BY JIDE AYOBOLU<\/p>\n
The Federal Government has inaugurated the Ajaokuta Presidential Project
\nImplementation Team aimed at realising the economic diversification
\nagenda of the regime of President Muhammadu Buhari. The Secretary to the
\nGovernment of the Federation, Boss Mustapha, is the chairman of the team
\nwhile the Minister of Mines and Steel Development, Olamilekan Adegbite,
\nis the Alternate Chairman. Inaugurating the committee, the SGF said that
\nthe government desired to industrialise the country within a diversified
\neconomy. He said, \u201cThe Ajaokuta Steel plant has languished in economic
\nunproductivity for about four decades, and previous efforts at reviving
\nit had proved abortive. This has resulted in avoidable massive foreign
\nexchange losses at an intolerable opportunity cost to the country.
\n\u201cThe pressing need to redress these avoidable challenges has
\nnecessitated this presidential intervention at this time. This is
\nfurther underscored by difficulties being witnessed with present
\nchallenges in the global oil industry.\u201d The SGF said it was the focus
\nof the regime to make Ajaokuta steel West Africa\u2019s largest fully
\nintegrated steel producer and most importantly, to accelerate
\nindustrialisation in steel-related industries. He added that the
\ngovernment placed a lot of value on the diversification of the economy,
\nhence, the President\u2019s participation at the Russia\/Africa summit in
\nSochi, Russia, hosted by his Russian counterpart, President Vladimir
\nPutin. Mustapha pointed out that the Ajaokuta Steel Project would \u201cbe
\nresuscitated on the basis of a Government-to-Government agreement with
\nfunding from the Afrexim bank and the Russian Export Centre\u201d.<\/p>\n
It would be recalled that the Nigerian government has debunked the
\nreports that it has plans of selling the over $8 billion Ajaokuta Steel
\nplant in Kogi state, despite its redundancy. Yahaya Bello, Kogi State
\nGovernor, revealed this to State House reporters recently after he met
\nwith the country\u2019s Vice President, Yemi Osinbajo. \u201cThe Vice
\nPresident said there is no plan by the Federal Government to sell
\nAjaokuta Steel Company. The Vice President said Ajaokuta is an asset of
\nthe Federal Government and that they are looking into how best to make
\ngood use of that particular complex for the benefit of Nigerians at
\nlarge,\u201d Bello said.<\/p>\n
Recently, the Central Bank of Nigeria, CBN, Governor, Godwin Emefiele,
\nhad, while briefing the Nigerian delegation at the end of the
\nInternational Monetary Fund\/World Bank Group meetings in Bali,
\nIndonesia, said the company will be sold. \u201cI am aware, as a member of
\nthe National Council on Privatization, that more is coming and I believe
\nin due course that the Bureau of Public Enterprise, BPE, will make this
\navailable for us. I am aware of the situation of Ajaokuta Steel Company
\nof Nigeria. It is also on the cart, first for a total review of the
\nprocess of privatization and payment, so that our aluminium sector can
\neventually come alive,\u201d<\/p>\n
The steel plant which has 12,000 plots large, 68-kilometre road network
\nand another 24-kilometre road network underground, was built four
\ndecades ago and has never produced any steel due to the dispute over the
\nownership of the Ajaokuta Steel Complex and Nigerian Iron Ore Mining
\nCompany (NIOMCO). The dispute made it impossible for the government to
\nmake any long\u2010term plans for the concession or privatization of the
\ntwo companies.<\/p>\n
However, the federal government in an attempt to revitalize the steel
\nsector signed a renegotiated concession agreement with Global Steel
\nHoldings Limited for the Nigerian Iron Ore Mining Company (NIOMCO),
\nItakpe. By the new agreement, the Ajaokuta Steel Complex was reverted to
\nthe Federal Government, effectively freeing the entity from all
\ncontractual encumbrances that had left it uncompleted and non-functional
\nfor decades, while GSHL retains NIOMCO. The agreement, which came after
\nfour years of mediation, was signed at a short ceremony presided by
\nOsinbajo.<\/p>\n
Recalled also that, the Federal Government has said it would not repeat
\nthe mistake of the former President Olusegun Obasanjo\u2019s administration
\non the Ajaokuta Steel Complex in Kogi State. The former Minister of
\nMines and Steel Development, Dr. Kayode Fayemi, who stated this at a
\npress conference in Abuja, also said the present administration would
\nnot spend any money to complete the steel plant. Fayemi stated that the
\nFederal Government had sunk over $ 8 bn into the project since 1979
\nwithout any result. The minister stated that no fewer than 14
\norganizations from different countries had since 2016 indicated interest
\nin the Ajaokuta Steel Complex.<\/p>\n
He said, \u201cWe have also said to them that we are not going to repeat
\nthe mistake of the Obasanjo administration. We will not undertake the
\nre-concession without one, a technical audit; two, a transaction
\nadvisory service that will look into all these and advise us accordingly
\nas to who really has the technical capacity, the financial wherewithal
\nand the track record to really bring Ajaokuta back to life. \u201cHowever,
\nthe government took a principled position on one thing: that Nigeria
\nwill not spend one dollar on the so-called completion of the Ajaokuta
\nsteel plant. The reason for that is very simple; today from our record,
\nwe have spent close to $ 8bn since 1979 when this process started and we
\nhave not seen the result.\u201d<\/p>\n
The minister added that the government and the House of Representatives
\nagreed on the concession of the plant and that the House approved the
\nsum of N2 bn for the purpose in 2017.<\/p>\n
The House had last week passed a vote of no confidence in Fayemi and the
\nMinister of State for Mines and Steel Development, Alhaji Abubakar
\nBwari, following their failure to appear before it for sectoral debate
\non the steel plant.<\/p>\n
The lawmakers also instructed the ministers to suspend every step
\ntowards the concession of the plant, adding that they preferred that the
\ngovernment should invest and complete the project. Fayemi, however, said
\nthat the government had taken a decision not to spend any money on
\nAjaokuta since over $ 8bn had been sunk into the project by successive
\nadministrations since 1979.<\/p>\n
According to him, the House agreed on the need to give out the plant as
\na concession by approving N 2bn for the process in the 2017
\nAppropriation Act. He said \u201cWe are just implementing what was passed
\nby the National Assembly. That is why we are surprised that we have been
\nsubjected to an unwarranted attack over the matter.<\/p>\n
\u201cAjaokuta is an inherited challenge. The Chief Olusegun Obasanjo
\nadministration gave it out on concession; the President Umaru Yar
\n\u2019Adua government revoked it. And the case went to the London Court of
\nArbitration. Its resolution in 2016 led to the signing of the Modified
\nNIOMCO Agreement, which ceded the complex back to the Federal Government
\nand NIOMCO to Global Steel.<\/p>\n
\u201cNo fewer than 14 parties have shown interest in running the complex,
\nbut the government \u2019s position is that we would not do any concession
\nwithout a technical audit. \u201cPricewaterhouseCoopers was engaged to do a
\nreview of the company\u2019s indebtedness and statutory liabilities as part
\nof the settlement agreement.\u201d The minister added, \u201cThe National
\nAssembly appropriated N 2, 096, 500, 000 for Ajaokuta concession in the
\n2017 Appropriation Act duly passed into law. We are just commencing what
\nwas passed into law by the National Assembly.<\/p>\n
\u201cThis is why I am surprised at how we have been subjected to vitriolic
\nattacks. The March 1 sectoral debate, which we could not attend, was the
\nfirst and only one I and the Minister of State were unable to attend and
\nwe duly communicated this to the leadership of the House. \u201cWe take
\nexception to allegations that are not backed up by evidences.
\nAllegations that officials of the ministry have had their hands tied by
\nthe concessionaire are quite unfounded. \u201cThe Russian government has
\nnot indicated an interest in Ajaokuta. Yes, we have had offers from
\ncompanies from Ukraine, Russia, Belarus and even Nigeria.<\/p>\n
\u201cYes, I have met with the Russian Ambassador the same way I have met
\nwith the Ukrainian Ambassador and many other ambassadors. The Russian
\nAmbassador told me they can offer technical, management and audit
\nsupport, but not as a country bringing in money to take over the
\ncomplex. \u201cMany are saying Ajaokuta is 98 per cent completed. The
\nministry believes that can only be determined by the outcome of the
\ntechnical audit, which should be ready in about six weeks.\u201d<\/p>\n
Fayemi reiterated that the President Muhammadu Buhari administration was
\nbeing painstaking with the Ajaokuta Steel Complex, given the fact that
\nit had been a victim of bad planning and poor execution by past
\nadministrations. \u201cOur interest is to make it work so that it can
\ncreate jobs and wealth, and we are ready to work with the National
\nAssembly and other stakeholders to ensure its success,\u201d he added.<\/p>\n
Fayemi condemned what he called unwarranted attacks by the leadership
\nand members of the House of Representatives on the ministry. \u201cThe
\nHouse of Representatives has every right to seek for an explanation on
\nany matter relating to what they have appropriated as one responsible
\nfor appropriation, and on any matter of public interest. There is
\nnothing fundamentally wrong in the House and its leadership requesting
\nour presence at the sectoral debate that was called last week,\u201d he
\nstated. Fayemi stated the ministry requested that the appearance of the
\nministers be shifted to another date.<\/p>\n
\u201cWe did not think there was anything untoward about our request for
\nanother time, partly because this was the fourth time we were going to
\nbe speaking to the House of Representatives on the Ajaokuta Steel
\nComplex,\u201d he added.<\/p>\n
Boosting mining output, along with developing agriculture and
\ninfrastructure, as part of plans to broaden the economy of Africa\u2019s
\nsecond-largest oil producer. Crude accounts for around 70 per cent of
\nthe OPEC member\u2019s revenue and for 13 per cent of gross domestic
\nproduct, according to Finance Minister Kemi Adeosun. Slumping global oil
\nprices, from over $100 a barrel of Brent crude in 2014 to under $50 a
\nbarrel currently, and reduced output due to militants attacks on
\npipelines in Nigeria\u2019s Niger River delta, have squeezed state finances
\nand caused a chronic dollar shortage.<\/p>\n
Nigeria will also require about $2 billion to revive Ajaokuta, a steel
\ncomplex which was supposed to have an installed capacity of 5 million
\ntons a year. Situated on the Niger River, in Kogi state, its
\nconstruction began in 1979 but work was delayed by the government\u2019s
\nfailure to pay builders on schedule and it is yet to be completed. By
\n2004, when it was taken over by India\u2019s Global Steel Holdings, then a
\nsubsidiary of Ispat Industries Ltd., it still hadn\u2019t produced any
\nsteel. Global Steel\u2019s concession was revoked in 2008. After an
\neight-year legal dispute, it was agreed on Aug. 3 this year that the
\ngovernment will take over Ajaokuta while the Indian firm retains Nigeria
\nIron Ore Mining Company, which it will rehabilitate to supply the steel
\nmill within two years.<\/p>\n
The ministry is hiring an adviser for investments needed to increase
\nAjaokuta\u2019s current capacity of 1.3 million tons of steel a year
\nfourfold, Fayemi said. The complex also includes a 110-megawatt power
\nplant, a 60 kilometre (37 miles) railroad and an airstrip. Just 18 of
\nsome 30 steel manufacturers in Nigeria are active, producing about 2.2
\nmillion tons a year and leaving the government with a $3.3 billion
\nannual import bill, Fayemi said. The government is talking with
\ncompanies including Russia\u2019s Techno-promexport and Ansteel Group Corp.
\nof China to complete and start production at Ajaokuta.<\/p>\n
It also plans to create a $1 billion mining exploration fund from state
\nand private capital to improve data on Nigeria\u2019s mineral wealth. Each
\nexploration project will be supported with about $5 million, Fayemi
\nsaid. Nigeria aims to increase mining\u2019s contribution to gross domestic
\nproduct to 7 per cent within a decade, from 0.3 per cent last year,
\naccording to the minister.<\/p>\n
Nigeria\u2019s Iron Ore and Steel sector Consumption of steel per capita
\nper annum Kg\/yr Nigeria currently lags behind global benchmarks on steel
\nconsumption per capita with potential to grow. Egypt, Brazil, Russia,
\nChina, South Korea and South Africa are great steel countries, so, also
\nin India. South Korea\u2019s demand for steel is largely fuelled by
\nincreased industrial activity, between 1965 and 1970, a dramatic
\nincrease in demand for intermediate and capital goods (20kg to 175kg per
\ncapita per year) \u2013 Steel beams, flat sheets, rods, coils, bars \u2013
\nRise in real estate development, construction of roads and bridges,
\nfabrication, etc; Increased steel demand owing to increased
\nindustrialization \u2013 Building construction; power \u2013 Automotive
\nconstruction; Agriculture \u2013 Road and bridge-building; Military \u2013
\nRefinery investments \u2013 Machinery for rubber and plastics, textiles,
\netc. South Korea leads the world due to high industrialization levels
\nNigeria can expect an increase in demand for steel in the coming decade
\ndriven by industrialization.<\/p>\n
Nigeria\u2019s Iron Ore and Steel sector Nigeria\u2019s domestically focused
\niron ore and steel strategy are driven by our ability to serve domestic
\ndemand, as well as the challenges in export markets today. Few global
\nsteel investors have the capacity to expand into Nigeria. China: ~60
\nmillion tons of steel capacity was mothballed in 2015 as part of a plan
\nto reduce production capacity; that has had a knock-on effect on the
\nglobal commodities market. Britain\/Tata Steel: Decision by Tata to
\nsell\/shut down its UK branch has also signalled the end of British steel
\nproduction which declined from 18M tons\/annum to 8M tons\/annum between
\n1988 – 2015; other European steelmakers are also challenged. Private
\nCompanies: Many steel producers and suppliers from Vale to Rio Tinto to
\nBHP are struggling due to the downturn in commodity prices and excess
\ncapacity in markets; we anticipate continued cost-cutting to rebalance
\nthe market.<\/p>\n
Therefore, Nigeria can build a world-class minerals and mining ecosystem
\ndesigned to serve a targeted domestic and export market for minerals and
\nores. Nigeria will focus on rebuilding its minerals and mining and
\nrelated processing industry in 3 phases. Phase 1: Win over domestic
\nusers of industrial minerals that are currently importing. Phase 2:
\nFocus on expanding domestic ore and mineral asset processing industry.
\nPhase 3: Return to global ore and mineral markets at a market
\ncompetitive price point. Hence, Nigeria will seek to build a minerals
\nand mining sector initially focused on using its industrial mineral
\nendowment to support its industrialization; private investors will be
\nfacilitated to lead this charge, to this end, Nigeria will invest in a
\nrange of initiatives including infrastructure investments, technical and
\nengineering capacity, regulatory reform, reorganization of the Ministry
\nitself, and expansion of access to financing to drive sector
\ntransformation.<\/p>\n
The government should support the development of an institutionalized
\ncoal\/gas-to-power plan for local players to guaranty affordable energy;
\nIdentify and foster locations for steel development sites\/clusters;
\nsupport the provision of concessional loans to current downstream
\nplayers to encourage backwards integration; support incentive to local
\nsourcing of raw materials wherever possible (iron ore, coal, limestone,
\nscrap) using specific levers such as tailored import tariffs or
\nsubsidized prices; develop and support a skill-building program or
\nencourage the transfer of knowledge by attracting global experts; Ensure
\nlogistics corridors with iron ore mines; offer favourable tax holiday
\nand zero duties and levies on iron and steel. Nigeria should drive
\nindustry growth through carefully planned strategies to develop the
\ncomatose steel industry in the country.<\/p>\n
BY JIDE AYOBOLU The Federal Government has inaugurated the Ajaokuta Presidential Project Implementation Team aimed at realising the economic diversification agenda of the regime of President Muhammadu Buhari. The Secretary…<\/p>\n","protected":false},"author":1,"featured_media":73429,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[7],"tags":[],"class_list":["post-73428","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles-opinions"],"yoast_head":"\n