ANOTHER $500M FOR AJAOKUTA?

Government should hands off the running of the steel company

The Speaker of the House of Representatives, Yakubu Dogara, last week, captured the nation’s anguish over the troubled Ajaokuta Steel Plant in Kogi State. “Any patriotic Nigerian that visits this place will shed tears,” he said, while leading a delegation of lawmakers on a visit to the plant. But Dogara also ruffled feathers when he insisted that the state must remain in control of the behemoth once described as the biggest “white elephant project” in the world.

By the wisdom of Dogara, the House would help to raise some $500 million reportedly needed to complete the last phase of the long-abandoned project. He added that the lawmakers would not support its privatisation because doing so, according to him, would tantamount to “concessioning Nigeria’s future.”

That stance, incidentally, is at variance with the position of the Ministry of Mines and Steel which superintends the project. The Minister, Dr. Kayode Fayemi said recently that even though the government was doing everything to ensure that the steel complex came back on stream, it “would no longer be run as a public concern.” He said that investors with proven track records and financial capability would be encouraged to buy into the scheme through a competitive and transparent bidding process. “We don’t want a project that becomes another funnel for wasting the hard-earned resources of Nigeria,” said Fayemi.

The minister is right. We believe it is in the interest of Nigeria to hands off this monument o waste. The Ajaokuta Steel Company Ltd (ASCL) has for decades been a metaphor for gross mismanagement. It is a disastrous scandal mired in political corruption. Constructed on a large expanse of land, the contract for the project was signed between the federal government of Nigeria and Messrs Tyajzhprom Export (TPE) of the former Soviet Union in 1979 during the regime of General Olusegun Obasanjo as military head of state.

But the company has over the years become an emblem of shame and waste such that Fayemi revealed that the federal government has spent over $10 billion on the steel company without providing the technological and the iron and steel needs of the country. Though said to be about 98 per cent completed as at the time the project was sold to some Indians, it was later abandoned allegedly after valuable assets had been stripped. In comparison, South Korea which started its steel company around the same time reportedly now has an annual revenue base in excess of $60 billion, with more than 65,000 staff in its employ.

Therefore, while it is heartening that the long-drawn dispute with Global Steel Holdings has been renegotiated and Ajaokuta has at last been returned to the federal government, everything should be done to ensure that it is not plunged into another catastrophe. For one, nobody is sure of the exact amount required to nurse the gigantic project into health. Even when the House said it would seek ways to raise $500m, other reports said that amount would be grossly inadequate. The state must get out of the business of running Ajaokuta as it has consistently proved incapable of managing public enterprises.

Indeed, the travails of the country’s economy in the past few years have exposed the dangers of over-reliance on a mono-product. The lessons from total dependence on oil and gas as the only dependable source of foreign exchange earner are too cruel on the economy to gloss over. The iron and steel industry offers another expansive alternative. The sector will not only create massive jobs for many of the country’s unemployed graduates, it will catalyse industrial growth. Indeed, if properly managed, it could help trigger the much-needed industrialisation with multiplier effects on all sectors of the economy. But these would be determined by adopting the right decision.