Ajaokuta ‘Still-Born’ Company: A Project Dead on Arrival

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By Eric Elezuo

For years, successive governments in the Nigerian project have battled albeit unsuccessfully to establish an indigenous steel company. The dream gave birth to the initiative called Ajaokuta Steel Company, sited at Aladja in Kogi State. But like a still born baby, the project has remained in comatose over thirty years since it was started.

The steel complex has been said to suffer diverse political and trauma prior, during and after establishment. In the first place, “the Ajaokuta steel complex was originally proposed to be sited in Onitsha, Anambra state but due to ethnic sentiment and political motive, it was moved to Ajaokuta,” says Phillip Atanmuo, which was once its general manager.

He narrated how he got to Ajaokuta: “In 1981, I joined Aladja as Acting General Manager but along the line, I discovered that tribal sentiment from government functionaries was weighing down the complex. I also discovered then that our leaders were not devoted to the people’s welfare. We established Aladja first and it went to 10 to 25 percent production capacity.

“In Aladja, somebody was supplying us certain quantity of raw materials at a cheaper rate of N600 per ton and after using the material to produce a certain quantity of iron rod, we would sell it at about N1,100. But at a stage, some government officials went and negotiated with someone else to be supplying the same quantity of raw material at a cost of N1,000. I kicked against it but I was only a lone voice in the wilderness and eventually, the government officials dropped the contractor who supplied us the material at N600 and handed it over to the one who supplied at N1,000. It was when I expressed my disappointment about such a decision that the officials redeployed me to Ajaokuta.

“As an obedient servant, I went to Ajaokuta with an open mind and settled down for work. By then, we were importing bloom and working at a low capacity with the expectations that in time to come, we should have 20,000 direct employees and 150,000 or close to 200,000 indirect employees.

A steel complex of that nature could be regarded as a school which needed time to break even.

However, in 1992 during the administration of General Ibrahim Babangida, a delegation of Ajaokuta senior visited Aso Rock in desperate moves to revamp the complex. Their effort was crowned with a N500 million cheque as against the N1 billion demanded. They were however, promised the balance of the N500 million. But something happened when they group returned to Ajaokuta.

“To my greatest surprise, the moment I called a meeting and showed the government officials the cheque from Babangida, they collected the cheque from me, retired me instantly and replaced me with someone else. The unfortunate aspect of it all was that they just shared the money after I had left and folded up the company,” Atanmuo explained raising the question of who these faceless government officials were.

More revelations had it that the method of recruitment was marred by irregularities as people of low quality were recruited, their qualification was just the part of the country they came from – North.

Atanmuo explained further: “Another unfortunate thing was that most of my assistants, who were northerners, were fresh graduates. Some of them had only one or two years working experience after the National Youth Service, yet because they were northerners, they were placed on levels 14 to 16 as assistant general managers for each department.”

It was obvious that such green horns had no place in the scheme of things as regards a gigantic project like the Ajaokuta steel company. Consequently, the vision of a N1 billion revamping cost as at 1992 was truncated by the greed of a few unscrupulous government officials. Today, the amount will be indescribable.

Ever since, the complex has been moving from one one administrator to another; one president to another, and the story has remained the same – comatose – infact, greater comatose.

A solid mineral expert has reasoned that steel is a low-margin commodity business, and the Nigerian obsession with it just betrays ignorance and an obsession with prestige projects over economic realities. He noted that the only people who have benefited from Ajaokuta over the last 40 years are politicians looking for an easy way to steal public funds.

 

In 2015, former President Goodluck Jonathan set up a committee led by a renowned civil servant, Mr. Stephen Oronsaye to look into comatose government projects and make recommendations, but did not submit the outcome of the exercise to the National Assembly for further consideration before the administration left office in 2015.

Oronsaye’s committee had recommended scrapping of 102 statutory agencies from the current 263, abolition of 38 agencies, merger of 52 and reversion of 14 to departments in the ministries.

The 800-page report also recommended the discontinuation of government funding of professional bodies and councils.

The agencies recommended for scrapping the Petroleum Technology Development Fund (PTDF), Petroleum Products Pricing and Regulatory Agency (PPPRA), Petroleum Equalisation Fund (PEF), Ajaokuta Steel Company and National Iron Ore Mining Company (NIOMCO).

But for the report to be implemented, the government has kept on appointing one adviser after another, one sole administrator after another, all to avail. With these appointments and committees, goes millions of naira in expenses and logistics.

This is coming on the heels of a proposed concession agreement between the Federal Government, Global Steel Holding Limited and Global Infrastructure Nigeria Limited. The said concession, which was denied as ever happened, was later said to have been ‘re-modified’.

The Federal Government, through the Minister of Mines and Solid Minerals, Dr. Kayode Fayemi, said it had yet to concession the Ajaokuta Steel Company to any foreign firm, describing the insinuations in some quarters as misleading, later turned around to say the Federal Government is set to concession the Ajaokuta Steel Company in Kogi State for a ‘second time’.

According to Fayemi, “The original concession agreement that was signed between the Federal Government of Nigeria, Global Steel Holding Limited and Global Infrastructure Nigeria Limited has been re-modified. It has been modified to decouple Ajaokuta Steel Company Limited from Nigeria Iron Ore Mining Company in Itakpe.

 

“What that also portends is that Global Infrastructure Nigeria Limited now has seven years of their original concession to complete the mining operation to operate neo-coal in Itakpe, whereas Ajaokuta has reverted to the government of Nigeria. So, it is now being held by the Federal Government of Nigeria.”

But what has the Federal Government done with it all these years it has been in its possession remains a question yet to be answered.

 

Worried about the continuous dilapidated state of Ajaokuta Steel Company, the paramount ruler of Ebira Land in Kogi State, Dr Ado Ibrahim, urged the Federal Government to revive the company.

While lamenting the neglect of the company by past administrations, he stated that, ‘’it was sheer abandonment of the nation’s ‘engine room’ of industrialisation for massive job creation and economic prosperity over the years.’’

It is worthy of note that over 3, 000 workers have been made redundant with indescribable hardship for them and their families since the complex was abandoned.

“I have seen this project on the floor for 30 years, whether dead or in comma …I think it was in comma and likely to come alive again,” the paramount leader enthused.

Recounting the amount needed to resuscitate the ailing complex with its facilities fast going obsolete, the Sole Administrator of Ajaokuta Steel Company Limited, Isah Onobere, hinted that one of the 43 plants installed in the complex was capable of producing 600, 000 tonnes of steel annually and that the quantity could cover a 10, 000 kilometres of rail network across the country, stressing
that the company requires N80bn to put the plant in use at full capacity.

He added that the Light Mill section of the plant, which require N43bn to become functional, and could produce 400, 000 tonnes of steel per annum at full capacity.
He also said that with an investment of the N43bn, the plant could generate an average annual income of N80bn.
The Thermal plant of the firm which has installed capacity of 110 megawatts of electricity, requires N5bn to become operational and would generate N18.7bn annually, adding that
that the electricity that would be produced by the firm could power the entire 43 plants in the complex when fully operational, and also supply power to three states including Kogi.
Maintaining that the heavy equipment installed in the sprawling edifice was not obsolete, he described the complex as the bedrock of Nigeria’s development, and that the government must be careful to concession it because any attempt to do so, would amount to selling out scraps.
In all about $513m was required to complete Ajaokuta project.

 

It would be recalled that the first phase of the project reportedly reached 98 percent completion but was abandoned in 1994. And ever since then
N23trn worth of steel products had been imported into Nigeria in nine years whereas $513m is needed to complete the project. Total investment for the entire project is $4.6bn.”
The Ajaokuta Steel Company was established by the administration of former President Shehu Shagari to industrialise Nigeria, overnight.
Chairman, Senate Committee on privatization, Senator Ben Murray Bruce, on his part, advised the Federal Government to involve the Ajaokuta Steel firm in its negotiations with the Chinese government which was expected to construct 8, 000 kilometres of rail network in the country, at the cost of $80bn.
He said what the government needed to do was to tell the Chinese government that the steel needed for the entire project could be produced in Ajaokuta and that the firm requires about $40m to produce the raw materials it needed.

He said: “After spending about $5bn, it does not make any sense to abandon the plant. The government should have had a plan. We are disappointed that successive governments after Shagari abandoned the project.”

 

But many believe that Ajaokuta was already an obsolete Soviet relic back in 1982 when it first came into existence, and steel production technology has moved on since then. They meant in essence that the project was delivered dead and ineffective, and that government never intended to make it a national cash cow, but a conduit pipe for siphoning the nation’s wealth.

Again, there is an international conspiracy attached as the Western countries and their IMF/World Bank who were in a cold war with the Soviet Union who built the Ajaokuta Steel Mill advised Nigeria to rather buy cheap steel from places like Australia instead of spending more money to fully complete it and let the Russians have a foothold in Nigeria.

Out of sheer ignorance, the military rulers who did not understand much of international politics quickly bought their idea and get the project in a comatose situation. They failed to consider the long term benefits of having a vibrant steel industry.

Like the great Ronald Reagan once said “Govt is not the solution, govt is the problem”, and so let it be Ajaokuta.

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