August 23, 2023/CSL Research
Based on a Punch news report, the Minister of Steel Development, Shuaibu Audu, at a press briefing in Abuja announced plans to resuscitate the Ajaokuta Steel Company. The Minister also announced plans to set up a roadmap for the development of the steel sector and enact required bills to regulate the steel sector.
The report also states that between 2016 and 2023, a total of N29.35bn has been allocated to cover personnel costs for the Ajaokuta Steel Complex which is yet to commence full operations in over 42 years.
We recall that in May 2020, the Federal Government inaugurated the Ajaokuta Presidential Project Implementation Team headed by the then Secretary to the Government of the Federation (SGF), Boss Mustapha, with the former Minister of Mines & Steel Development as the alternate chairman. According to the SGF, the mandate given to the implementation team was to prepare and submit periodic work plans and develop concession contract terms for reviving the company.
The Ajaokuta Steel Company is one of the foremost industrial projects conceived after the discovery of iron ore and coal deposits in commercial quantities in Nigeria in 1970. The Steel company with a capacity to produce 1.3 million tonnes of steel per year was designed and built as an integrated plant by the Russian Steel Company, TyazhpromExport, in 1976, after reaching an agreement with the Nigerian government. By 1983, the project had reached 95% completion and was commissioned by the then President Shehu Shagari. The agreed plan was that the remaining 5% of the project will be financed using profits generated by the company.
However, after almost four decades of several concessions and legal disputes with foreign private companies, Ajaokuta steel company remains in a moribund state.
Over the years, successive governments have made efforts to revive the steel company, however, such efforts have proved abortive. The failure of the project has been blamed on several factors, with poor management being the leading factor.
The project has also not been spared from legal battles as the Federal government had been involved in a legal face-off with Global Steel Holdings Limited, an Indian firm involved in the failed concession of the Steel Company. In 2016, the Buhari administration settled a pending court case that enabled the FG to take control of the project and accelerate efforts to resuscitate the company. While we believe the steel company has enormous potential given its capacity to become a major source of FX, we doubt if a focus on Ajaokuta will not be yet another attempt at wasting the country’s scarce financial resources.
