Nigeria’s steel complex, Ajaokuta Steel Company Ltd gulped N42.03bn in budgetary allocation between 2016 and 2024 under former president Muhammadu Buhari and President Bola Ahmed Tinubu despite its moribund state. The figure is based on an analysis of the budget allocation for the steel company under the two presidents. In April 2024, the Minister of Steel Development, Shuaibu Audu told Nigerians that the government is embarking on a three-year plan to resuscitate the moribund complex.....CONTINUE READING THE ARTICLE FROM THE SOURCE
Audu said he intends to visit Russia on a formal invitation from Tyamzhpromexport (TPE) and other consortium partners to engage in further discussions to secure funding to the tune of about $2bn required for the revival of the entire steel plant.
But the moribund Ajaokuta Steel has enjoyed N42.03bn in budgetary allocations for salaries, overhead and capital expenditure in the last nine years, from 2016 to 2024.
The Ajaotuta Steel Company was built on a 24,000 hectares (59,000 acres) site in 1979 under former president Shehu Shagari with the idea of large-scale national steel production.
Shagari left the project 84 per cent completed in 1983. The steel company reached 98 per cent completion in 1994, with 40 of the 43 plants at the facility being built. The project was mismanaged and remains incomplete over 45 years later.
Both former President Olusegun Obasanjo and Buhari made unsuccessful efforts to revive the steel company.
In 2019, at the Russia-Africa Summit in Sochi, Buhari and Russian President Vladimir Putin agreed on a revitalization of the steel mill with Russian support and the project funding from the Afreximbank and the Russian Export Center.
But it was delayed due to the COVID-19 pandemic and the agreement was abandoned. In January 2024, Tinubu opened discussions with Chinese steel company Luan Steel Holding Group with the aim of reviving the Ajaokuta Steel Company.
Investigations by THE WHISTLER showed that despite its moribund state, the company is still enjoying huge annual budgetary allocations by the government.
Between 2016 to 2024, the company has enjoyed N42.03bn in budgetary allocation. Out of the N42.03bn allocated to the company in the nine-year period, the sum of N33.99bn representing 80.87 per cent went for personnel costs.
The federal government under former President Muhammadu Buhari budgeted N28.42bn for Ajaokuta Steel out of whih N26bn was used to fund personnel cost.
Under the Bola Tinubu government, between 2023 and 2024, a total of N13.61 was budgeted for the steel company. A total of N7.98bn was used as personel cost.
A breakdown shows that under Buhari, N3.88bn, N4.27bn, N4.28bn, and N3.59bn was allocatee to the Plant in 2016, 2017, 2018 and 2019 respectively.
For the 2020, 2021, and 2022 fiscal periods, the government allocated the sum of N3.73bn, N4.21bn and N4.46bn to the Steel Plant respectively.
In the 2023 budget, the government allocated N4.14bn for the moribund steel company. Checks by THE WHISTLER showed that personnel cost gulped N3.58bn and out of this amount, N2.7bn is for salaries and wages. Overhead for the year was N80.17m and capital expenditure was N482.85m.
The government also made another budget of N40m for concessions of the steel company. Another allocation of N80m was made with the title, ‘Transaction Advisor Services For The Resuscitation Of The Ajaokuta Project.’ Consequently, N4.16bn was budgeted in total for the company.
In the 2024 appropriation, the Federal Ministry of Steel Development led by Shuaibu Audu budgeted N4.45bn for the moribund company.
A breakdown showed that N4.4bn was for personnel cost; N150m for overhead and another N150m was budgeted for capital allocation.
Another N4bn was allocated for the concession of the steel company with code, ERGP1100950. N800m was also allocated with the title, ‘Transaction Advisor Services For The Resuscitation Of The Ajaokuta Project (ERGP30185618).’
Audu’s ministry also budgeted N200m with the title ‘Revitalizing The Ajaokuta Steel Company Limited (Ascl) And The National Iron Ore Mining Company (NIOMCO).’ The code is ERGP3205686. The ministry budgeted a total of N9.45bn for the company in 2024.
The Senate ad-hoc committee set up to investigate alleged cases of corruption and inefficiency at the Ajaokuta Steel and the National Iron Ore Mining Company from 2002 to the present had raised alarm over the bogus personnel budget by the troubled company.
At the resumed hearing which involved key stakeholders from the Ministry of Mines and Steel Development represented by the Permanent Secretary, Directors from the Central Bank of Nigeria, and the Bureau of Public Enterprises (BPE), the Nigerian Society of Engineers, and the Steel and Engineering Union Workers of Nigeria, among others, the committee expressed shock that the troubled company could budget N4.2bn in the 2024 budget for workers when in actual fact less then 10 workers are always turning up for work daily.
Speaking on how to resuscitate the plan, the Group Managing Director of KAM Holding Ltd, an iron and steel manufacturing company, Dr Kamoru Yusuf said in an interview that government should adopt the model used by the Peoples Republic of China which later transformed the country’s steel industry within 25 years which led to massive development of the industrial sector in China.
He said, “What the Chinese Government did was to indigenise one of the country’s major industries – the iron and steel, into the hands of their people with the government holding only 25 percent interest while local investors were allowed to own 75 per cent stake.
“I urge Nigerian government to redirect its policy on the industry because haven expended close to 40 years experimenting a particular model without result, it should be clear and in fact obvious that the commercial interest of the offshore investors does not match the developmental interest of the government of Nigeria as well as the industrial aspiration of her citizens.”
