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For the umpteenth time, the Federal Government has commenced fresh plans for an effective and coordinated take-off of the Ajaokuta steel plant located in Kogi State. This time round, the government has inaugurated a Presidential Project Implementation Team to help revamp the company in line with the recent agreement with the Russian government, a key partner in the steel complex, which had been unproductive for some decades. The Presidential Project Implementation Team is headed by the Secretary to the Government of the Federation (SGF), Boss Mustapha.
As the SGF admitted, previous attempts to revive the plant, which had gulped billions of dollars and designed to accelerate Nigeria’s industrial development, has resulted in avoidable massive foreign exchange losses at intolerable opportunity cost to the country. We want to believe that the latest effort will not go as the previous ones. Indeed, revamping the Ajaokuta steel plant presents a unique opportunity to make Nigeria West Africa’s largest fully integrated steel producer, and accelerate the nation’s industrialisation, especially in steel-related industries and government’s economic diversification drive.
The current effort to resuscitate the steel plant followed recent bilateral discussions at the Russian-African Summit in Sochi. Under the bilateral agreement between Nigeria and Russia, the funding of the project will come from Afrexim-bank and the Russian Export Centre. Already, preliminary works are said to have commenced to determine parameters for effective and coordinated take-off of rehabilitation works at the plant. The presidential team will engage all bilateral negotiations necessary on behalf of the Federal Government leading to the actual execution of the project, while the Russian Federation will provide all the relevant technical and other inputs, including local raw materials that will ensure smooth execution and completion based on the original design.
It is not clear how much the present effort to revive the steel plant will cost. Last year, an internal technical audit conducted by a team of Nigerian engineers and Ukraine experts on the project revealed that the sum of $652million would be required to reactivate and complete the project. According to the audit, which was conducted between February and April 2018, it was ascertained that the plant has reached 95.7 per cent completion. The audit report was reported to have been submitted to the Federal Government by the Sole Administrator of the Company, Mr. Sumaila Abdul-Akaba. It was an updated version of an earlier technical evaluation conducted in 2010 by M/S Reprom Nigeria Limited.
It is, however, not clear whether the audit report is part of the technical audit which the Federal Government engaged the services of renowned accounting and audit firm, PricewaterhouseCoopers on the Ajaokuta steel plant to review the company’s indebtedness and statutory liabilities. The non-completion of the Ajaokuta steel plant remains one of the mistakes of successive administrations in the country. It hinges on the lack of political will to see the project through.
Between 2003 and 2016, the steel plant had gone through many concession deals and reversals. The administration of Olusegun Obasanjo concessioned the plant to Messrs SOLGAS Energy of the United States, for a 10-year tenure, in 2003. A year later, the contract was terminated on grounds of non-performance. Another concession was given to Global Infrastructure Steel (Nigeria Ltd) which the Umaru Yar’Adua administration revoked. The case went to the London Court of Arbitration. Its resolution led to the modified agreement in 2016, which ceded the steel plant back to the Federal Government, and to Global Infrastructure Steel Nigeria Ltd. The uncoordinated deals badly affected the completion of the steel complex.
We are aware that many issues, including funding and disagreements between the Federal Government and the National Assembly contributed to the non-completion of the steel plant. The multiplier effects that the project will have on the economy when it eventually comes on stream are compelling enough to necessitate a speedy completion, especially now that the economy is in a big hole due to the deadly coronavirus pandemic. Going forward, all grey areas, especially undue politisation and maladministration that have hampered the completion of the steel complex, should be removed. The Presidential Project Implementation Team should sustain the commitment to complete the project as scheduled.
