Can the “Next Level” break the Ajaokuta jinx?

The intervention of the Senator Saraki led 8^th Senate  which passed the Ajaokuta Steel Company Completion Fund Bill and requested Buhari  to make available $1 billion from the Federal Government’s share of Excess Crude revenue for the immediate completion of the project may just be a scratch.  Buhari did not only refuse to sign it into law, citing budgetary constraint and other competing demands as reasons, his body language does not indicate he is willing to reconsider the bill. But can Ahmed Lawan, who moved for the bill concurrence, now Senate President, be able to persuade Buhari to do the needful in the true spirit of “Next Level”?

Osisanya Dare reports

One of the bills passed by the  Bukola Saraki led eight Senate but rejected by Buhari was the Ajaokuta Steel Company Completion Fund Bill.

However, the rejection of the Ajaokuta Steel Company Completion Fund Bill  by President Muhammadu Buhari has expectedly sent tongues wagging as to whether the project will ever be completed.

Established through decree No. 60 on September 18, 1979, Ajaokuta Steel Company was conceived and steadily developed with the vision of erecting a metallurgical process plant cum engineering complex with other auxiliaries and facilities. The complex is meant to be used to generate important upstream and downstream industrial and economic activities that are critical to the diversification of Nigeria’s economy into an industrial one. Ajaokuta steel plant is therefore aptly tagged as the bedrock of Nigeria’s industrialization.

The project was embarked upon as a strategic industry, a job creator and a foreign exchange saver and earner. It was envisaged that the project would generate a myriad of socio-economic benefits and increase the productive capacity of the nation through its linkages to other industrial sectors. It would provide materials for infrastructural development, technology acquisition, human capacity building, income distribution, regional development and employment generation.

While the project was expected to directly employ about 10,000 staff at the first phase of commissioning, the upstream and downstream industries that were to evolve all over the nation thereafter were to engage not less than 500,000 employees.

Ajaokuta Steel, in the estimation of  analysts, Abah Adah, is unarguably the largest integrated steel complex in the sub-Saharan Africa. Yet, Nigeria has been unable to take the lead in steel production in Africa even in her illusory claim of being the giant of the continent.

At the moment, South Africa and Egypt produced 6.7 and 5.2 million tons of steel respectively in 2018 based on data provided by the World Steel Association (WSA). While South Africa is the 22nd on the list of countries by steel production, Egypt is the 27th. Nigeria did not make the list because only countries with annual production of crude steel of at least 2 million metric tons were included. China, the world’s largest steel producer, topped the chart with a production of 808.4 million metric tons which represents about 50 per cent of the global steel output for 2016. Japan and India produced 104.8 and 95.6 million metric tons of crude steel to maintain the 2nd and 3rd position on the list respectively.

Both China and India  were nowhere in terms of steel production in the 19th century and at the start of the 20th century. But they worked hard to advance their steel industries and  they have overtaken even the G8 (forum for the world’s major highly industrialised countries) members like US, Britain and Germany that were hitherto leading the pack in the manufacture of steel.

By 1994, under late General Sanni Abacha regime, the plant  was reckoned to be at 98 per cent completion in terms of equipment erected. Some completed units of the plant operated at different times but had to shut down due to non-availability of fund.

With the return to democratic rule in 1999 after a military interregnum, the hope was that the people’s government would surmount the challenges of corruption, lack of political will, international conspiracy and policy summersaults/inconsistencies, among others, that have continued to hamper the completion of the project capable of changing Nigeria’s status from underdeveloped. But nothing significant happened.

But the coming of Buhari in 2015 signaled a ray of hope and revival of the industrial giant with the announcement of plans to diversify Nigeria’s oil based economy by prioritising the development of key sectors, which include agriculture, mines and steel, to rekindle hope in the Ajaokuta project.

This probably ignited  the intervention of the Senate which passed the Ajaokuta Steel Company Completion Fund Bill to make available $1 billion from the Federal Government’s share of Excess Crude revenue for the immediate completion of the project.

The Senate resolution followed the adoption of the bill for concurrence by Senate Leader, Senator Ahmed Lawan. On March 28, 2018, the House of Representatives had approved a similar report of a bill seeking to establish a fund for the completion of the Ajaokuta Steel Company. The report was considered and approved in the Committee of the Whole, making a clear provision that the Federal Government should complete the plant as against then-plan to concession it.

In the letter rejecting the Ajaokuta Company Completion Fund Bill, Buhari explained that appropriating $1 billion from the Excess Crude Account for funding the project as stipulated in the bill was not the best strategic option for Nigeria at this time of budgetary constraints. He stressed that Nigeria could not afford to commit such an amount in the midst of competing priorities with long term social and economic impact that the funds can be attentively deployed towards.

As a remedy, many have advocated a total concessioning of the plant to experts, a development that would earn government huge sum as well as creating the expected number of jobs. But others see it differently.

According to Izedomi Ohirein, a public affairs analyst, “the idea of Nigerian government completing Ajaokuta before concessioning it out, is being advanced by those who want to loot the process. Government should lease Ajaokuta out, bought as seen. The lessee should have the knowhow and financial capacity to get the plant working within a specified time or loose the contract.”

Gabriel agrees with Ohirein. Speaking with OpenLife, he said “No government is efficient enough to run any business. None. Sell it to a private, proven and successful private enterprise like Dangote, leave him alone and watch the steel industry thrive without the unwieldy overhead of governmental bureaucracies”

Concerned and worried by the large turnover of rejected bills, the Senate had, in 2018, set up a Technical Committee on Declined Assent to Bills, chaired by Senator David Umaru, APC, Niger East, to look into the development. Although the Technical Committee laid its report in December last year, the report is yet to be considered.

Without doubt, the industry serves as stimulus to national development and economic boost to industrial growth of a country.

The Ajaokuta Steel Company in Kogi State of Nigeria was envisaged to serve as the bedrock of Nigeria’s industrialisation.

The idea of having a steel industry was conceived in 1958 by the federal government. 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.

Late Tafawa Balewa and late Nnamdi Azikiwe between 1960 -1966 invited and received proposals from foreign firms, including those from UK, U.S., Germany and Canada, most of these being on the feasibility of establishing steel complexes.

The efforts of the government did not yield significant positive result because they were based on the use of iron deposits in Agbaja and Udi which were later found to be unsuitable for direct reduction.

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.

In their report, they recommended the use of blast furnace process of iron making. The report also pointed out that the known iron ore deposits in the country were of poor quality and recommended that further geological surveys be conducted to see if better ore could be found.

In 1968, Soviet geological experts came to Nigeria and after a general geological investigation reported that there were high prospects for richer iron ore and coal deposits in the country.

However, the federal government signed a contract in 1970 with TYAZHPROMEXPORT (TPE), a Russian company, under which they agreed to provide specialised equipment to carry out further geological survey to determine the quantity of the deposits of iron ore, coal resources in the country that could be used for the proposed iron and steel industry.

By 1973, suitable iron ore deposit was discovered in Itakpe, Ajabanoko and OShokoshoko all in the region around Kabba-Okene-Lokoja – Koton Karfe axis, now in Kogi State.

The TPE was contracted to prepare the preliminary project report for the proposed Iron and Steel Industry in Nigeria.

In 1975, during the reign of Murtala Mohammed, the preliminary project report specifying the raw materials base at Itakpe in Kogi plant site location (Ajaokuta), 1st phase production volume (1.3 mmt), process route (Blast Furnace -Basic Oxygen Furnace), Product form (Long products) submitted by TPE was reviewed, discussed and accepted.

TPE was subsequently commissioned to prepare the Detailed Project Report (DPR) on Ajaokuta which was completed and submitted in 1977.

In 1979, Ajaokuta Steel Company Limited (ASCL)/NIOMCO, Delta Steel Company (DSC), among others, were established under Section 2 of National Steel Council Decree No. 60 of September 19, 1979 and incorporated as Limited Liability Companies.

In 1980, former President Shehu Shagari laid the foundation stone of an integrated steel plant in Ajaokuta on 24,000 hectares of sprawling green-field landmass, built on 800-hectares.

The steel company has four different types of rolling mills inside the plant, such as the Billet Mill which produces billets; the Light Section Mill which produces round, square, strip and angles metals.

The Wire Rod Mill produces wire rods and rebars used in construction companies and production of nails, fencing wire, rope mesh, bolts and nut and netting and the Medium Section and Structural Mill produces parallel flange channels, equal angles, unequal angles and standard channels.

The four rolling mills are bigger than Aladja, Osogbo, Katsina and Jos rolling mills put together while the coke oven and bye products plant is bigger than all the four refineries in Nigeria put together.

In 1980 to 1983, the administration achieved 84 per cent of Ajaokuta steel plant as the Light Section Mill of the plant was commissioned earlier than the scheduled date, while the Wire Rod Mill was also commissioned in April 1984, earlier than the scheduled month of December.

In 1994, equipment erection work at Ajaokuta Steel Plant reached 98 per cent completion.

With all these achievements, it was, however, sad that the gigantic steel plant idea conceived and executed by past leaders had failed to contribute to the development of Nigeria.

The Ajaokuta steel that had reached 98 per cent completion as far back as 1994 had not produced a single steel till now.

The integrated plant was envisaged to have multiplier effects on all sectors of the Nigerian economy such as the industrial, agriculture, transport and construction sectors, among others.

The steel plant was designed to produce 1.3 million tonnes of liquid steel per annum in its phase one, with a built-in capacity to expand its production to 2.6 million tonnes of flat iron and steel products in its second phase and phase three plan was planned to produce 5.2 million tonnes of various types of steel products, including heavy plates.

The steel plant complex also has highly sophisticated assemblage of 43 different plants made up of a web of complex iron, cable and machinery of different sizes and functions.

The annual estimated per capita consumption of iron and steel in Nigeria has increased from 5 kg in 1968 to 145 kg in 2018.