By Hussain Abdulraman
I am compelled as a private sector Steel Plant Entrepreneur to wade into the controversy emanating from Professor I. A. Madugu’s pragmatic views expressed in an interview published in the Daily Trust of 18th June, 2015 and the subsequent fiery and discourteous response by the group led by Dr. Sanusi Mohammed the Secretary-General of African Iron and Steel Association Published on Thursday 2nd July, 2015 in the Daily Trust.
To start with I think it a great disservice to the cause of intellectual discourse to try to ridicule genuine and patriotic contributions of people who do so with good and positive intent. We can effectively contribute our ideas to the resolution of issues affecting our fatherland without being insulting and without ridiculing the genuine contributions of others by simply advocating better ideas rather than getting personal and abusive.
The use of the words like “ignorant”, “sentiments”, “veiled subterfuge”, “shallowness” “fallacious” have the overall effect of diverting attention from the real issues to matters of personality which ultimately undermine the quality of intellectual engagement. The essence of all intellectual discourse is not to highlight who we are and how good or bad we are but to contribute to the upliftment of our society and mankind. This is very much like football, if you go after the ball you have no problems but if you go after an opponent’s leg you get a yellow or red card.
To move the steel sector forward in a country where 95% of private sector investments is owned by foreigners leading to serious capital flight we demand a paradigm shift from the present state of phobia and distrust of alternative suggestions by our colleagues in the public sector to one of openness, accommodation and constructive engagement.
In one of my several trips to China I was taken to Pangang Steel plant where excess blast furnace gas was used as heat and reduction fuel to sustain a 300, 000 tons per annum Direct Reduce Iron plant!!! So what is the justification for sticking doggedly to the position that the two technologies are necessarily mutually exclusive and disruptive of each other? We may well find out when we eventually commission the blast furnace that substantial financial gains will result from reducing substantially the amount of coal required in our Direct Reduced Iron plant when blast furnace gas becomes available.
The basic idea expressed in Professor Madugu’s interview is that due to the huge completion cost of Ajaokuta Steel Plant and the uncertainties tied to being able to raise those huge funds (put at USD 1.1 billion in Ajaokuta Steel Plant management’s presentation to the Transport Committee of the recent National Conference approximately USD 500 million for internal industrial plant completion and USD 600 million for the external infrastructure completion.
So Dr. Sanusi Muhammed’s group’s advertorial is being economical with the truth by ignoring the actual cost of completion) our Government should explore an intermediate course that will allow for a smaller investment of between USD 200 million and USD 300 million to allow for the attainment of Liquid Steel Production and therefore put the plant to the economic use it was meant to achieve before confronting the huge additional investment the plant requires in the face of competing national economic priorities against the backdrop of declining oil revenues.
In several papers and keynote addresses I have delivered to the Nigerian Steel Sector summits and Metallurgical Society conferences I postulated solutions similar to what Professor Madugu proposed in the interview and my proposals were well taken. In fact in one such summits the last Minister of Mines and Steel Development Arc. Musa Muhammed Sada set up a committee to come up with more detailed and convincing feasibility report on how to advance the implementation of an intermediate non-coke solution to the Ajaokuta Steel Plant non completion debacle.
For the very obvious reason of an all pervading phobia and suspicion of the non-coke intermediate solution amongst Ajaokuta Steel Plant Alumni and present engineers and administrator who have since constituted themselves into a veritable strong lobby that shoots down any non-blast furnace ideas, the committee never saw the light of the day. Each time I enthusiastically asked when the committee would start its work I was told there was no fund to get the committee to work and when I suggested providing funds for the committee’s work and there was very little enthusiasm I gave up the idea for fear of being tagged a pest.
The sad and very demoralizing fact is that those bred in the public sector and who have had a full career as civil servants that constitute the crux of the Dr. Sanusi Mohammed’s group hardly see anything wrong morally with spending USD 5.7 billion on a 1.3 million tons capacity blast furnace based integrated steel plant over a 35 year period without completing the plant and still to argue that the only way forward is to sink another 1.1 billion USD on the same plant without tolerating other views that think outside the traditional box.
Were we to send the data relating to Ajaokuta Steel Plant to the Guiness Book of World Records to be certified as the longest, most expensive and wasteful Steel Plant project in human history I am certain it will be confirmed as such. Yet patriotic and decent Nigerians who insist that the overall performance and viability of the project be judged against international techno-economic and public accounting best practices, sound accounting principles, comparative economic advantages derived from similar projects initiated at the same time in other countries are coldly rebuffed.
There is virtually nowhere in the world today where the idea that money expended on huge national projects should be considered as a sunk cost. That idea belonged to the era of command economies of the socialist world who have since reformed and now insist on projects paying for themselves so that they can be sustainable as well as pay for other projects. In the business plan of the People’s Republic of China’s Three Gorges Project (The world’s biggest hydro electricity project) which cost 25 billion US Dollars for example, repayment of the whole investment was planned to be made in 10 years and that was achieved.
I am certain that our friends led by Dr. Sanusi Muhammed are not saying that we are estopped from projecting what the opportunity cost of 5.7 billion USD tied down to one Government non performing project for 30 years (if we make room for a legitimate construction period of 36 months) without giving 1 USD return should just be over-looked and regarded as sunk. The opportunity cost of the non performance of ASCO is best imagined if we judge it against a similar plant that was commissioned on time, had a project cost and investment payback of 10 years and subsequently earned profits of 10% of investment every year for 20 years, for the investor and (in our own case the FGN) cumulative and investible profits of 11.4 billion USD.(Enough to build 10 more steel plants).
Ajaokuta Steel uncompleted plant has outlived at least four of its Chief Executives who sadly never lived to see the plant run yet in the quest for a pragmatic way forward an extremely powerful lobby of technocratic civil servants and politicians who see nothing wrong in sinking public funds into the project without accountability stand resolutely on the way of mediatory and more pragmatic and accountable path. Using international best practices it takes 35 months to build a 1.5 million ton capacity integrated steel plant and not 35 years.
Likewise it takes 450 million US Dollars to build a 1.5 million tons per annum capacity blast furnace based integrated steel plant (which includes: Land 800 hectares, 120 megawatts captive power plant, 500, 000 tons per annum capacity wire rod mill, 500, 000 tons capacity section mill and 500, 000 tons capacity hot strip mill with all infrastructure of the plant) and not 5.7 billion USD.
Abdulraman is the Chairman and Chief Executive Officer, Total Steel Group Nigeria Limited
