Ajaokuta Steel/NIOMCO and the modified concession

When President Muhammadu Buhari promised during his electioneering campaign in Lokoja, the Kogi State capital last year January to revive Ajaokuta Steel Company (ASCO) if elected, I was not in any way thrilled by the pledge. I was not excited because I saw it as one of those political statements that we have become used […]

When President Muhammadu Buhari promised during his electioneering campaign in Lokoja, the Kogi State capital last year January to revive Ajaokuta Steel Company (ASCO) if elected, I was not in any way thrilled by the pledge. I was not excited because I saw it as one of those political statements that we have become used to from politicians anytime they want to get the votes of Nigerians for the purpose of winning elections.
After Buhari emerged victorious in the poll, just before he was sworn in, I made it a point of duty to remind him in a piece of his covenant with Kogi people on the Ajaokua Steel posing the following questions which were on the lips of many – will the Buhari government taking off from May 29, 2015 make significant difference in the actualization of the Ajaokuta Steel dream? Is it going to be another four years of lip-service to the issue of steel development in the country? Will Buhari on his own part strive to fulfil his pledge on Ajaokuta Steel, the largest integrated steel complex in the Sub-Saharan Africa?
As one who has visited the Ajaokuta Steel Company (ASCO)/National Iron Ore Mining Company (NIOMCO), Itakpe in Kogi State, and done a lot of write-ups on the need for their revival and full operation, it is heartwarming to see that the Buhari administration has taken a very important step towards the completion of the Ajaokuta Steel project. On Monday, August 1, 2016, a renegotiated concession agreement was signed between the Federal Government and the Global Steel Holding Limited (GSHL); a development which has freed the Ajaokuta Steel Complex from all the legal and contractual encumbrances, giving way for its revitalization.
In the new arrangement, GSHL retains NIOMCO, while FG takes full control of the Ajaokuta Steel outfit. GSHL is the Indian company the Olusegun Obasanjo administration concessioned ASCO and NIOMCO to in 2004 and 2005 respectively, after an earlier concession pact with SOLGAS of the United States of America failed to turn around the steel facility. The Indian firm equally did not live up to expectation and the government under the late Umaru Musa Yar’Adua was compelled to revoke the contract in April, 2008. It was alleged that the GSHL was involved in devious dealings that were causing more damages to the steel complex and NIOMCO.
A major highpoint achieved by the government in the renewed concession agreement was a higher concession fee payable to it from 3% of turnover to 4%. Also, GSHL will ensure a guaranteed and continued supply of iron ore to Ajaokuta Steel Company as a priority customer. The renegotiated concession is expected to last for seven years as against the revoked one that was for ten-year tenure.
Now that NIOMCO has been released to GSHL all in a bid to resolve a protracted legal tussle that has hindered its operation and prevented any major work on Ajaokuta Steel, the Nigerian government must not go to sleep.
The Indian firm must be properly monitored to ensure strict adherence to the terms of the new agreement. Ordinarily, if not for the legal entanglement we found ourselves and needed to get out of it, for the sake of Ajaokuta Steel, GSHL is one company that the Nigerian government should never again engage in any business dealing with.
The GSHL clearly failed in the first arrangement we had with them. We must move on in our dream to actualize the Ajaokuta Steel project. At this juncture, I would want to stress the need for President Buhari and the Minister of Solid Minerals Development, Dr. Kayode Fayemi to be cautious in taking their decision on who gets the contract for the completion of Ajaokuta Steel Company this time around. We made many mistakes in the past on the concessioning of Ajaokuta Steel that should not be repeated. If we do not get it right in this new arrangement, then the desire to bring the steel firm back on stream, as part of government determined efforts to diversify the economy for the benefit of the Nigerian people might remain a pipe dream.
I think the best thing to do is to invite the Russian Company, Tyazh Promo Export (TPE) that designed and built ASCO up to 98 per cent as at 1994 to come back and complete what they started. This is a company that is known worldwide to have carved a niche for itself in the construction of mining and mineral processing plants. They actually pulled out in 1994 for no fault of theirs but due to the failure of the Nigerian government to live up to its obligations on the project.
The Obasanjo administration invited TPE, the original builder of Ajaokuta Steel in 2001 to do a technical audit of the project and present a report on what was needed to finish and bring it back on track. Only for him to in 2003, hand over the industrial edifice to SOLGAS, a business concern that has nothing of any kind to do with engineering and mineral processing.
The late Yar’ Adua had upon the cancellation of the earlier concession contract with GSHL, recommenced talk with TPE Russia in 2009 before he died in office. President Buhari, as a man of integrity, should follow the footstep of Yar’Adua, rather than carrying out any bidding process that no matter how open it may appear to be, could still land Ajaokuta Steel into the hands of people that will only end up bringing down this most treasured asset of our dear country.
Good enough, TPE Russia has declared their readiness to come back if invited. We must not forget that the TPE has been part of our country’s journey in steel development. The company was engaged by the Nigerian government to do Preliminary Project Study on Iron and Steel industry in Nigeria in 1973, the year in which good iron ore deposits were found at Itakpe, Ajabanoko and Shokoshoko, all in the expanse of Okene, Kabba and Lokoja in Kogi State.
The Indian Consortium completed the Detailed Project Report (DPR) in 1977 which laid the template for the establishment of ASCO/NIOMCO in 1979, same year the formal signing of the Global contract for the implementation of the Ajaokuta Steel project between the Nigerian government and TPE was done during the military regime of Obasanjo. It was at the outset programmed for completion in 1986. And between 1980 when the foundation stone of Ajaokuta
Steel Plant was laid and 1983 during the time of former President Shehu Shagari, 84% of the steel plant equipment had been erected by TPE before successive governments failed to show great commitment to the project.
With the strong determination and political will we are seeing in the current Buhari-led administration to complete the Ajaokuta Steel after almost four decades of its initiation, FG should endeavour to give the project to the right firm. And the right firm, in my view, just like many other right thinking Nigerians, is the TPE Russia. God bless Nigeria!
Jegede, a public affairs commentator, wrote this piece from Abuja