How Buhari’s Govt Failed To Revive Ajaokuta Steel Company Despite N31bn Allocation

The Federal Government under President Muhammadu Buhari allocated a whopping sum of N30.51bn in seven years to the idle Ajaokuta Steel Company Ltd, THE WHISTLER can report.

Details of the N30.51bn is contained in the annual budget of the federal government for each of the seven years covering 2015 and 2022 obtained from the Budget Office of the Federation.

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Built on a 24,000 hectares (59,000 acres) site in 1979, the Ajaokuta Steel Company is the largest steel mill in Nigeria, and the coke oven and byproducts plant are larger than all the refineries in Nigeria combined.

However, the project was mismanaged and remains incomplete over 40 years later. Three-quarters of the complex have been abandoned, and only the light mills have been put into operation for small-scale fabrication and the production of iron rods.

Buhari had during his campaign in the build-up to the 2015 general election promised to revive the Ajaokuta Steel Company if elected president of the country.

Then, Buhari had while campaigning in Lokoja promised to resuscitate the company, which has been out of production for several years.

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He explained that the resuscitation of the plant would enable government to generate employment for the nation’s teeming youths and create wealth for the country.

But seven years into his administration, that promise has not been fulfilled.

Investigations by THE WHISTLER showed that despite its moribund state, the company is still enjoying huge annual budgetary allocation by the government.

For instance, out of the N30.51bn allocated to the Company in the seven-year period, the sum of N26.01bn representing 85.25 per cent went for personnel cost while capital allocation gulped N1.82bn which is just about 5.96 per cent.

Similarly, the Buhari’s administration allocated N603.4m for overhead expenses for the Steel Company while the sum of N1.21bn and N866m went for concessioning of the Steel Plant and transaction adviser services respectively.

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Further breakdown of the N30.51bn showed that the Federal Government allocated N3.88bn, N4.27bn, N4.28bn, and N3.59bn to the Plant in 2016, 2017, 2018 and 2019 respectively.

This website could not obtain the details of the 2015 allocation from the Budget Office of the Federation.

However, for the 2020, 2021, and 2022 fiscal periods, the government allocated the sum of N3.73bn, N4.21bn and N4.46bn to the Steel Plant respectively.

Further breakdown of the N26.01bn allocated for personnel cost showed that N3.8bn each was provided for the 2015 and 2017 fiscal period while 2018, 2019 and 2020 had N3.76bn, N3.25bn and N3.53bn respectively.

For the 2021 and 2022 fiscal periods, N3.89bn and N3.93bn were allocated by the government for payment of salaries in the steel plant.

THE WHISTLER understands that the steel mill reached 98 per cent completion in 1994, with 40 of its 43 plants having been built before it got stuck, with the remaining two per cent for external infrastructure like waterways and viable ports.

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Despite the regular budget, the steel company is yet to commence full operations in over 42 years, with the government making failed attempts at privatization and concession.

In an attempt to revamp the company, an Indian firm, Global Steel Holdings Limited, won the concession of the Ajaokuta steel mill for a 10-year period but the agreement was revoked when the federal government accused the firm of asset stripping, a development which led to a court case between the two parties.

In 2016, the federal government announced that the legal dispute had been resolved, after it reportedly ceded the National Iron Ore Mining Company, Itakpe, to Global Steel for the remaining concession period, in line with an agreement reached during mediation talks.

However, the resolution has since turned contentious. In 2019, Buhari ordered the completion of the company, while the Senate in 2020 also passed a resolution urging the federal government to, as a matter of urgency, complete the Ajaokuta Steel Complex.

To revive the Plant, the federal government immediately inaugurated the Ajaokuta Presidential Project Implementation Team.

The Minister of Mines and Steel Development, Olamilekan Adegbite, had said that the Ajaokuta Presidential Project Implementation Team would enact a pact reached between Buhari and Russia’s President Vladimir Putin, which required the East European country to assist in completing the project and finding a Russian firm to manage it on Build-Operate-and-Transfer basis.

The minister said that Afreximbank would fund the project with $1bn, while the Russians would offer $460m, adding that a Russian firm, MetProm Group, would ensure the completion and operation of the steel company.

However, efforts at concession have failed. There had also been calls on the federal government to privatize the company.

The federal government halted privatization move, stating that the problem with the Ajaokuta Steel Company was very complex.

In July of 2020, Adegbitesaid that the Ajaokuta Steel Company Ltd. would function to capacity before the end of the administration of Buhari.

The minister added that the federal government had made efforts to ensure that the Russian company that built the steel industry would come to Nigeria to conduct a technical audit of the company.

But in March this year, Adegbite shocked Nigerians when he said that the federal government will no longer be able to revitalize the company in 2022 as it earlier pledged, citing the impact of COVID-19 and the ongoing Russia-Ukraine war.

Adegbite said the project will also likely not be completed by the Buhari administration before it leaves office in 2023.

The minister explained that before the pandemic, the government had successfully convinced Russia, the original builders of the steel complex, to evaluate its status and consider completing the steel facility, but could not proceed with the negotiations due to force-majeure caused by the COVID-19 pandemic.

He said, “Where we are today, we may not be able to get Ajaokuta to work but I pray that we can start something permanent.

“I’ve said it before. When we came back from Russia, yes, I went to the public and said, ‘look we will deliver Ajaokuta before the end of this tenure’. And I pray that I’ll have a chance to go back and apologise and explain what happened to the people before I leave office.

“It is due to no fault of ours. Everybody was ready to go, but unfortunately, COVID came in. So, it is a force majeure.”

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