Ajaokuta: A steel company at a crossroads
A nation’s development would be greatly restricted without a viable steel industry. This assertion encapsulates the tragedy of Nigeria’s effort to develop the sector in question, a narrative of failure by successive administrations to complete the Ajaokuta Steel Company Limited (ASCL).
The contract for the project was signed in 1979 between the Federal Government and Messrs Tyajzhprom Export (TPE) of the former Soviet Union. It was designed as an integrated steel complex to tap from the country’s abundant raw material base. Unfortunately, the company has over the years become a cesspool of corruption.
Setting up of the project met global standards, having proximity to raw materials, rail, water and good weather condition. Besides, Nigeria had juicy returns in oil revenue at the time. And its foreign collaborators, particularly Russia, demonstrated uncommon faith and commitment.
Political maneuverings, however, scuttled the unique opportunity. Successive administrations turned the initiative into conduits for siphoning the nation’s wealth. The PDP-led Federal Government from 1999 to 2015 merely paid lip service to the steel sector, particularly ASCL. And while the Obasanjo government had a desire to right wrongs in the sector, its privatisation policy was not well thought out, resulting in poor implementation and consequent failure. The President Jonathan administration on its part evolved a work plan. This, however, did not translate into action due to lack of finance.
Since 1983, the company has remained in a state of ‘near completion’. Meanwhile, over $5 billion has been spent. It was once reported that just $650 million was needed to make it fully operational. It was supposed to have an installed capacity of 5 million metric tons of steel a year. Work was delayed by the government’s failure to pay TPE on schedule. The project was then sold to an Indian firm, which later abandoned it after allegedly stripping the company of all valuable assets.
But why would any government contemplate concessioning the plant, when its first phase is “98 per cent completed, with 40 of the 43 units already installed”? Former President Shehu Shagari laid the foundation stone in 1979. By 1983, the Light Section Mill was commissioned. By 1980-1983, 84 per cent of equipment had been erected. What, therefore, could the insurmountable issues have been?
Nigerian leaders might have allowed saboteurs to undo the country’s largest investment, in connivance with foreign interests. The fact remains that the powerful nations of the world were uncomfortable with the prospect of Nigeria becoming a big steel producer. According to analysts, Nigeria’s potential for steel production and its oil wealth gave the West reasons to worry.
Many well meaning Nigerians have condemned moves to concession the company, wondering if the nation has been bewitched. With an installed capacity of 1.3 million tons per annum, which can be increased to 2.6 million tons and eventually 5.2 million, such move could amount to throwing away a fortune. The complex also has two electricity plants with a total installed capacity of 110MW, “more than enough to power the entire complex, and the whole of Kogi and Edo States. When completed, the steel plant has capacity to generate about $1.7 billion per annum, employ over 10,000 engineers and technicians, employ over 10,000 other personnel, and lead to the creation of over two million indirect jobs.” Nigeria’s export earnings are expected to increase by over $1 billion per annum, and it could save over $15 billion worth of steel products imported into the country yearly.
Since the return to democracy in 1999, three administrations have flexed muscles, trying to find a solution. The Obasanjo government in 2003 decided to concession the steel mill to Global Infrastructure, an Indian firm. The steel company, however, became worse off. The concessioners were accused of stripping the mill of its assets and carting them abroad.
During a recent Tuesday Live programme of the Nigerian Television Authority (NTA), anchored by Cyril Stober, contributors rejected the plan to concession the company, saying the previous attempt was marred by irregularities and failure to follow due process.
“How can the authorities continue to commit the same mistake and expect a different result? Why not build Ajaokuta steel complex to capacity, operate it for five to 10 years, then we can privatise it or enter into a joint venture. The steel sector is critical to the economy of every nation, job creation and even security. Is there any nation on this earth that will sink more than $5.1billion of its hard earned money on any project and walk away from it when it is 98 per cent completed?”
Many Nigerians may have a hard time grasping the real worth of ASLC until they visit the place. This probably explains why workers at the complex are insisting the plant is not sold as scrap. Contrary to insinuations of idleness, they have been working at the rolling mill, which is in full operation. The complex has been producing specialised equipment for neighbouring countries and companies.
Chairman of Kogi Coalition of Business and Professional Associations (KOCOBPA) Dr. John Alabi, said the problem with the company has been lack of political will to get it completed.He said: “It was a good starting point because we gave it to a Russian firm and they did an excellent job, and when they left it was politicised. You cannot start the conception and delivery of a child and then, midstream, change doctors. That was wrong. We did that and again the story of concessioning and privatisation was politicised and that has not been resolved. When the resources were available, corruption and mismanagement robbed the country of the opportunity.
“When an interim management was brought on board, they were never allowed to do their job. Yet, it is a well-known fact that the concept of ASCL has the potential for job creation. This is very apt, especially now that Nigeria is trying to diversify the economy. The company would have been the right catalyst to stabilise the economy by looking inwards in the line of small and medium-scale enterprises. Small and medium-scale enterprises are the key and the bedrock for that growth of the economy. And Ajaokuta would have been the sure bet, especially as it is located in North Central Nigeria.”
Alabi said a conspiracy of world powers frustrated the original builders out of the project, adding that for Ajaokuta to be resuscitated successfully, the Nigerian government must invite the same builders to complete the work.Speaker of the House of Representatives Yakubu Dogara who visited the plant recently, said: “To our collective shame, the present state of Ajaokuta steel complex is more of an expressive metaphor of our ineptitude and bad governance over the years.”
He ruled out concessioning, saying it would amount to handing over the nation’s assets to stripers. “Any patriotic Nigerian that visits this plant cannot but shed tears. Any foreigner who visits this plant cannot but agree that we are from a shithole country. Anyone who tries to re-introduce concessioning as a way forward will definitely have problem with us at the House.”He said the House would do all that is needed to bring the company to life, adding: “We are aware of local and international conspiracies against the plant, but we are determined to get money from every angle to complete it.”
Kogi State Governor Yahaya Bello called for the deployment of recovered looted funds towards the completion of the plant.The workers of the plant, nevertheless, have remained patriotic. Even after their salaries were withheld for 13 months between 2009 and 2010, they still came to work to protect the plant. The action was to prevent vandalisation and ensure facilities were not submerged. This explained the unanimity of purpose with which they marshaled out their position against concessioning, arguing that what is required to complete the project is not as much as what has already been invested.
When the Senate and House of Representatives joint committee on privatisation visited the plant in 2015, Senator Ben Murray-Bruce who led the team declared: “I am really touched by the presentation and the kind of leadership you have here. What is really clear to me is that the leadership of Ajaokuta steel are very patriotic Nigerians.” He commended the management and workers for not selling out their souls for money.
Members of the team bewailed the abandonment of the project and waste of resources. They blamed past leaders for neglect and lack of forthrightness.The Senate committee chairman also blamed the Ministry of National Planning for poor coordination over the issue of non-completion. He vowed to find a lasting solution.
He said: “I am very disappointed with government for abandoning a historic site like this. You are talking of a city within a country set up by Shehu Shagari between 1980 and 1983 with 92 to 96 per cent completion but abandoned by successive governments. You want to cry. I am deeply depressed as a businessman, a Nigerian, and a senator when you listen to a presentation like that with $4b to $5b spent, abandoned at 98 per cent completion.”
The position of Iron and Steel Senior Staff Association of Nigeria (ISSAN)/ Steel Engineering Workers Union of Nigeria (SEWUN), presented by the then National President, Comrade Otori Saliu was: “To sell off the project at this stage implies selling it as scraps. The extra facilities meant to enhance our national capacity for industrialising the economy and ensuring our technological independence will be lost.
“Liquid steel may not be produced as the outstanding infrastructures are yet to be completed. Our steel raw materials would be exported in the interest of the foreign investors and the products therefrom imported back at exorbitant prices, as we do with oil today.”
Against that background, he maintained that steel production, besides making Nigeria richer, has the ability to turn around the economy. “Unknown to Nigerians, the lingering impossibility at Ajaokuta steel complex has its root in the conspiracy by influential countries who may not be able to stand the idea of having a giant (Nigeria) wake up and then getting empowered limitlessly by resources from steel. If its present comatose state can be overcome, it has the potential of boosting the technological dream and industrial drive of the nation.”
He said: “The essence of this analysis was to show that Nigeria was not broke and that the same old argument could not be tenable under the Buhari administration.Never again shall we be convinced by this regime, citing economic crunch and the corruption of past administration as a common chorus and excuse, to finally destroy the dream of our forefathers on ASCL. This will amount to begging the issue.”
He pointed out that the Buhari administration has not shown real commitment to the completion of the project, as its 2016 budget made no such provision. According to him, “The present government should look the way of the original builders by inviting them to come and complete ASLC. All core parameters are strongly in favour of this approach, in terms of costs, functionality and productivity. The original builders would be willing to bring down knockdown parts and complete the project within record time.”
Former ASCL Sole Administrator, Eng. Isah Joseph Onobere, noted: “Steel industries spur employment generation, facilitate technological growth, acquisition and development of technical expertise, and provide impute for infrastructural development.”He identified other areas of benefits as value addition to natural mineral; earning and conservation of foreign exchange; varied capacity building; wealth generating activities, economic diversification and others.
Onobere said the steel plant is Nigeria’s foremost investment in one location and the bedrock for its industrialisation. He cautioned the National Council on Privatisation (NCP) and all persons and agencies concerned with privatisation of publicly owned entities to tread carefully on ASCL. “You have to be very cautious in exercising the mandate on privatisation when you take into cognisance the experiences from previous attempts at privatising the steel sector of our economy.
“Ajaokuta has witnessed two failed concessions and the nation has been worse off for those attempts. We have a protracted arbitration case between the Federal Government and the last concessionaire, M/S GINL, at the London Court of Arbitration.
“Osogbo and Jos Rolling Mills are still under lock and key, since they were privatised in 2005. We submit with due respect that Ajaokuta Steel plant, being at once the jugular of the Nigerian steel sector, should not be privatised until the project is completed, commissioned and its operations stabilised, if at all.