Ajaokuta Steel Company and Buhari’s renewed pledge

In demonstration of his commitment towards ensuring a functional Ajaokuta Steel, Buhari, in October 2019, met with Russian President Vladmir Putin at the Russia-Africa Summit in Sochi, where bilateral agreements were reached for the purpose of reviving the comatose steel mill

 

By Michael Jegede I Sunday, January 29, 2023

 

LAGOS, Nigeria – Like his predecessors in office, the resuscitation of the recklessly abandoned Ajaokuta Steel Company (ASCO), the largest integrated steel complex in the Sub-Saharan Africa, occupying 800 hectares of land on 24,000 hectares of an expansive greenfield area, was one of the promises President Muhammadu Buhari (PMB) made to the people of Kogi State to secure their votes in 2015.

During his re-election campaign in 2019, a reassurance was given of his commitment to the completion of the steel project, situated along the West Bank of River Niger in Kogi Central Senatorial District, and envisaged to serve as a pivotal element in the country’s industrial revolution plan almost five decades ago.

Since Buhari’s inauguration for a second term in office, the Federal Government (FG) continued to give Nigerians hope that Ajaokuta Steel would become fully operational before the expiration of his tenure. There were indeed apparent indications pointing to the fact that the Buhari-led administration was making genuine efforts to address the issues impeding the take-off of the steel company.

In demonstration of his commitment towards ensuring a functional Ajaokuta Steel, Buhari, in October 2019, met with Russian President Vladmir Putin at the Russia-Africa Summit in Sochi, where bilateral agreements were reached for the purpose of reviving the comatose steel mill. Buhari was widely commended for that significant move which was followed by the setting up of the Ajaokuta Presidential Project and Implementation Team (APPIT) in 2020. I recall how virtually everyone who called in, poured encomiums on PMB for his strong determination to wake up Nigeria’s sleeping steel giant, when I featured as a guest in Abuja Vision FM’s flagship programme, Brugami, to discuss issues relating to Ajaokuta Steel shortly after the crucial meeting between him and Putin.

However, the Minister of Mines and Steel, Olamilekan Adegbite, on March 31, 2022, said the current administration would no longer be able to deliver a fully revamped Ajaokuta Steel. Adegbite placed the blame on the COVID-19 pandemic and Russia-Ukraine war. According to him, Buhari had approved the release of $2m in 2020 for the technical audit of the steel company to ascertain the extent of work to be completed under an arrangement with a Russian firm, TYAZHPROMEXPORT (TPE), the original builder of Ajaokuta Steel, recommended by the Russian government.

The Mines and Steel Minister remarked: “Arrangements were being made to commence the process but COVID-19 came and put a halt to all activities, causing a force majeure.” He said after the COVID-19-related travel restrictions were relaxed, effort made to continue the process was thwarted with the international sanctions imposed on Russia resulting from its war with Ukraine.

Recently, PMB while in Lokoja to commission some laudable legacy projects executed by the Kogi State governor, Alhaji Yahaya Bello, made a renewed pledge to Kogites and Nigerians that his administration will see to the completion of the process that will bring Ajaokuta Steel to life.

Stressing that Ajaokuta Steel is dear to his heart, the President stated: “Our administration is working to reposition Kogi as an investment hub through the activation of solid minerals in the state. No project is dear in our heart like the Ajaokuta Steel Company in Kogi State, which we inherited in moribund condition from the previous administrations.

“The steel company has disputes both locally and internationally, I am glad to say that through our concerted effort we are able to settle the dispute by paying some money and the company is now ready for concessioning to competent private investors that will operationalize it for the people of Kogi State and Nigerians at large. We are in talks with a reputable company in the United State of America and by God’s grace, Ajaokuta will come back to serve the people of Nigeria very soon.

“The significance of making Ajaokuta Steel working again is enormous as it will generate over 500, 000 jobs for Nigerian youths and also generate high revenue for the state and the country in the tune of over 1.6 billion dollar annually. Nigerians should be rest assured that my administration will pursue the issue of Ajaokuta Steel Company to logical conclusion before I leave office as president of Nigeria.”

Buhari was also quoted as saying that “The process has cost this Federal Government over 400m US Dollars so far, but I consider it money well spent as we move closer to achieving our objective of transforming Kogi State into Nigeria’s iron and steel powerhouse.”

The Minister of Justice and Attorney General of the Federation (AGF), Abubakar Malami, SAN, had in September 2022, announced that FG has finally resolved the long-standing contractual dispute over the steel complex which had been at the International Court of Arbitration since 2008.

Malami disclosed that FG was able to secure a 91% reduction in the original claim of $5.258 billion by Global Steel Holdings Limited (GSHL), and would have to pay only $496m. GSHL is the Indian firm the then President Olusegun Obasanjo concessioned ASCO and National Iron Ore Mining Company (NIOMCO) Itakpe to in 2004 and 2005 respectively, after a previous concession deal with SOLGAS of the United States of America fell flat.

The AGF explained that the root cause of the disputes was the termination of contracts entered into by the Obasanjo administration (between 1999 and 2007), and terminated by late Umaru Musa Yar’Adua, for giving greater advantage to the Global Steel group accused of “asset stripping and other unwholesome practices” believed to be wreaking havoc on ASCO.

About two weeks after Malami gave the cheering news that the legal bottleneck hindering Ajaokuta Steel revival has been successfully removed, his spokesman, Umar Gwandu, disclosed that $250m has been paid to GSHL as part of the first tranche of the $496m arbitration fee, according to The Africa Report. Gwandu was quoted as saying: “The first settlement of $250m was effected on Thursday 15 September 2022 to Global Steel.” The Minister of Information and Culture, Alhaji Lai Mohammed just revealed that FG has now paid a total of $446m with a balance of $50m which will be paid in February to clear off the judgement debt on ASCO.

On August 1, 2016, just about one year, two months into Buhari’s first term in office, FG and GSHL signed a renegotiated concession in an out-of-court settlement initiated by the immediate past administration of Goodluck Jonathan. That arrangement, we were told, returned full control of Ajaokuta Steel to the Nigerian government while the Indian firm, GSHL was to run NIOMCO for a period of seven years.

Even though some stakeholders were vehemently against the 2016 modified concession, the Buhari-led administration perhaps felt that it would be a quick way to resolve the lingering issues. Many Nigerians eager to see Ajaokuta Steel come to life hailed the decision and prayed for it to work in the interest of the country.

Months later, while Nigerians were still basking in the euphoria that greeted the said reworked concession, reports emerged indicating that GSHL was making fresh demands from FG. Their unjustifiable demands made outside the modified agreement were not granted by FG. GSHL, ostensibly trying to frustrate the possibility of revivifying ASCO, made good its threat to return to the International Court of Arbitration in 2020.

President Buhari is believed to have charted the right path for the future of Ajaokuta Steel with the latest resolution of the protracted contractual dispute. Yes, much as it could be seen that PMB has made assiduous efforts to reactivate the steel complex, a national treasure left to lie fallow for over 40 years, what Nigerians would have loved to hear now, is the commissioning of a completed ASCO ready for full operation.

Knowing the great value the operation of a completely revitalized ASCO would add to our economy, one would expect that the steel project should not have been allowed to drag for this long. Nigerians are seemingly tired of hearing promises on ASCO, a project that has over the years become a cesspool of corruption and reportedly consumed over $8 billion, requiring only $652m to complete, as revealed by the last technical audit conducted in 2018. Another election year has come and the presidential candidates have started making the usual promises in their visits to Kogi State for campaigns.

As I have always asked in my previous write-ups on ASCO, how can we still be dwelling on an uncompleted Ajaokuta Steel, after over four decades of its conception, a project originally programmed to be completed in six years and expeditiously taken to over 85% completion by the late Shehu Shagari administration as at 1983 within a space of three years after the foundation stone was laid? Certainly, Shagari would have completed the project if not for the military coup that toppled his government three months into his second term in office.

As at 1994, when the original builder, TPE Russia, finally deserted ASCO, due to the failure of the Nigerian government to fulfil its side of the contract, it had reached about 98% completion. Of the 43 different industrial units in the integrated steel complex, 40 had been fully completed. 476 out of the 482 items said to be in the Ajaokuta Steel Contract had been delivered and put in place before work on the project was stopped. The initial contract for the construction of the steel plant was signed on the 4th of June, 1976 during Obasanjo’s military regime.

In just 35 years (between 1978 and 2013), while Nigeria kept dilly-dallying and foot-dragging on ASCO that was supposed to be the bedrock of its industrialization, China rose rapidly from their pathetic story as a backward and impoverished agrarian society to the world’s largest manufacturing powerhouse, with steelmaking being a key driver. Today, China is top on the world list of countries by steel production, producing 1.0648 billion tons in 2020 and 1.0328 billion tons in 2021, which amounted to over 53% of the global output. For over 15 years now, it has unwaveringly maintained the top position on the global chart for steel manufacturing.

A media report in 2017 indicated that according to the National Bureau of Statistics (NBS) Nigeria imported steel products amounting to N23 trillion in a period of 10 years. Another report last year showed that over a trillion naira was spent on iron and steel imports within 9 months. All this money would have remained in the system and helped to considerably boost our economy if we had a completed and fully operational Ajaokuta Steel.

We are richly blessed with all the raw materials required for steel production including Iron Ore which is the major ingredient. With an estimated reserves of over 3 billion tonnes, Nigeria is presumed the 12th largest country in terms of iron ore deposits globally and the second largest on the African continent. Yet, we have not been able to effectively harness the resources to produce steel for the benefit of our nation.

It is hoped that this current settlement, said to have been reached via the International Chamber of Commerce (ICC) Alternative Dispute Resolution (ADR) framework, will, indeed, be the final resolution of the legal brawl over ASCO, which lasted for almost 15 years, blocking the completion of Nigeria’s number-one steel firm designed to actualize the country’s industrialization dream.

NB: Michael Jegede, a journalist writes from FCT, Abuja