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 to from politicians anytime they want to get the votes of Nigerians for the purpose of winning elections.
The question I asked then was: Did we not hear a similar vow from Goodluck Ebele Jonathan before the 2011 presidential election when he came to Lokoja to canvass for votes from my people in Kogi State? Jonathan in much stronger words had said: “One thing that is dear to Nigerians is the Ajaokuta Steel Complex and until we revive that complex, we cannot talk about Vision 20:2020. This is because for you to play big globally, you must industrialize and for you to industrialize you must produce steel. The Ajaokuta complex must be revived.”
In the four years of Jonathan as elected President, we did not see anything meaningful from his administration to bring this great national asset of ours back to life after years of total neglect. All efforts to get him to fulfill the promise he made to secure the votes of Kogites and Nigerians as a whole in 2011 did not yield any fruitful result, as he left Ajaokuta Steel almost the same way he met it.
I recall how Senator Nurudeen Abatemi-Usman, former Senator of Kogi Central Senatorial District, who brought Ajaokuta Steel matter to the front burner in the Senate then, mounted pressure on Jonathan’s administration for the resuscitation of the steel firm.
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 fulfill 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 (FG) and the Global Steel Holding Limited (GSHL); a development which has freed the Ajaoukuta 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.
Dissatisfied with the revocation of the concession agreement by the late Yar’Adua, GSHL took the Nigerian government to the International Court of Arbitration. The case dragged on until FG opted for out of court settlement in 2013 which eventually led to the latest modified concession agreement that has now paved way for the return of ASCO to the Nigerian government.
In his speech, at the brief ceremony presided over by him in the Presidential Villa, where the new concession agreement was signed, Vice President Yemi Osinbajo, hailed the mediation process which led to the resolution of the impasse that had mired the operation of the two national assets for over eight years.
According to the number-two citizen, “It is one of the cases of failures. It is a tragedy of immense proportion that we have both Ajaokuta Steel Complex and NIOMCO and couldn’t get anything out of them for years.” The VP emphasized that the top priority of Buhari’s administration was to make ASCO and NIOMCO work. He implored GSHL to keep to the different timelines and conditions in the new deal in the spirit of mediation, noting that “it is important the concession works so that Ajaokuta can take off too.”
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 a 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. I remember how their activities resulted to the crisis that led to the senseless killings of over 50 residents in Ebiraland, left hundreds of citizens injured, made about 5, 000 homeless, over 20 vehicles damaged, 65 houses and 150 stores burnt in what was tagged “The Ogaminana Massacre” in February, 2008. In any case, we must move on in our dream to actualize the Ajaokuta Steel project. Therefore, I urge our people in the host community to cooperate with the Indian company in the new arrangement that has brought them back to NIOMCO. FG, on its part, must, as a matter of necessity, keep a very close watch on the activities of the Indian firm.
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.
Fayemi, while signing the modified concession deal on behalf of FG assured that with the new agreement on NIOMCO, the next step was to launch the process of taking over Ajaokuta Steel and making sure that it was given out to a serious operator with confirmed technical and financial capability. I think the best thing to do is to invite the Russian Company, TyazhPromoExport (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 before he died in office in 2009. President Buhari, as a man of integrity, should followed 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 endeavor 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!
Michael Jegede, a journalist and public affairs commentator writes from Abuja