Ajaokuta: How Mismanagement, Stealing Crippled $4.6bn Steel Industry. |Anyigbaleft

Ajaokuta Steel Complex Limited (ASCL) in Kogi State is 40 years old. But rather than roll out the drums and pop champagne to celebrate th...

Ajaokuta Steel Complex Limited (ASCL) in Kogi State is 40 years old. But rather than roll out the drums and pop champagne to celebrate the company’s ruby jubilee, Nigerians are weeping as the complex lies prostrate atop a 24, 000-hectare sprawling greenfield.

Described as the biggest white elephant project in Nigeria, the enterprise has not produced a single sheet of steel since inception; no thanks to institutionalised corruption that has continually blighted government establishments in Nigeria.

ASCL was founded in 1979 to help address Nigeria’s infrastructure nightmare and provide 10,000 direct jobs as well as 500,000 indirect employment opportunities in the first of the three phases. It was also envisaged to have a multiplier effect on agriculture, transportation, mining, maritime and other sector.
It was conceived after a Soviet survey team discovered iron ore deposits in Itakpe and in 1975, a contract was signed between the Nigerian government and the Soviet state-owned company, Tiaj Prom Export (TPE).

But 40 years down the line, the company itself has become Nigeria’s nightmare, gulping billions of naira on a regular basis with little or nothing to show for it.

South Korea, which started its steel factories around the same time with ASCL, has become a fully industrialized nation, posting annual revenue of over $60 billion and a staff strength of 65,000.

In 2017, the then Sole Administrator of the ASCL, Joseph Onobere, cited a figure of $4.6 billion as the cost of building the complex and said an extra $400 million was required to complete it.

Although there are reports that the enterprise has gulped nothing less than $10 billion since inception, what is more worrisome to the younger generation of Nigerians is that government has paid lip service to the place capable of solving the nation’s technological problems and employing hundreds of thousands of them.
Onobere’s successor and incumbent Chief Executive, Sumaila Abdul-Akaba has a different estimation on ASCL. He recently said the enterprise was 95.7 per cent ready, while the fund required to complete and make it operational is estimated at $653 million.

He explained: “That amount does not cover external facilities, but the internal infrastructure; like the steel equipment, rail and plants.

“What has happened differently is that a lot of vandalism in terms of underground cables and some transformers has taken place in Ajaokuta. People want to steal some parts and sell.”

The near-completion data has been the sing-song in government since the first phase was inaugurated in 1983.

The steel plant itself is built on 800-hectares of land, though it was integrated with the iron ore and rolling mills in Itakpe (Kogi), Aladja (Delta), Osogbo (Osun) and Katsina (Katsina State).

The concept of Ajaokuta was to produce 1.3 million tonnes of steel annually in the first phase, 2.6 in the second, and 5.2 in the third phase respectively. That dream appears to have been abandoned.
While the ASCL has not produced a single sheet of steel, the light mills were finally put into operation in 2018 for small-scale fabrication and the production of iron rods.

However, three-quarters of the plant have been abandoned, including the large-scale equipment and the internal railway.

Nigerians worry about the propensity of successive administrations to use the ASCL as a conduit to loot the treasury, rather than a fulcrum to build the needed infrastructure for the nation.

Since Nigeria that is blessed with raw materials such as iron ore, coal, natural gas and limestones needed for the manufacture of steel, the complex was designed to produce various products in various capacities. For instance, Coke-880, 000 tonnes/year; tar- 48,000 tonnes/year; ammonium sulphate (fertilizer)-12, 000 tonnes/year; liquid metal – 1, 350,000 tonnes /year; pig casting machine – 155, 000 tonnes/year; blast furnace slag-675, 000 tonnes/year; liquid steel-1,300,000 tonnes/year and many others.

To supply it with the needed raw materials and connect it with the world market, a contract was awarded in 1987 for the construction of Nigeria’s first standard gauge railway, from the iron mines at Itakpe to the steel mill at Ajaokuta and continuing to the Atlantic Ocean at Warri.

However, both projects have been grossly mismanaged, leaving the complex unfinished four decades after construction began.

After several failed attempts at privatisation from 2003 till 2015, the federal government took back control in 2016 from a concessionaire and returned to paying salaries and benefits to its redundant workforce.

Two years after that, the then Minister of Mines and Steel Development, Abubakar Bwari, raised hopes that 11 companies, which he did not reveal, had shown sufficient interest in the ASCL. At the end of his tenure last May, it became crystal clear it was all a ruse.

But eager for a way out of the perennial logjam that impeded the growth of the steel industry, experts have come out to define and design the next step for the government since Nigeria’s quest for industrialisation is at the mercy of advanced countries who gulp the nation’s hard-earned foreign exchange by selling what could have ordinarily been produced locally.

Championing the new order is the Manufacturers Association of Nigeria (MAN) and some industry experts who have advocated outright transparent privatisation of the enterprise.

In President Muhammadu Buhari’s first tenure, there was a major disagreement between the legislature and the executive on the path to toe in resuscitating the moribund complex.

On its part, the National Assembly passed a bill that advised the government to draw down $1 billion for the project from the Excess Crude Account, but Buhari rebuffed it, preferring a concession arrangement instead.
While the ASCL rots away, a study undertaken by the Oxford University has shown that Nigeria loses billions of dollars by not keying into the global steel industry valued, as of 2018, at $2.9 trillion or 3.8 per cent of the global Gross Domestic Product (GDP). It contributes about six million direct jobs and millions of other indirect jobs. China, which reached 928.3 MT steel production in 2018, was the major beneficiary of the receipts through exports, followed by India, which relegated Japan to the third position.

Experts insist that without privatising her own industry, Nigeria cannot take advantage of this juicy market.

An engineer, Wale Adebayo, told Daily Sun that he had hoped to work at ASCL having visited the place in the 90s and saw the gigantic machines there.

“I said to myself that I would work here. I went there as a secondary school student on excursion. I went there before and after my university education. I discovered nothing had changed in many years. It was the same story of skeletal services and promises of completion. Today, I’m 48 and ASCL is worse than it was”, he lamented.

However, hopes of resuscitating the complex brightened recently as the federal Government insisted that plans were in top gear to give it to qualified investors on concession.

In line with that plan, key stakeholders comprising the Chairman, House Committee on Steel, Abdullahi Ibrahim; the Director-General of the Bureau of Public Enterprises (BPE), Alex Okoh and the Senior Special Assistant to the President on Infrastructure, Imeh Okon, recently visited the complex on a fact-finding mission, preparatory to fully granting the concession.

Speaking at the visit, the BPE boss, Alex Okoh said the main objective was to ensure the country taps into the potential of the steel sector to transform the Nigerian economy.

“Other objectives of the visit were to avail members the opportunity to physically inspect the complex in order to appreciate the quantum of investments made; meet with the management and obtain the management’s option(s) on the issues that affect the plant with the view to enriching the strategy to be adopted for resuscitating the complex.

“We want to address the issues of the steel industry and rescue it from its current state, foremost among which is the completion and operations of ASCL
“Government is desirous to achieve this through a robust framework to drive and guide the process for the revitalisation of ASCL and the steel industry in general”, he explained.

At the meeting with the management of the ASCL, Okoh emphasized the willingness of President Muhammadu Buhari’s administration to resolve the on-going legal issues between FGN and Global Infrastructure Nigeria Limited (GINL).

He added that the FGN was desirous to see that ASCL was completed and made operational, and thus solicited the support of the National Assembly, management of ASCL and other stakeholders in achieving the goal under this administration.

A physical tour to some of the major plants, installations and facilities in the complex was done by the team where it verified the management’s claim that many of the machines were in good condition and would only require minor repairs to operate effectively.

Additionally, the team observed that the status of the ASCL plant was not as dilapidated as assumed generally, but that the plant was rather in a reasonably operational state.

According to the Brussels-based World Steel Association, for an economy to be healthy, it requires a healthy steel industry.

Anxious Nigerians are itching to see the federal government walk the talk of reawakening the 40-year old sleeping giant via a transparent concession deal.

Experts assert that such an effort would mark the beginning of opening up the Nigerian economy to the much-needed foreign direct investment, which declined to $2.2 billion in 2018.

A functional ASCL will significantly reduce government’s spending on infrastructure and capital projects that gulped N5.41 trillion between 2015-2018. This is because the bulk of the imported materials can be sourced locally once ASCL is up and running.

-Credit: The Sun




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ANYIGBALEFT: Ajaokuta: How Mismanagement, Stealing Crippled $4.6bn Steel Industry. |Anyigbaleft
Ajaokuta: How Mismanagement, Stealing Crippled $4.6bn Steel Industry. |Anyigbaleft
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