In a flagrant display of legislative petulance, the House of Representatives has effected amendments to the privatisation law to prevent the planned concession of the Ajaokuta Steel Company. This is in continuation of its war against the Federal Government, which is also determined to give out the gigantic complex to private interests to manage on its behalf. Both are wrong: the only sensible solution is to sell it off, quickly, transparently and only to a competent operator.
Ajaokuta is a striking monument to how waste, corruption and ineptitude have been the guiding attributes of national leadership in Nigeria. Built in the early 1980s, it is reputed to be the largest integrated steel plant in Africa and was laid down to be connected to iron ore mines in Itakpe, Kogi State; steel rolling mills in Jos, Katsina and Osogbo; the Delta Steel Company, Ovwian-Aladja; coal mines and rail lines. The steel master plan also called for the channelisation of the River Niger to transport raw materials and finished steel products. But since its formal inauguration over three decades ago, it has suffered a peculiarly Nigerian problem; it has not been producing. Instead, it has been lying idle, used by successive public office holders to defraud the treasury and has been victim to fraudulent concessions that left it and the country the poorer.
President Muhammadu Buhari and the Minister of Mines and Steel Development, Kayode Fayemi, are resolved to handing it over to private operators as managers. But the House would have none of that. Their preference is for the government to “complete the project” by injecting more funds into it. Initially, lawmakers had opposed the concession plan, ostensibly because they wanted the plant prepared in top shape to attract favourable concession bid price. However, thwarted by the insistence of the government, the lawmakers have bared their fangs and their real agenda is now in the open. We reject the attempt to retain Ajaokuta in state control under any guise. The position of the lawmakers is self-serving, retrogressive and totally at odds with reality and rational economic decision-making.
Ajaokuta is a national disgrace. The minister’s position, though short of the ideal of outright sale, is more rational but also bound to fail. According to Fayemi, the government has resolved not to commit any more funds to the project, which is reasonable, having already gulped over $8 billion of taxpayers’ money. Rather, it is undertaking a technical audit of the complex to determine its condition, after which it will concession it. It rightly wants to verify the oft-repeated claim that Ajaokuta is “98 per cent completed,” as well as assess the state of the machinery and infrastructure, such as its 110-megawatt power plant and housing facilities.
But the House adamantly wants the government to spend the N2 billion the National Assembly approved in the 2017 budget to “rehabilitate” the complex and run it. Taking their sinister intervention to absurd levels, the lawmakers pressured the government to opt for an external loan of $500 million to invest further in Ajaokuta, apparently unfazed by our external debt of $18.9 billion as of December 2017, which is still rising. After threatening and repeatedly summoning Fayemi and Minister of State, Mines and Steel Development, Abubakar Bwari, to no avail, the House now wants to resolve the matter by amending the Privatisation Act.
There should be a limit to arrogance. This is nothing but abuse of power. There is no tangible benefit for Nigerians in keeping Ajaokuta in government hands. Buhari and Fayemi too should get the message: privatisation is the only viable route to revitalising the steel complex. Previous concessions to Solgas and, later, Global Infrastructure, were unmitigated failures with allegations of asset stripping, incompetence and rigging of the bid processes. The deal with Global Infrastructure ended in protracted litigation that was only recently resolved with the company taking NIOMCO but freeing Ajaokuta for the state. Similar concession deals at the Lagos Trade Fair Complex and Tafawa Balewa Square have failed to deliver.
But British Steel was privatised in 1986 and later merged with a Dutch producer to form Corus that was in turn bought by India’s Tata Steel in 2007. The global steel industry shrank in 2007/08 and again in 2010. According to the World Steel Association, today’s 1.6 billion tonnes total global output is driven mostly by production and demand from China that accounted for 49.2 per cent of global output in 2017. Competing in today’s global steel market requires expertise, financial and technical capability beyond what any emergency Nigerian consortium or second rate foreign player can provide.
To meet national aspirations of industrialisation, it is important to privatise steel, refineries and airports to compete with BRICS nations. India got it right and Tata and Mittal-Accelor are some of the world’s biggest. India produces 101.4 million tonnes annually; Brazil 34.4 million tonnes, Russia 71.5 million tonnes and South Africa 676,000 tonnes. Nigeria’s 21 steel mills hardly produce enough to dent the $4.5 billion the ministry says Nigeria spends importing steel products each year. This should be a targeted sale, not the failed highest bidder route that has marred previous privatisations.
The Senate should resist the temptation for brinksmanship and opt out of the mischievous Reps privatisation amendment. Unless we privatise and open up the economy for massive foreign direct investment, joblessness will continue to spike and industrialisation will elude us.
We also strongly oppose the Buhari-Fayemi plan to grant concessions. Ajaokuta is purely a business, not a national facility or utility like airports, seaports, water supply or waste management infrastructure. This will give room for the usual political interference and patronage. Concessions have not worked well here. There is no guarantee that vested interests will not, as usual, take charge.
Buhari should leave a lasting legacy before his four-year term runs out by selling Ajaokuta without further delay.
