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Ajaokuta Steel Company
By Ogacheko Opaluwa
There is currently renewed interest in the resuscitation of Ajaokuta Steel Plant by the Federal Government of Nigeria (FGN) and this should excite a lot of Nigerians. Rather, it comes as a surprise to many keen observers of Nigeria’s inglorious neglect and perfidy around Ajaokuta Steel project regarded by many as our country’s industrialization cradle. The surprise stems fromwhat most of us know all along; that both President Muhammad Buhari and the FGN never placed much store by the Ajaokuta project. As a hater of anything corruption and official grime, the President already knows and perceives the prurient stench of genetic and generational corruption around the Ajaokuta Steel project from its inception till date. In the estimate of the Octogenarian, Ajaokuta Steel project may be beyond governmental intervention as it requires huge financial outlay;perhaps in multiple of the amount that had been sunk already to construct it. Besides, the humungous settlement debt hanging on the neck of the FGN deriving from messy termination of concession agreement between Government and Global Infrastructure Holdings limited (GIHL) does not make any talk on reviving the Steel Plant attractive to anyone.To the FGN therefore resuscitation of Ajaokuta Steel Plant is better left for private initiatives and this has been the position of President Muhammad Buhari ever since.
Based on above scenario therefore, many Nigerians must be wondering what may have changed within the spate of the past one and a half years to warrant current optimism and renewed vigour on the part of the FGN to reactivate Ajaokuta Steel Plant with foreign support. Specifically, we are told that Russia has offered to support Nigeria with technical and financial resources to resuscitate Ajaokuta Steel Plant. This is good news no doubt, but it is hardly what we think as what is emerging now is that a roguish cabal comprising well-heeled Nigerians, government officials and politicians are at their usual games of using the Ajaokuta Steel project as ploy to line their pockets. A little background to this will elucidate what I am referring to here.
After progress on development of Ajaokuta Steel Plant stalled around 1994 at a time when the Steelproject had reached about 96% completion, the project was abandoned and left to rot away up until 2004 when it was concessioned to Solgas (Nig) Limited by the administration of former President OlusegunObasanjo. The arrangement suffered a still-birth as it was aborted almost immediately as it took off by the FGN due to what was termed ‘non-performance.’ The Bureau for Public Enterprises (BPE) was thereafter mandated to pre-qualify and recommend preferred concessionaires with proven technical and financial capabilities this time around for consideration. But as we were told, BPE’srecommendations were overruled through executive fiat and Ajaokuta Steel Plant, with some of its capture infrastructure were concessioned to GIHL in what many regarded as underhand deals. GIHL did not fare any better in terms of reviving and operationalizing Ajaokuta Steel Plant optimally.At leasta Government administrative panel of inquiry that was constituted by the administration of late President Umar Musa Yar’Adua to investigate allegations of wrongful business practices by the concessionaires indicted GIHL of non-performance, assets striping and contractual infractions, among other sins. Again, the FGN terminated the concession agreement between it and GIHL based on findings and recommendations of the panel of inquiry. From that point onwards, things began to fell apart for Ajaokuta Steel project and the centre could not hold any more.GIHL will not go away quietly as the previous concessionaire did; the company dragged the FGN before an international arbitration in London, pursuant to aconflict resolution clause in the concession agreement.GIHL dubbed the termination ‘wrongful’ and demanded humongous amount of money in hard currency as compensation.
Meanwhile, a technical audit that was instituted by the FGN after the departure of GIHL revealed extensive assets stripping and equipment spoilages under the concession. The Government was unhappy about whole thing and expectedly, the case in arbitration dragged under the administrations of both late President Umar Musa Yar’adua and former President Goodluck Jonathan. President Muhammad Buhari’sAPC government comprising western progressive elements that helped him wrestle power from the PDP took over reins of power in 2015. The western progressives knew exactly what they wanted in President Buhari’s Government and one of it was the Federal Ministry of Mines and Steel Development (FMMSD). To a casual observer, there is nothing strategic or ‘juicy’ about FMMSD unlike worksor petroleum or finance ministries based on Nigerian classifications. However, FMMSD superintends over Nigeria’s vast and somewhat untapped mineral resources that hold more promises for the future than fossil fuel. Besides, Ajaokuta Steel Plant with its allied facilities all fallwithin the purview of FMMSD. Therefore, feet-hold inthe Ministry will accord further opportunity to acquire mining licences and leases. It will also enable the progressives remediate the wrongs done to their kinsmen through wrongful termination of the concession agreement on Ajaokuta Steel Plant; political and ideological differences notwithstanding. Is anyone still wondering why all substantive ministers of FMMSD were picked from among the western progressive stock of Mr President’s party till date?
The ministers of FMMSD have consistently and vigorously pursued ‘amicable’resolution of the case between GIHL and the FGN involving huge monetary payouts in foreign currency and completion by the companyof its mining leasehold of the Nigerian Iron Ore Mining Company (NIOMCO). As desirous as this outcome may seem, the FGN can ill afford the luxury of committing to paying the huge sums to GIHL especially at this critical economic period when the nation is surviving virtually on borrowings. Consequently, the Government adopted a waiting game and hopes for a more auspicious time to act. But the progressives and the cabal are in a hurry as the end of President Muhammad Buhari’s APC led Government looms ominously in the horizon. They must do something and quickly too before time runs out.This was where the Ajaokuta Steel Plant revival project camehandily to their mind. It sat pretty well amid the quick impact and legacy projects that were proposed for execution in the twilight stretch of President Muhammad Buhari’s administration.The only thing that may prevent inclusion of Ajaokuta Steel Plant revival project in the President’s legacy projectsbasket was funding. Hence, the cabals approached their rich Oligarch counterparts in Moscow to devise a scheme. And this is what the scheme looks like.
There is plenty of money to be made quickly from the resuscitation project of Ajaokuta Steel Plant. Let the Oligarchs meet theRussian Government and persuade it to guarantee a loan of $1billion from AFREXIM Bank to Nigeria to be augmented by a further sum of $460mfrom the Russian Government as loan for immediate take-off of the project. On their part, the cabals will return home to tell the Nigerian Government that Russia has indicated willingness to assist the country both technically and financially in the effort to resuscitate and operationalize Ajaokuta Steel Plant. They will also try to convince the FGN to provide some funds to offset part of the settlement debt that was being owed to GIHL in order to remove the only legal hurdle in the way. Both parties returned to their respective countries and they succeeded in their mutuallyinclusive missions. Thus, the resuscitation of Ajaokuta Steel Plant project became the main agenda of a Russia-Nigeria bilateral meeting that was held by the sides during the November 2019 Russia-African Economic Summit that was held in Sochi, Russia. It was agreed at that meeting that Russia, through its State Owned Enterprise, TyazhPromEXPORT (TPE-Russia)will assemble a team of experts that will handle the Ajaokuta Steel project on behalf of FGN. On its part,Nigeria was to also assemble ateam of experts after which both countries were to meet to flesh-up technical and funding issues preparatory to commencement of the project.
Back home in Nigeria, the mines and steel cabal together with officials of FMMSD got busy designing plans and schemes that will ensure success of the project. Although Russia had promised to guarantee the debt funding and provide additional loan to fund initial working capital, Nigeria was required to provide funds immediately for a pre-engagement technical audit of Ajaokuta Steel Plant.The technical audit to be conducted by TPE was not only to ascertain current technical and physical states of the Steel Plant, but also benchmark scope of all future works on the Steel Plant. The FGN approved sum funds for the FMMSD to conduct the technical audit eventually. Meanwhile, a similar audit was conducted in 2010 at the behest of the FGN which report was submitted to it through the FMMSD. Therefore, if concerned government officialswere patrioticas they claim, would it not have been more appropriate to revisit the previous technical audit and perhaps re-engage the consultants to review the exercise possibly with an expanded mandate that reflects current vision of the Government? Also, would it not have been better for an independent party to conduct such technical audit and provide more realistic benchmarks for TPE rather than TPE being an arbiter in its own case?
While using COVID-19 as excuse for the delay in conducting the technical audit that will catalyse further works on Ajaokuta Steel Plant, the Ministry approached the Bureau of Public Procurement (BPP) to obtain a ‘Letter of no Objection’ that will enable it procure TPE toconduct the technical audit. Expectedly, BPP declined to issue the letter due to what it observed as ‘flawed’ expression of interest by TPE. Suffice to state here that TPE of Russia had also bid to conduct technical audit of Ajaokuta Steel Plant in 2009 with 10 other international consultants in which Reprom Company (Nigeria) Limited won the bid. This is the second time that TPE of Russia has failed to meet prescribed minimum requirement for consideration to conduct technical audit of Ajaokuta Steel Plant. This should therefore be a sign to the FGN that what FMMSD and its patronizing cabal are bringing to the table currently is hollow and may amount to additional wasteful expenditure in the name of reviving the Ajaokuta Steel Plant. Furthermore, it is doubtful if the FMMSD on behalf of the FGN can meet the stringent requirement for accessing the AFREXIM.Similarly, it is needless to reiterate the fact that the Russian loan may end up being expended on Russian experts that will be working on the Steel Project while Nigeria bears the burden of repayment ultimately.I wish to conclude that the current story about resuscitation of Ajaokuta Steel Plant to me is like a story retold a thousand times by an idiot. As Shakespeare averred, ‘…it is full of sound and fury, but signifying nothing.’ We need to go back to the drawing board on this very important project and quit the money game please.
