Dwindling oil revenue: Ajaokuta as alternative

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The Ajaokuta steel project in Kogi State has suffered a lot of setbacks. This, pundits say, is as a result of lack of political will on the part of successive governments, corruption and mismanagement. With the new efforts to diversify our economy, Peoples Daily Weekend with agencies, reviews some of the ways this all-important sector of our economy would rescue our dwindling fortunes as a nation.

Former President Goodluck Jonathan on assumption of office promised to make history by ensuring that the Ajaokuta dream became a reality. Though not much will was shown in that direction, the re-involvement of Ukrainians, original designers of the plant, was seen as a step in the right direction.

The plant was established in September 1979 by the federal government of Nigeria to serve as a base for the nation’s industrialization. According to experts, the project was designed as an integrated iron and steel complex based on the conventional blast furnace (BF) route iron making and basic Oxygen Furnace (BOF) for steel making which was considered to be most cost effective considering the high volume of steel to be produced in the plant.

Owing to the strategic importance of the Ajaokuta Steel Company Limited (ASCL) to the country and the host community, in 2012, Senator Nurudeen Abatemi-Usman, convened a stakeholders meeting to find ways of actualizing the dream of the steel plant.

Abatemi-Usman said the potential of ASCL as a perfect alternative to the oil sector, by not only stimulating and steadily stabilizing the economy, but also in creating jobs for the teeming unemployed populace is a well-established fact.

The roundtable decried the lack of political will by the Federal Government in allocating funds to make the Ajaokuta project operational. According to the stakeholders who were drawn from various disciplines, the completion of the plant was key to the realization of the Vision 20:2020. As a move towards the realization of this goal, a 31-man committee of eminent persons was constituted to, among others, and in liaison with the office of the Senator, explore and adopt effective strategies towards getting the Federal Government to complete and put into operation the Ajaokuta Steel Company Limited (ASCL).

The forum also agreed that the move by a Ukrainian company to take over the burden of completion and putting the plant to effective operation was a very welcome development. As the original designers of the plant in the then Soviet Union, they were sure to make a lot of difference in the ever dwindling fortunes of the company.

The news of Ukrainian’s interest to take over the moribund Ajaokuta Steel factory under the Federal Government’s privatization programme was received with joy by stakeholders though with mixed feelings in some quarters.

This development came as the Federal Government said it was doing everything possible to tackle all critical issues impeding the successful privatization of the nation’s steel industry.

The then Ukranian Ambassador to Nigeria, Serhii Khanenko, who submitted the request of his country when he led a delegation of investors from his country to the Ministry of Mines and Steel Development, said the country would be investing over $2 billion to bring the plant on stream.

Commenting on the issue, an engineer in the company, Engr. Joseph Isah, confirmed that the project was embarked upon as a strategic industry and a foreign exchange earner which was expected to serve as a major industrial breakthrough for the nation.

He said apart from the foreign exchange and economic growth objectives, it was envisaged that the project would generate a myriad of socioeconomic benefits to Nigeria such as increase in the production capacity of the nation through its linkage effects and supportive roles to industries.

In addition, it was expected that the project would greatly contribute to the achievement of other socioeconomic goals of the nation such as the provision of materials for infrastructure development, technology acquisition, employment generation and training of labour, income distribution and regional development.

According to the ASCL branch chairman of the Iron and Steel Senior Staff Association of Nigeria, (ISSSAN), Comrade Abdulkareem Jimoh, the company if managed properly, could also help to improve the nation’s power situation.

He noted that the thermal power plant of the company is capable of generating 110MW of electricity per day which can service three states in Nigeria. He said when the plant was in operation, the company was selling the excess to the national grid which was a source of revenue generation to the company also.

It is sad to note that after over forty years of the conceptualization of the plant, its objectives have not been realized due to what a member of staff of the company who chooses to be anonymous, referred to as lack of focus and political will on the part of successive governments. Also, mismanagement, corruption and above all, external forces like the World Bank, and other international organisations who want to make Nigeria a perpetual dumping ground for their steel products continue to frustrate the project.

According to him, the suggestions of World Bank and their commission agents like the HATCH ASSOCIATES that the steel project be discontinued, is a grand design to ensure that the Ajaokuta steel company remains at project stage perpetually.

Speaking further he said the steel industry at its present stage of development is strategic to the industrialization plans of the nation and as such huge investments are required to set up integrated steel plants and rolling mills.

“This is why super powers like, USA, Russia, Britain and others do not joke with their steel industry,” he noted.

Another engineer with the company, Salisu Abdullahi, who said he was employed in the early 80s, lamented the several misadventures of government.

He said Ajaokuta steel project has had its fair dose of maladministration.

He said that General Ibrahim Babangida threw caution to the former President Goodluck Jonathan on assumption of office promised to make history by ensuring that the Ajaokuta dream became a reality. Though not much will was shown in that direction, the re-involvement of Ukrainians, original designers of the plant, was seen as a step in the right direction.

The plant was established in September 1979 by the federal government of Nigeria to serve as a base for the nation’s industrialization. According to experts, the project was designed as an integrated iron and steel complex based on the conventional blast furnace (BF) route iron making and basic Oxygen Furnace (BOF) for steel making which was considered to be most cost effective considering the high volume of steel to be produced in the plant.

Owing to the strategic importance of the Ajaokuta Steel Company Limited (ASCL) to the country and the host community, in 2012, Senator Nurudeen Abatemi-Usman, convened a stakeholders meeting to find ways of actualizing the dream of the steel plant.

Abatemi-Usman said the potential of ASCL as a perfect alternative to the oil sector, by not only stimulating and steadily stabilizing the economy, but also in creating jobs for the teeming unemployed populace is a well-established fact.

The roundtable decried the lack of political will by the Federal Government in allocating funds to make the Ajaokuta project operational. According to the stakeholders who were drawn from various disciplines, the completion of the plant was key to the realization of the Vision 20:2020. As a move towards the realization of this goal, a 31-man committee of eminent persons was constituted to, among others, and in liaison with the office of the Senator, explore and adopt effective strategies towards getting the Federal Government to complete and put into operation the Ajaokuta Steel Company Limited (ASCL).

The forum also agreed that the move by a Ukrainian company to take over the burden of completion and putting the plant to effective operation was a very welcome development. As the original designers of the plant in the then Soviet Union, they were sure to make a lot of difference in the ever dwindling fortunes of the company.

The news of Ukrainian’s interest to take over the moribund Ajaokuta Steel factory under the Federal Government’s privatization programme was received with joy by stakeholders though with mixed feelings in some quarters.

This development came as the Federal Government said it was doing everything possible to tackle all critical issues impeding the successful privatization of the nation’s steel industry.

The then Ukranian Ambassador to Nigeria, Serhii Khanenko, who submitted the request of his country when he led a delegation of investors from his country to the Ministry of Mines and Steel Development, said the country would be investing over $2 billion to bring the plant on stream.

Commenting on the issue, an engineer in the company, Engr. Joseph Isah, confirmed that the project was embarked upon as a strategic industry and a foreign exchange earner which was expected to serve as a major industrial breakthrough for the nation.

He said apart from the foreign exchange and economic growth objectives, it was envisaged that the project would generate a myriad of socioeconomic benefits to Nigeria such as increase in the production capacity of the nation through its linkage effects and supportive roles to industries.

In addition, it was expected that the project would greatly contribute to the achievement of other socioeconomic goals of the nation such as the provision of materials for infrastructure development, technology acquisition, employment generation and training of labour, income distribution and regional development.

According to the ASCL branch chairman of the Iron and Steel Senior Staff Association of Nigeria, (ISSSAN), Comrade Abdulkareem Jimoh, the company if managed properly, could also help to improve the nation’s power situation.

He noted that the thermal power plant of the company is capable of generating 110MW of electricity per day which can service three states in Nigeria. He said when the plant was in operation, the company was selling the excess to the national grid which was a source of revenue generation to the company also.

It is sad to note that after over forty years of the conceptualization of the plant, its objectives have not been realized due to what a member of staff of the company who chooses to be anonymous, referred to as lack of focus and political will on the part of successive governments. Also, mismanagement, corruption and above all, external forces like the World Bank, and other international organisations who want to make Nigeria a perpetual dumping ground for their steel products continue to frustrate the project.

According to him, the suggestions of World Bank and their commission agents like the HATCH ASSOCIATES that the steel project be discontinued, is a grand design to ensure that the Ajaokuta steel company remains at project stage perpetually.

Speaking further he said the steel industry at its present stage of development is strategic to the industrialization plans of the nation and as such huge investments are required to set up integrated steel plants and rolling mills.

“This is why super powers like, USA, Russia, Britain and others do not joke with their steel industry,” he noted.

Another engineer with the company, Salisu Abdullahi, who said he was employed in the early 80s, lamented the several misadventures of government.

He said Ajaokuta steel project has had its fair dose of maladministration.

He said that General Ibrahim Babangida threw caution to the winds by even appointing a military man Air Commodore Muhammed Ndatsu Umaru in 1990 to head the Ajaokuta steel company.

The period according to him, witnessed the collapse of production in the completed rolling mills and the fund of the project went down the drains.

According to him, the Steel Company did not fare any better under the eight years of Chief Olusegun Obasanjo’s administration.

According to a former union leader in the steel company, comrade Lasisi Tijani, the eight years of Obasanjo witnessed the worst era in the history of the project.

The administration of Obasanjo according to Tijani, went into the privatization of the company to two incompetent firms in less than three years as against all known norms, public outcry and expert advice.

These companies Solgas Energy of America and Global Holding Infrastructure Limited an Indian company, helped in finally killing the project, he said.

Investigations revealed that while Solgas Energy of America who took over the company in 2003 held unto it without any progress in its fortunes, when the Indians took over on 13th August, 2004, they were said to have gone a step further by carting away machines and valuables and outrightly vandalised the company. There was a wide public condemnation from Nigerians who felt that the country was being ripped off.

This led to the determination of the agreement by the federal government in 2008 on the recommendations of the National Assembly.

Today, the company is in a dilemma. Business activities have gone into oblivion with very little attention from the federal government.

Experts in the steel industry have argued that, if the vision of the present administration to diversify government’s sources of revenue is anything to go by, the steel sector must be properly funded particularly the Ajaokuta Steel Company.

Government must come out with a definite policy as to what it wants to do with the project particularly in the area of funding, Engr Joseph Isah a pioneer staff member of the company said.

According to the National Bureau of Statistics, Nigeria is losing between three and six Trillion Naira annually through importation of steel and steel products into the country.

Isa stressed that the leadership of the country must also begin to realize that without a clear display of political will, no country will help Nigeria develop its steel which is to be the hub of the nation’s industrialization.

According to him, government must take the bull by the horns by approving a substantial amount of money for the completion and eventual opening of the company and also stressed that it must also check leakages and corruption. These he said, accounted for the failures of previous efforts.

It is however conceded by experts that as the steel industry matures, government can re-define its roles and level of involvement by allowing for progressive private participation and not the type of retrogressive concession or privatization carried out by the administration of Chief Olusegun Obasanjo which only helped to retard the progress of the company.

Workers of the company have protested severally, the alleged diversion of funds including salaries by successive managements of the company. That is to say government will need to work very hard to stamp out this trend if it must succeed.

While calling on the federal government to inject funds to finish the uncompleted units of the plant, one of the workers who sought anonymity, said urgent steps must be taken to restructure the management team.

He said the present Interim Management Committee, (IMC) has outlived its mandate and called on the government to urgently constitute a substantive management team that would see to the completion and effective operation of the plant.

 

 

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