By Charles Nwaoguji
In the quest to develop its policy in the steel sector the Federal Government of Nigeria under General Gowan era promulgated Decree No.19 on April 14, 1971 setting up the Nigerian Steel Development Authority (NSDA) which was charged with the responsibility for the planning, construction and operation of steel plants in the country. It was in addition tasked with carrying out investigations related to geological surveys, market studies and metallurgical research. The NSDA also embarked on short and long-term training of staff in overseas countries such as India and the Soviet Union on the operation and management of an iron and steel plant. Hence, in 1973, Tiajpromexport (TPE) of the then USSR was commissioned to prepare a preliminary project Report (PPR) on the iron and steel industry in Nigeria. The Report submitted in 1974, studied alternative production schemes based on both local and imported raw materials and was accepted in 1975.
Poor funding has been the major challenges facing this multi-billion naira project that is capable of pulling Nigeria out its economic difficulties.
The current situation is worst now as the current administration is not ready to do any thing about the steel industry. As the former Minister of State for Mines and Steel Development, Abubakar Bwari puts it , the federal government has no money to complete the Ajaokuta Steel Company Limited.
Ajaokuta Steel Mill was incorporated in 1979 but has never produced steel. Referred to as the “bedrock of Nigeria’s industrialization,” the project which was started by the Soviet Union under a cooperation agreement with Nigeria, reached 98 percent completion by 1994, with 40 of the 43 plants at the facility completed.
Mismanagement and failed attempts at privatization has seen the mill remain non-operational. But now, the government may give it another try.
The steel which has gulped about $80 billion since its inception, needs another $652 million for it to be ready for production, money the government says it does not have.
Nigeria has one of the highest deposits of iron ore in Africa, nay the world. The steel industry is strategic for providing feeds for the housing, construction, railway, automobile, shipbuilding, arms, and ammunition industries of any nation.
The Ajaokuta Steel project, sitting on 24,000 hectares, out of which only 800 hectares have been built, should provide 10,000 skilled direct jobs, and another 500, 000 unskilled jobs. The project that can produce 55 MW electricity, also has a 10,000-housing units residential estate, out of which only 4,000 have been completed.
Phase One is expected to produce 1.3 million tonnes of liquid steel per anum. Phase Two should double production to 2.6 million tonnes of flat iron and steel products, while Phase Three would expand production to 5.2 million tonnes of various steel products, including heavy plates.
Sadly, all of these are on paper as successive governments have failed to pay any attention to this project, despite its potential to turn the Nigerian economy around for the better.
If Nigeria could spend over $80 billion on the project, why can’t the country generate the $652 million required?
$80 billion down the drain through one project is indeed disheartening for a country which is currently regarded as the poverty capital of the world, how sad.
An expert, Engr.John Edwin of Global Outlook Limited, while speaking to Daily Sun, recently, has fingered what he described as “monumental failure” on the part of Ajaokuta as a major reason while most of Nigeria’s contemporaries with whom she started the struggle for industrialisation back then have crossed their line, leaving Nigeria far behind as they now rub shoulders with the industrialised countries of the world. There are many white elephant projects in Nigeria, but the Ajaokuta Steel Company is perhaps Nigeria’s most infamous white elephant project.
“When the Russians were building it,” Edwin said, “they built it like they were building their own. They built it so it in a way that would make it almost independent of imports. They were very socialist in their approach.”
According to him, the steel plant has 43 plants in it. From assembly plants to workshops, and almost everything needed to function can be built there.
Thousands of Russian engineers lived and worked in Nigeria to make this project come to life and in 1983, Shehu Shagari inaugurated the project, though the complex was still not completed at the time. 40 of the 43 plants are now completed.
The Managing Director of Currentwave Nigeria Limited, Engr. Akin Akinwale, said “compared to the amount of progress made between ‘80 and ‘83, not much has happened after that.
“Corruption started to happen, and Ajaokuta became a conduit pipe,” one veteran staff said. “It became an outlet where money meant for this place never really reached here.”
Preliminary market studies were carried out and studies were initially directed towards the feasibility of establishing rolling mills.
However, because of the growing awareness of the availability of iron ore in Agbaja, Udi and other areas of the country, emphasis later shifted to establishing an integrated steel plant.
In 1967, a team of Soviet experts arrived in Nigeria to conduct a feasibility study on the establishment of an iron and steel plant, as a follow-up on a technical/economic cooperation agreement between the governments of Nigeria and the USSR.
Successive governments have commissioned audits on the steel firm. Since his first term in 2015, President Muhammadu Buhari has sanctioned at least two audits.
Last April, he refused to sign the Ajaokuta Steel Company Completion Fund Bill, preventing a $1bn allocation to the project from the Excess Crude Account.
However, labour unions are lashing out at the government, accusing it of lacking political will. They believe Ajaokuta could deliver 50,000 direct jobs after completionBottom of Form
“For selfish reasons, the United States of America, Britain and other European countries have continued to frustrate all efforts geared towards revamping the company, and successive governments over the years have not demonstrated any political will to revive Ajaokuta,” said Jimoh Salami, chairman of the local mineworkers union.
Sources of funding remain unclear for Ajaokuta steel company. The parliamentary committee says it is working it with the president’s Economic Recovery and Growth Plan. How soon this would be, we don’t know.
Nigeria is facing a difficult choice: cut its losses by shutting down the steel mills, or risk fresh funding to revive them.