BY endorsing a bill to fund the “completion” of the Ajaokuta Steel Complex as 2018 wound down, the Senate reminded the world how terribly ill-served Nigerians have been by their elected representatives. Passed earlier by the House of Representatives, the Ajaokuta Steel Completion Fund Bill provides for the final completion of the complex, halts an ongoing programme to concession it and authorises a drawdown of $1 billion from the Excess Crude Account. The bill is retrogressive and should be dropped forthwith, while the Federal Government should proceed post-haste to diligently privatise the company.
Only a simpleton persists in his errant ways, no matter how often his folly is exposed. In the light of the tortuous history of the ASC, the bill has no redeeming feature. It is a culmination of a supremacy battle between the parliament and the Executive that featured a “vote of no confidence” in the immediate past Minister of Mines and Steel Development, Kayode Fayemi, and his deputy and successor, Abubakar Bwari, a meaningless gesture in a presidential system of government. While Nigeria’s economic challenges require sober, mature deliberation, petulance and legislative rascality are on offer.
Begun in 1979, the first phases, inaugurated in 1983 and by 1994, were said to have been “95 per cent completed.” Since then, government officials have been parroting the line of it being 95 per cent or 98 per cent complete. Figures of how much the project has cost the taxpayer range from $6 billion to $11 billion; a definitive sum of $8 billion was provided by the ministry last year. Designed as the bedrock of Nigeria’s industrial take-off, export diversification and job stimulator, the first phase of the integrated steel complex was to create 10,000 direct jobs and 500,000 more down the value chain.
It is the fulcrum of a national complex that would utilise iron ore and coal in various sites, feed and be fed by the iron ore company at Itakpe, coal mines, and the steel rolling mills at Ovwian-Aladja, Jos, Katsina and Osogbo. However, since its various inauguration ceremonies, it has not produced steel, another monument to the dysfunction of the Nigerian state. Occupying 24,000 hectares of land in Ajaokuta, Kogi State, it has major plants, facilities and auxiliary plants. It has installed capacity to produce 1.3 million tonnes of steel per year with provision to raise this to 2.6 million tonnes p.a. and 5.2 million tonnes p.a. A thermal power plant of 110 megawatts capacity, as well as a separate lime, alumina silicate and tar bonded dolomite plants and housing estates are some of its facilities.
Successive governments have spent money on salaries and pensions; on plant maintenance and embarked on disastrous and self-serving concession arrangements. The last ended in London courts and has seen the Nigerian Iron Ore Mining Company ceded to the Indian concessionaire to allow the Nigerian government re-posses ASC. It has been lying idle.
Confronted with this, the only rational option is for the government to carefully and responsibly privatise Ajaokuta. Past mistakes, driven solely by corruption, should enlighten the government to the wisdom of targeting a first-rate, tier-one global steel producer to take up majority stake. This becomes imperative as global steel production, at 1.68 billion tonnes in 2017, outstripped use that was 1.58 billion tonnes that year, according to the World Steel Association. Our competitors like Brazil, South Africa and Egypt produce 34.4 million metric tonnes, 6.3 million metric tonnes and 6.8 million metric tonnes yearly respectively.
President Muhammadu Buhari’s government, in line with its notorious reluctance to let go of state enterprises, opted for yet another concession. So far, said Fayemi, 14 investors had indicated interest. A more enlightened parliament would have pressured the government to go for full privatisation or exercised its oversight to ensure that, as promised by this government, the concession process is transparent, backed by technical audit and a transaction advisory service.
The National Assembly has dealt Nigeria’s international reputation in policy consistency another blow. Curiously, the parliament had earlier approved the concession plan and voted N2 billion for it in the 2017 budget only to turn around to oppose it bitterly in 2018, vowing to pass this bill and also amend the privatisation law to remove the ASC from the list of enterprises to be let go.
Legislators should not be ignorant: that the ASC does not produce has little to do with “completion”; 40 of its 43 autonomous mills are reported to be completed, with installed capacity greater than those of the four steel rolling mills combined. Its facilities to produce coke oven by-products surpass those of our four moribund refineries put together.
By hampering the privatisation of a company that has cost the taxpayer so much and has not produced in 40 years under state control, the parliament’s move is not only foolhardy, it is sinister. The interests of Nigerians and the economy are better served by private sector investment that will finally bring this complex to full production, reduce import dependency in steel products that cost $3.3 billion yearly, push exports and create thousands of jobs, while saving the treasury from further expenditure on the project.
Asking the government to draw down another $1 billion from the ECA is irresponsible: the fund was set up as a buffer when oil prices fall and, by inference, revenues plummet. It is a cushion in times of adversity. It fell to a meagre $631 million by December, $1.68 billion having been withdrawn in three weeks to buy arms for the Boko Haram war. The 2019 budget provides N2.14 trillion to service debts and a deficit of N1.86 trillion, with all tiers of government borrowing to fund activities. Yet, the Senate wants $1 billion to fund a project that government has never been able to run.
Moreover, ASC is not a stand-alone project: the mining sites, railway links and the dredging of the River Niger are crucial to its success. Steel production is a complex, global enterprise that needs investors with funds, expertise, production, logistics and marketing networks to operate. Ajaokuta, Africa’s biggest integrated steel complex, deserves no less than a targeted privatisation to bring such investors. The bill is antithetic to national aspirations; Buhari should decline assent and privatise ASC.