Experts lament as FG spends N20bn on idle Ajaokuta Steel in six years
Recurrent expenditure gets N18.7bn, capital, N1.4bn under Buhari regime
The Federal Government allocated N20.4bn to Ajaokuta Steel Company Limited from 2016 to 2021 despite the company’s idleness.
The data were collated from the appropriation bill for each year available on the website of the Budget Office of the Federation.
In 2016, N295.1m was allocated with N135.2m released by October of that year.
However, a detailed breakdown of the expenditures for the year was not available.
In 2017, the total allocation was N4.3bn with recurrent expenditures at N3.9bn and capital expenditures at N354.1m.
For the recurrent expenditures, total personnel cost was put at N3.8bn while total overhead cost was put at N75.3m.
In 2018, the total allocation was N4.3bn with recurrent expenditures at N3.9bn and capital expenditures at N354.1m.
For the recurrent expenditures, total personnel cost was put at 3.8bn while total overhead cost was at N75.3m.
Further breakdown showed that salaries and wages cost N2.9bn, allowances and social contribution cost 895.3m, uniforms and other clothing cost N2.5m, refreshments and meals cost N1.8m, and purchase of bus cost N41.3m.
Funds were also budgeted for certain projects such as the maintenance of power facilities for N106.3m, construction /provision of water facilities for N196.5m, lighting and security of Ajaokuta steel plant at N10m and purchase of a 30-seater bus at N413m.
In 2019, the total allocation was N3.6bn with recurrent expenditures at N3.3bn and capital expenditures at N262m.
For the recurrent expenditures, total personnel cost was put at N3.25bn while total overhead cost was put at N75.3m.
Further breakdown showed that salaries and wages cost N2.5bn, allowances and social contribution cost N793.6m, uniforms and other clothing cost N2.5m, refreshments and meals cost N1.8m, and purchase of bus cost N41.3m.
Funds were also budgeted for certain projects such as the maintenance of power facilities for N87.7m, construction /provision of water facilities for N123m, lighting and security of Ajaokuta steel plant at N10m and purchase of a 30-seater bus at N41.3m.
In 2020, the total allocation was N3.7bn with recurrent expenditures at N3.6bn and capital expenditures at N147.2m.
For the recurrent expenditures, total personnel cost was put at N3.5bn while total overhead cost was put at N51.5m.
Further breakdown showed that salaries and wages cost N43.3m, allowances and social contribution cost N5.4m, uniforms and other clothing cost N273,684, and refreshments and meals cost N1.6m.
Funds were also budgeted for certain projects such as the maintenance of power facilities for N43m, construction/provision of water facilities for N94.2m, and lighting and security of Ajaokuta steel plant at N10m.
In 2021, the total allocation was N4.2bn with recurrent expenditures at N4bn and capital expenditures at N253.9m.
For the recurrent expenditures, total personnel cost was put at N3.9bn while total overhead cost was put at N72.3m.
Further breakdown showed that salaries and wages cost N3bn, allowances and social contribution cost N846.5m, uniforms and other clothing cost N2.5m and refreshments and meals cost N1.8m.
Fund was budgeted for only one project in 2021, which was the construction/provision of water facilities for N80m.
Russia’s Tyazpromoexport built the plant, which was incorporated in 1979.
The steel mill reached 98 per cent completion in 1994, with 40 of its 43 plants having been built before it got stuck, with the remaining two per cent for external infrastructure like waterways and viable ports.
Despite the regular budget, the steel company is yet to commence full operations in over 42 years, with the government making failed attempts at privatisation and concession.
In an attempt to revamp the company, an Indian company, Global Steel Holdings Limited, won the concession of the Ajaokuta steel mill for a 10-year period but the agreement was revoked when the Federal Government accused the firm of asset stripping, a development which led to a court case between the two parties.
The Federal Government announced in 2016 that the legal dispute had been resolved, after it reportedly ceded the National Iron Ore Mining Company, Itakpe, to Global Steel for the remaining concession period, in line with an agreement reached during mediation talks.
However, the resolution has since turned contentious.
In 2019, the President, Major General Muhammadu Buhari (retd.), ordered the completion of the company.
In 2020, the Senate also passed a resolution urging the Federal Government to, as a matter of urgency, complete the Ajaokuta Steel Complex.
The Federal Government inaugurated the Ajaokuta Presidential Project Implementation Team.
The Minister of Mines and Steel Development, Olamilekan Adegbite, said that the Ajaokuta Presidential Project Implementation Team would enact a pact reached between Buhari and Russia’s President Vladimir Putin, which required the East European country to assist in completing the project and finding a Russian firm to manage it on Build-Operate-and-Transfer basis.
The minister said that Afreximbank would fund the project with $1bn, while the Russians would offer $460m, adding that a Russian firm, MetProm Group, would ensure the completion and operation of the steel company.
However, efforts at concession have failed.
There had also been calls on the Federal Government to privatise the company.
The Federal Government halted privatisation move, stating that the problem with the Ajaokuta Steel Company was very complex.
The PUNCH reported in July that Adegbite had said that the Ajaokuta Steel Company Ltd. would function to capacity before the end of the regime of Buhari.
The minister added that the Federal Government had made efforts to ensure that the Russian company that built the steel industry would come to Nigeria to conduct a technical audit of the company.
Ajaokuta steel project, a waste of government scarce resources, say experts
An economist and a senior lecturer of economics at the Pan Atlantic University, Dr Olalekan Aworinde, who said that he was familiar with the establishment, described the company as a waste of government resources as it is currently inactive.
He, however, said that the company had the potential to significantly drive down unemployment, improve economic growth and boost the country’s foreign reserves.
He said, “I believe it is just a waste of government resources because If you go there you will see that there are a lot of workers, getting paid without working.
“Also, majority of the infrastructures that are put in place in that country are out of date and moribund; they can’t serve any purpose at this time.
“The only solution is to update the technology and equipment. The government should be ready to do a total overhaul of the establishment; bring in the right people and the latest technology.
“Iron oil is in abundance in Itakpe. So, if the government is able to revamp the establishment, it can reduce the rate of unemployment to a reasonable level.
“This will contribute immensely to the Gross Domestic Product growth of the country. It will also lead to the appreciation of the naira as we are going to demand less of the dollar.
“You see all those steel that we import into the country, they require foreign exchange to get them into the country.
“In summary, a functional Ajeokuta Steel Company will mean improved economic growth, reduction in unemployment. It will also help to stabilise the forex market and improve our foreign reserves.”
A former President of the Nigerian Metallurgical Society and a professor of metallurgical and materials engineering, Federal University of Technology, Akure, Benjamin Adewuyi, said that the problem with Ajaokuta was internal.
He said, “Ajaokuta Steel Company has a problem that is internal but it is not that it cannot be revived. Ajaokuta can be revived.
“The greatest problem is that those people who have benefitted in past in the corruption of Ajaokuta will not allow Ajaokuta to function.”
He added that the company could function in six to eight months if the government implemented a steel programme and allowed those in the Ajaokuta Presidential Project Implementation Team to function.
He added, “We have told the government several times that in less than six to eight months, Ajaokuta will start functioning if a steel programme is put in place.
“If the government allows the people who have been appointed to look at the situation in Ajaokuta to function, I am sure very soon we will see the difference between the moribund industry and the functioning industry.”
He further emphasised the need for a steel university, which he believed would provide manpower for the steel company.
“If Ajaokuta starts to work, it would require a steel university to bring out manpower for the steel plant to function well,” he said.
In May this year, the Senate passed the Nigerian Steel University Bill after the adoption of the report of the Senate Committee on Tertiary Institutions and TETFUND.
Sen. Sam Egwu, who presented the report of the Committee on behalf of the Chairman, Sen. Ahmed Kaita, said that the Nigeria Steel University, when established, would provide the required manpower for metallurgical and technological advancement in the country.