It is highly lamentable that in spite of the huge amount of monies expended so far by successive governments over the years, the Ajaokuta Steel complex is still bedeviled by multifarious challenges, and the project is being used as campaign rhetoric, yet the project remained a mere vision and the rot continues.
It will be recalled that the immediate past President Goodluck Jonathan during his Presidential electioneering campaign rally in 2011 in Lokoja, Kogi State, re-echoed the significant as well as agreeing with many Nigerians on the need for steel development in the country, as he posited thus: “One thing that is dear to Nigerians is the Ajaokuta Steel Complex and until we revive that complex, we cannot talk about Vision 20:2020. This is because for you to play big globally, you must industrialize and for you to industrialize you must produce steel. The Ajaokuta complex must be revived.”
Similarly, just like his predecessor, President Muhammadu Buhari, publicly vowed to resuscitate the Ajaokuta Steel Complex, ASCO, during his campaign to the state. He was quoted saying that the company which has remained moribund for years will generate employment for the army of unemployed in the state and the country at large. Without a doubt, Ajaokuta remains the largest integrated steel complex in the sub-Saharan Africa and the President’s promise again during his inaugural speech to revamp the mining sector in the spirit of diversification is encouraging.
The lamentation started as Ajaokuta was sold to Global Steel during ex-President Olusegun Obasanjo’s administration under the then privatization exercise of the Federal Government. But shortly after it was privatized; allegations of downsizing and asset stripping rocked the complex until it finally shut down operations. The plants have not functioned since 2005 when they were given to the Indian company. Since 2007, the Federal Government had been in arbitration with Global Steel and Global Infrastructure Limited at the International Chamber of Commerce, London, culminating in the reversion to the government. As part of the new arrangement, Global Steel agreed to withdraw its claim of $1 billion it initially demanded as damages.
Global Steel appeared to have further compounded the woes of the multi-billion dollar steel engineering complex and rendered it comatose. And no Nigerian institution, which includes the Obasanjo Presidency at the time, the labour unions, the export inspection arm of the Customs Service and, even the Bureau for Privatisation, which signed off the plant in the formal sense, was positioned to check the transnational irregularities at Ajaokuta Steel Rolling Mill, ASRM.
It was also gathered that for some time, the Federal Government has been in negotiation with Global Steel Holdings Limited and Global Infrastructure Limited, at the International Chamber of Commerce, London for the return of Ajaokuta Steel Company. The legal battle was said to have started in 2008, when Global Steel dragged the Federal Government before the International Criminal Court ,ICC, with the ex-Attorney-General and Minister of Justice, Mohammed Adoke leading the federal government delegation.
In the process of gaining total control, Global Steel agreed to forfeit the sum of $1b initially being demanded as damages allegedly suffered by the company while running the two plants. The federal government has been in arbitration with the International Chamber of Commerce since the concession was terminated in 2007, while the main case started in 2008.And the two plants have not been functioning since they were privatized and the meeting that resolved the issue was held in Dubai.
This was the plant that cemented Nigeria-Russian relationship, built from the civil war collaboration, and was considerably touted by the National Development Plan 1975-80 as the metallurgical phoenix to foster Nigerian technology. An estimated $20 billion is believed to have gone into the complex over the years.Sadly, years after, the project continue to be bedeviled by a combination of administrative bottlenecks, corruption and lack of sheer political will amongst successive administrations to see to the completion of this monumental national edifice.
Though, ex-President Jonathan intervened and the federal government regained total control of the steel company. That it took the authorities six years to undo what they should not have done in the first place is pathetic. Now that it has recovered the complex, government needs to go back to the drawing board to decide what exactly it wants to do with the set-up.
It is inexcusable and cheerless to note that the abandonment of the Ajaokuta Steel Company, ASCO, by successive Nigerian government, after spending about seven billion dollars on the project, with less than one billion dollar to complete the project bespeak otherwise how projects of huge significant economic value are abandoned across the country due to insensitivity of the leadership and lack of proper planning by economic expert who should know what we are losing as a nation from not ensuring the full operation of the steel complex and other related projects in the country.
All over the world, steel development is believed to be an essentially fundamental component in enhancing economic growth and development. This is why many countries, including third world nations have continued to do everything possible to ensure the sustenance of their steel sector. But the Nigeria case is evidently different as it seems the country consciously shut its doors to the numerous benefits derivable from having a robust steel sector. Successive governments, for instance, have thoughtlessly abandoned the Ajaokuta steel project, not minding its strategic role to the industrialization of the country and the significant growth and development it can bring to the economy.
It will be recalled that the discovery of good iron ore deposits in Itakpe in 1973 led to the formal signing of the global contract for the implementation of the Ajaokuta steel project between the Federal Government of Nigeria and Messrs Tyajzhpromexport, TPE, of the defunct USSR on July 13, 1979 during the reign of then military Head of State, General Olusegun Obasanjo.
It was originally programmed for completion in 1986, but a combination of factors including policy inconsistency and massive corruption were responsible for not meeting the said deadline.
Upon assumption of office in 1985, General Ibrahim Badamasi Babangida visited the Ajaokuta Steel Complex, and in 1986, he signed a new protocol agreement on the project with the same Tyajzhpromexport, TPE, rescheduling its completion date to 1989. This target date was equally never met and operations at ASCO and NIOMCO had to be halted in 1992. Amazingly, the project was said to have reached 98 per cent technical completion before work on it was stopped.
Astonishingly, it is the same Tyajzhpromexport, TPE which had a frustrating encounter with the Nigerian authorities on the Ajaokuta Steel Company, that did commissioned and delivered on schedule similar steel projects in China and other countries, where steel development have had significant impact in the advancement of their economies.
With an estimated $7 billion already engulfed by the Ajaokuta Steel Company since the contract for the project was awarded in 1979, and about $650 million required for it to become fully operational, most Nigerians, have contended in different fora that it would make much economic sense for it to be completed.
The then Minister of National Planning, Shamsudeen Usman, had in the course of his ministerial screening on the floor of the Senate wept for Nigeria on what has become of the largest integrated steel company in sub-Saharan Africa. Responding to a question on the Ajaokuta Steel Company raised by former Senator Abatemi-Usman, the minister lamented that in spite of the huge amount of money expended on the scheme, there was nothing on ground to show for it.
A presentation by an official of ASCO painted a pitiable picture of the position of Nigeria in steel production among other countries of the world. It showed Nigeria as the least in the ranking of 41 countries according to the volume of steel production as at 2008. While China produced 489 million tonnes of steel in 2008, United States 97 million, United Kingdom 16 million, South Africa 9 million and Australia 8 million, Nigeria could only manage to produce 0.30.
According to the data provided by the World Steel Association, WSA, the total world crude steel production in 2010 was 1,413.6 million metric tonnes (mmt). China, which is presently the largest steel producing country in the world, accounted for 626.7 mmt (44.3 per cent) of world steel production in 2010. Nigeria is not on the WSA 2010 list of 40 countries ranked on the basis of steel production volume, which showed that Venezuela the least produced 2.2 mmt.
However, Nigeria would have been among the top 10 countries in terms of steel production, if only we had properly harnessed the great potentials in our steel industry, and our economy would have been better for it.
In October 2002, Secretary General of African Iron and Steel Association, AISA, Dr. Mohammed Sanusi, an expert on iron and steel matters, in a paper observed that, “To industrialise, there is the need to have a sound industrial base. This will provide the solid foundation on which the industrial super-structure will be built.
This industrial base is nothing other than a well-developed iron and steel industry that will be producing such critical industrial raw materials as: cast iron (different categories); rods and bars (both high tensile and mild steel varieties); wires (in all its ramifications); structural steels (light, medium and heavy structural); flat sheet steels (plain and galvanised, and also the entire spectrum classified as flats); stainless and other special alloy steels; rails and pipes; plates (various sizes in width and thickness).”
He added that it is only governments that could provide the initial developmental funds in view of the high capital costs and the long gestation period of steel projects. This, he noted, is the trend worldwide where all pioneer steel industries and accompanying infrastructures of any nation are public-owned.
Also that, “It is after several such facilities are available and have proven themselves in a country; then the industry is privatised to allow the government to move on to other strategic areas of development. This is how today’s industrialised nations became what they are. Taking cognisance of the above, many third world countries followed suit and have been able to lift their economies away from third world poverty and starvation, and seriously threatening the developed countries of the world in economic wellbeing for their people.
A few examples will suffice, thus; India, South Korea, Pakistan, Egypt, Iran, Iraq, Algeria, Libya, Turkey, Venezuela, Indonesia, Singapore, Malaysia and Mexico. The steel projects in all these countries started as serious national projects, with their Governments taking active interest in the steel development.”
It will also be recall that Jawaharlal Nehru (1889-1964), first Prime Minster of India, called the giant steel structures in Bhilai, Durgapur and Ruerkela in the late fifties, the “Temples of Modern India”.
Thus, countries like Saudi Arabia, Algeria, Libya, Venezuela, Indonesia and Mexico are oil-producing countries with excellent oil reserves, yet they have developed a viable steel industry.
Therefore, if properly developed, the steel sector can easily rival the oil sector, as the country in the past nine years had spent over N2.1 trillion to import steel into the country. This shows that the country would have saved a lot of money if the Ajaokuta steel company was working.
Recently, the United Kingdom Department for International Development, DFID, and evaluation described the economic viability of steel production at Ajaokuta Steel Company, ASCO, as marginal. The damning appraisal by the Nigeria Infrastructure Advisory Facility, NIAF, a DFID- funded programme, according to a media publication, recommended that the Federal Government should avert a commercial risk exposure by an out-and-out closure of ASCO on the ground that it is not economically viable.
Reacting to the DFID, evaluation, many believed that there are external forces working circuitously against the full operation of the twin companies for what they hold for the country’s economy. Even the World Bank/IMF has never encouraged the advancement of the steel industry in third world countries, especially Nigeria. They argued that how could anyone say that a project that is capable of engaging over two million people is not economically viable. The steel industry if properly developed in Nigeria can conveniently rival the oil sector and transform our country from being a monolithic economy.
Similarly, in an internal analysis of the NIAF evaluation, the Ministry of Mines and Steel Development was quoted as saying that “the economics of producing steel at Ajaokuta said to be likely marginal is based solely on immediate commercial considerations without taking into cognisance other advantages such as technological acquisition, multiplier effects (downstream and upstream), national security, national pride, socio-economic importance, etc. In addition, potential markets for the bye products offer great prospect for profit.”
On the other hand, workers in the iron and steel sector, under the aegis of Iron and Steel Senior Staff Association of Nigeria, ISSSAN, and Steel and Engineering Workers Union of Nigeria, SEWUN, appealed to the Federal Government not to pay attention to any recommendation whatsoever asking it to dump the ASCO/NIOMCO project. Describing those demanding for the shutdown of Ajaokuta Steel Mill as evil, egoistic and unpatriotic, as well as “agents of the World bank and Paris Club”, the employees noted that both firms hold vast potentials for the economy of Nigeria and that of the entire African continent.
Addressing newsmen, ISSSAN National President, Salihu Otori, pointed out that the argument being propounded by the agents of advanced economies is simply to dissuade us to pave way for their continuous economic growth and technological development to our own disadvantage.
In like manner, President of Nigeria Mining and Geoscientists Society, NMGS, Akin George, said any plan by the federal government to scrap Ajaokuta Steel plant project in line with the recommendation of the NIAF team report would be robustly resisted. The NMGS boss contended that winding up ASCO would see the government acting against its industrialisation programme.
He said, “There is no nation that can survive without industrialisation and the steel sector is at the heart of that. Scrapping the project is unacceptable to us because you cannot throw away the baby with the bath water. The project is about 98 percent completed and scrapping is colonial mentality. They want us to continue to depend on them for our steel needs and the government is backing them. China has no raw material for steel, yet they are one of the leading steel producing countries in the world.”
The recent technical audit of the plant by the Ukrainians, indicates that the steel plant was in good form and set for operation, if the needed funds are being provided. Quoting from the Ukrainians’ report, ASCO chief said, “The situation of the steel plant’s equipment and facilities are satisfactory. Mechanically, the steel plant equipment and facilities are generally in good condition.”
There is no gainsaying that the project if completed has the capacity to engage over two millions Nigerians directly and indirectly. So let the Buhari government know that vision 20:2020 can never be achieved without a solid industrial base that is anchored on steel development.