BUHARI’S COMMITMENTS TO AJAOKUTA STEEL COMPANY, THE RIGHT STEP TO ECONOMIC DIVERSIFICATION
Steel is the world’s most important engineering and construction material. It is used in every aspect of our lives; in cars and construction products, refrigerators and washing machines, cargo ships, and surgical scalpels. It can be recycled over and over again without loss of property.
It remains the material of choice for many elements of manufacturing, construction, transportation, and various consumer products. Traditionally valued for its strength, steel has also become the most recycled material. About two-thirds of the steel produced in the United States in 2008 was made from scrap.
The Ajaokuta Steel Company is one of the foremost industrial projects conceived after the discovery of iron ore and coal deposits in commercial quantities in Nigeria in 1970. The Steel company with a capacity to produce 1.3 million tonnes of steel per year was designed and built as an integrated plant by the Russian Steel Company, TyazhpromExport, in 1976, after reaching an agreement with the Nigerian government. By 1983, the project had reached 95% completion and was commissioned by President Shehu Shagari at the time. The agreed plan was that the remaining 5% of the project will be financed using profits generated by the company. However, after almost four decades of several concessions and legal disputes with foreign private companies, Ajaokuta steel company remains in a moribund state.
Over the years, successive governments have made efforts to revive the steel company, unfortunately, such efforts have proved abortive. The failure of the project has been blamed on several factors with poor management being the leading factor. The project has also not been spared from legal battles as the Federal government had been involved in legal face-off with the Global Steel Holdings Limited, an Indian firm involved in the failed concession of the Steel Company. In 2016, the Buhari administration settled a pending court case that enabled the FG to take control of the project and accelerate efforts to resuscitate the company. We applaud the giant strides made by the current administration in reviving the company, the FG has demonstrated its commitments by inaugurating the Ajaokuta Presidential Project Implementation Team headed by the Secretary to the Government of the Federation (SGF), Boss Mustapha with the Minister of Mines & Steel Development as the alternate chairman. According to the SGF, the mandate given to the implementation team is to prepare and submit periodic work plans and develop concession contract terms towards reviving the company. We understand that the revamp of the steel plant will be supported with funds estimated at US$1.46bn from AFREXIM bank as well as Russia Export Centre.
We however commend the Senate for expressing its readiness to work with the executive arm in reviving the Ajaokuta Steel Company project. This was disclosed by the Senate Leader, Yahaya Abdullahi, who led the Senate team on an oversight visit to Ajaokuta Steel Mill and the Itakpe National Iron Ore Mining Company (NIOMCO).
However with the present dwindling price of oil in the global market, the Ajaokuta steel remains the ideal alternative for the economic diversification of the country owing to its enormous potentials, Steel Industry will continue to serve as a stimulus to national development and economic booster to the industrial development of Nigeria. The industry will serve as the backbone of industrialization of our great country, Nigeria if all the necessary parameters are put in place. The benefits of having a functional steel industry will translate into a functional country. It should also be noted that the steel industry will contribute to all the facets of the economy, including the important role steel plays in economic development and growth.
Hence as the FG is exploring alternative ways of diversifying foreign exchange earnings away from oil, the Ajaokuta steel project is a veritable source of foreign exchange earnings.
The amount of foreign exchange being expended on the importation of steel today runs into billions of dollars. This colossal amount of money is an unacceptable waste of our meager resources and could have been diverted to other vital sectors of the economy. On the other hand, it is expected that the Ajaokuta Steel Company Limited when completed will generate enormous foreign exchange through export. It is also envisaged that the products of the company would be exported to the West African sub-region and other African countries. “During the short period of Global Infrastructure Holding Limited (GIHL) a statement was credited to the Management (Ajasteel 2006:6) that Ajaokuta steel company limited generated $74 million in foreign exchange for the sales of 128,000 metric tonnes of rolled products. According to the report, ribbed bars were exported to four West African countries as follows: 3,800 metric tonnes to Mauritania, 3,400 metric tonnes to Cote d’Ivoire, 1,050 metric tonnes to the Benin Republic and 600 metric tonnes to Mali.
In the same vain The Ajaokuta steel company limited supplied Power Holding Company of Nigeria (PHCN) with 65 MW of Electricity. Other beneficiaries of the company‘s 85 MW of electricity generated from the Independent Thermal Power Plant (TPP) include Lokoja, Okene as well as Benin city and its environs. In another report (Ajasteel 2006:7), 50,000 megawatts have been exported from the Ajaokuta Steel Company Catchment Power Company to Power Holding Company of Nigeria (PHCN) to service electrical strength in Okene, Lokoja, Itakpe and Ajaokuta Villages since 2005 to 2007. Furthermore, a concessionary agreement process had commenced between Ajaokuta Steel Company limited Management and the Management of Obajana Cement Factory to export 147,000 megawatts of electricity to the cement industry to enable it to go into production when completed.”
It is, therefore, our editorial opinion that the steel company has enormous potentials given its capacity to become a major producer of industrial machinery, auto-electrical spare-parts, shipbuilding, railways and carriages that will lead to job creation and reduce reliance on imported steel, hence all levels of commitments should be accorded to the project to boost our economy and improve on our livelihoods.