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Ajaokuta: Fraud as bane of development



Ajaokuta: Fraud as bane of development

The fresh probe by the House of Representatives reaffirms the fraudulent racket in Ajaokuta Steel concession as the long and unending story is costing Nigeria fortunes and a drag on local content development. ADEOLA YUSUF reports


The Floating Production Storage and Offloading (FPSO) for $16 billion Egina field is unprecedented in the anals of Nigeria.
Thirty per cent of the biggest oil installation in the country was fabricated in-country.
As for the remaining 70 per cent, investment of undisclosed several billion dollars was repatriated to South Korea to get the equipment fixed, and this was largely due to dearth of functional steel company that could cater for the need of the project.
Like Egina, other FPSOs are being planned and Nigeria is on the verge of being the terrible loser with incessant hurdles for Ajaokuta Steel Complex, the biggest steel hub for the nation, that is struggling to be in the comity of industrialised nations.

The story, the probe
As at the last count, the fresh acquisition racket rocking the Ajaokuta Steel Company Limited, ASCL, has altered $1.2 billion funding for the Turn Around Maintenance (TAM) of the plant.
The prospective lenders for the projection earlier made by Sole Administrator of the company, Sumaila Abdul-Akaba, investigation by New Telegraph at the weekend showed, are standing aback following the petition by a lawyer, Natasha Akpoti.
The lawyer is alleging plot by some individuals in the ex-President Goodluck Jonathan’s administration and the current government of Muhammadu Buhari “to fraudulently acquire the steel company for themselves.”
Although the House of Representatives had set up a committee to probe the new allegation, it was seen, according to checks by this newspaper, as another major hiccups to the success of the ongoing rehabilitation and acquisition of the moribund steel plant.
The 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.
The third phase was planned to produce 5.2 million tonnes of various types of steel products, including heavy plates.
“This is not the first time that acquisition and or concession of the company had hit the rock,” an investor told this newspaper at the weekend after his anonymity was guaranteed.
“Mark my words, as we speak,” he said, “ nothing will come out of this probe,” which he alleged “would end up thwarting efforts to get the backbone of Nigeria’s industrial growth back on the track.
“The Sole Administrator, Sumaila Abdul-Akaba, who revealed that $1.2 billion is required to turn around the moribund steel plant, gave a breakdown of the amount to include $513 million for rehabilitation, completion and commissioning while $687 million will be used for balance of external infrastructure.
“He pointed out that Nigeria could save over $10 billion annually if the steel company was brought on stream, nothing that following the last technical audit of the steel plant in 2010, it was estimated that about $1.2 billion was required to achieve the total rehabilitation, completion and commissioning of the plant. The amount, he said, included balance of external infrastructure.
“But the question is which financer or lender will hear that the company is again in acquisition racket and stick his neck to cough out $1.2 billion?” The source inquired.

History of concession, revocation
The misgivings expressed so far are based on the long history of concession and revocation of the asset.
In June 2003, former President Olusegun Obasanjo conceded Ajaokuta steel to Messrs SOLGAS ENERGY of USA on a 10-year tenure.
In August 2004, the Federal Government terminated the SOLGAS agreement due to non-performance.
In 2004 and 2005, the Obasanjo administration, again, granted another concession to Global Infrastructure Nigeria Limited (GINL), an India, company, for the operation of Ajaokuta steel and the Nigeria Iron Ore Mining Company (NIOMCO) at Itakpe in Kogi state.
However, the Indian company did not live up to Federal Government’s expectation in managing the two companies.
Consequently, the late Umaru Yar’Adua’s administration was compelled to revoke the contract in April 2008 without meeting the requirements of the clauses built into the agreement.
The Indian company, thereafter, took Nigerian government to arbitration court in London, which also crippled the two firms.
In 2016, President Muhammadu Buhari fulfilled his campaign promise on Ajaokuta steel by settling the legal bottleneck surrounding the companies out of court.
However, the Federal Government signed modified concession agreement with GINL to enable the firm retain the National Iron Ore Mining Company, Itakpe.
The modified seven-year concession agreement was signed on August 1, 2016, while the Federal Government took over the Ajaokuta steel.

The committee
Meanwhile, leader of the House of Representatives, Mr. Femi Gbajabiamila, is heading a committee constituted by the House to investigate the controversial steel mill.
The committee, which began sitting last week, was set up to look into the critical issues raised at the debate.
Akpoti, the petitioner, had revealed how a Russian company had to abandon the project in 1994 because Nigeria fell short of its contractual agreement by not releasing funds needed for the completion of the steel plant.
She also claimed that Russian President, Vladimir Putin, wrote the Nigerian government on how to modernise and complete the Ajaokuta complex, but key Nigerian actors have been silent on the offer because of their personal interest in the steel company.
She also recalled how Ajaokuta and Itakpe Iron Ore were concessioned to a private company, Global Infrastructure Holding Limited, which later metamorphosed to Global Infrastructure Nigeria Limited, GINL.
According to her, GINL had at many times contributed to the decay of the steel company, which is why the steel company remains moribund.
Akpoti also explained how Yar’Adua terminated the concession of Ajaokuta and Itakpe steel company to GINL after a committee was set up to probe the concessioning process and the state of Ajaokuta Steel in 2008.
She also claimed there were several indications that the current Minister of Solid Minerals and Steel Development, Kayode Fayemi, and Governor of Kogi State, Yahaya Bello, had interest in the steel company.

Shattered dream
The Ajaokuta Steel Company 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.
The late Tafawa Balewa and Nnamdi Azikiwe, between 1960 and 1966, invited and received proposals from foreign firms, including those from UK, US, Germany and Canada, on the feasibility of establishing steel complexes.
The efforts of 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 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 survey 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 date.

Last line
Government should add efforts in resolving the controversy on the concession of ASCL. This will go a long way in solving the riddles on ineffective industrialisation drive for the country.
The House of Representatives should also conduct the probe on time and without fear or favour.
All these will restore confidence in the country’s local content development drive.

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