advancement in the country.
