Punch Editorial Board

THE President, Major General Muhammadu Buhari (retd.), who rode to power promising change, has exposed himself as not different from his predecessors as evidenced by his lacklustre, unimaginative, and insipid handling of the Ajaokuta Steel Complex. Consequently, the ASC has cemented its white elephant status, producing no steel but gulping public funds and fattening the pockets of unscrupulous individuals.

A new report reveals that the Buhari regime allocated N20.4 billion to the Ajaokuta Steel Company Limited from 2016 to 2021 despite the company’s idleness. In 2016, it received N295.1 million with N135.2 million released by October of that year. In 2017, the total allocation was N4.3 billion with recurrent expenditure at N3.9 billion and capital expenditure at N354.1 million. This is preposterous given the fact that by the Federal Government’s admission, over $8 billion had been expended on the project with nothing to show for it. The fact that recurrent spending far outstrips capital spending is bad economics.

Conceived as the launchpad for Nigeria’s industrial take-off, its construction was kick-started by President Shehu Shagari in 1979, the first phase was inaugurated in 1983, built by a Russian firm, Technopromexport. It was set for completion in 1986, but due to policy inconsistencies, this target was never met. In 1994, the Russian firm abandoned the project when it was at 98 percent completion, citing Nigeria’s inability to meet its contractual obligations.

Russia made overtures to Nigeria in 2001 to complete the complex, but President Olusegun Obasanjo leased the project to Solgas Energy, an obscure American firm, in 2004. Citing non-performance, the contract was revoked, and another was signed with Global Infrastructure Nigeria Limited, owned by an Indian firm, Global Steel Holdings, which was also to handle the Nigeria Iron Ore Mining Company in Itakpe. By design, NIOMCO was to supply Ajaokuta with iron ore.

Obasanjo’s successor, Umaru Yar’Adua, terminated the concession, stating that the agreements were largely skewed in favour of the concessionaire to the detriment of Nigeria. He accused GINL of stripping Nigeria’s assets and ordered that the firm be investigated for corruption. The matter eventually ended in a London court with GINL claiming it had spent over $500 million on the project. Eventually, the matter was settled out of court.

In 2016, the Buhari regime signed an agreement with the company for the resuscitation of the project. Vice-President Yemi Osinbajo, stated, “It is very clear that this is one of those terrible failures of just basically getting things done over the years. I think that somehow or the other we let the ball drop so many years ago and somehow, we couldn’t get this back on track. Unfortunately, it has cost us a lot; the fact that we had Ajaokuta Steel for so long and we had the iron mining company for so long and yet produced absolutely nothing is by itself a tragedy of immense proportions.”

But five years after, and the assurances by the Buhari regime, the Ajaokuta complex is still moribund. Worse still, government officials continue to sing discordant tunes over the fate of the complex. In January 2019, the then Minister of Mines and Steel Development, Abubakar Bwari, said 11 companies had shown interest in entering a concession on Ajaokuta. The government was no longer interested in running it directly, he promised. He said all legal issues with GINL had been resolved, adding that while Ajaokuta steel plant was fully owned by the government, GINL had been given a seven-year concession on the iron ore company Itakpe.

In July 2021, however, the Director-General of the Bureau of Public Enterprises, Alex Okoh, said, “For Ajaokuta, it’s a very complex issue. Currently, there are negotiations with GINL, who are the original concessionaires of Ajaokuta and it’s a very complex problem to untangle. But I can, without divulging too many details, state that we are close to being able to resolve the issue, especially the litigation around Ajaokuta.” Such uncertainty is bad business.

Some indications are that borrowed funds would be put into the project. Already, the Federal Government has set up the Ajaokuta Presidential Project Inauguration Team with a view to revamping the project based on a government-to-government agreement with funding from the Afreximbank and the Russian Export Centre. When will this folly end?

According to the Federal Government, about $8 billion has been spent on the project to date. Unfortunately, about three-quarters of the complex has been abandoned, while only the light mills have been put into operation for small-scale fabrication and the production of iron rods. Viewed against the cumulative huge financial losses, the age of the plants, developments in the global steel industry and the demonstrated failure of the government to run the facility efficiently or transparently, putting more funds into the project by way of loans that would be repaid by the Nigerian people is unwise and counterproductive.

In January, the Minister of Finance, Budget and National Planning, Zainab Ahmed, told lawmakers that the Federal Government would sell selected properties to fund this year’s budget. Rather than sell off the ASC and the oil refineries to rake in funds for the government, Buhari has continued to plunge the nation into more debts with 97.8 per cent of government revenue spent on debt servicing between January and May. This is not how to run an economy. Enough of the concessions, Ajaokuta should be privatised outright.

The National Assembly, which is saddled with the task of oversight and ensuring executive accountability, should make sure that such privatisation is done transparently. Sadly, the legislative arm of government has also been complicit in the waste by approving frivolous budgets for Ajaokuta. Against better advice, the Eighth NASS absurdly passed a bill endorsing the “completion” of the ASC, which would be funded with $1 billion from the Excess Crude Account. Thankfully, wisdom eventually prevailed.

Experts say that steel production and consumption levels are indices of national power. According to the World Bank, steel is a major indicator for measuring economic progress and a key driver of other high investment and job-creating industries. These include mining, which supplies the raw materials − iron ore, coal, bauxite, and limestone. It is important in construction, housing, railways, shipping, defence, manufacturing, power and water supply, automotive/transport and agricultural (for machinery and implements) industries. But the government should focus on providing a business-friendly environment and the needed infrastructure. To this end, the inauguration of the Ajaokuta-Warri-Itakpe railway, which will help convey raw materials to Ajaokuta is commendable. That is how government intervention should be and not the direct management of facilities like the Ajaokuta complex.

Any promise to revive the steel complex is either a huge joke or a dubious channel to siphon public funds. It won’t work. Ajaokuta is a personification of the failure of Nigeria. For a project that was supposed to create no fewer than 500,000 jobs, it has now become a liability that needs to be sold off to competent hands immediately to actualise its potential. Buhari must therefore resist the temptation to cling to a decaying asset because of a warped sense of national pride as his predecessors did. The regime must snap out of the fantasy of reviving this pipedream.