Friday, July 1, 2022

Resuscitation of Ajaokuta Steel Company: Another story retold by an idiot?, by Ogacheko Opaluwa

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There is currently a renewed interest in the resuscitation of the Ajaokuta Steel Plant by the Federal Government of Nigeria (FGN) and this should excite a lot of Nigerians. Instead, it comes as a surprise to many keen observers of Nigeria’s inglorious neglect and perfidy around the Ajaokuta Steel project that is regarded by many as our country’s industrialization cradle.

The surprise stems from what most of us know all along; that both President Muhammad Buhari and the FGN never placed many stores by the Ajaokuta project. As someone that pretends to hate anything corruption and official grime, the President thinks he already knows or perceives the prurient stench of genetic and generational corruption associated with the Ajaokuta Steel project from its inception till date. In the estimate of the Octogenarian, Ajaokuta Steel project is beyond governmental intervention as it requires huge financial outlay to revive it; perhaps in multiples of the amount that was sunk to construct it. Besides, the humungous settlement debt hanging on the neck of the FGN deriving from the messy termination of a concession agreement between the Government and Global Infrastructure Holdings limited (GIHL) does not make any talk on reviving the Steel Plant attractive to anyone. To the FGN therefore resuscitation of Ajaokuta Steel Plant is better left for private initiatives and this has been the position of President Muhammad Buhari ever since.

Based on the above scenario, therefore, many Nigerians must be wondering what may have changed within the spate of the past one and a half years to warrant current optimism and renewed vigour on the part of the FGN to reactivate Ajaokuta Steel Plant with foreign support. Specifically, we are told that Russia has offered Nigeria technical and financial support to resuscitate Ajaokuta Steel Plant. This is good news no doubt, but it is hardly what we think as emergent facts reveal that a roguish cabal comprising well-heeled Nigerians, government officials and some politicians are at their usual games of using the Ajaokuta Steel project to line their pockets. A little background to this will elucidate what I am referring to here.

After progress on Ajaokuta Steel Project development stalled around 1994 at a time when the Steel Plant had reached about 96% completion, the project was abandoned and left to rot away up until 2004 when it was concessioned to Solgas (Nig) Limited by the administration of former President Olusegun Obasanjo. The arrangement suffered a still-birth as it was aborted almost immediately it was started by the FGN due to what was termed ‘non-performance.’ The Bureau for Public Enterprises (BPE) was thereafter mandated to pre-qualify and recommend preferred concessionaires with proven technical and financial capabilities than the previous concessionaire for consideration. But as we were told, BPE’s recommendations were overruled through executive fiat and Ajaokuta Steel Plant, with some of its capture infrastructure, were concessioned to GIHL in what many regarded as underhand deals. GIHL did not fare any better in terms of reviving and operationalizing Ajaokuta Steel Plant. At least a Government administrative panel of inquiry that was constituted by the administration of late President Umar Musa Yar’Adua to investigate allegations of wrongful business practices by the concessionaires indicted GIHL of non-performance, assets stripping and contractual infractions; among other sins.

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Again, the FGN terminated the concession agreement between it and GIHL based on findings and recommendations of the panel of inquiry. From that point onwards, things began to fall apart for Ajaokuta Steel project and the centre could not hold anymore. However, unlike Solgas, GIHL did not go away quietly; the company dragged the FGN before an international arbitration in London, pursuant to a dispute resolution clause in the concession agreement. GIHL dubbed the termination ‘wrongful’ and demanded a humongous amount of money in hard currency as compensation.

Meanwhile, a technical audit that was instituted by the FGN after the departure of GIHL revealed extensive assets stripping, assets collateralization and equipment spoilages under the concession.

The Federal Government was unhappy about whole thing and expectedly, the case before the international arbitration panel dragged under the administrations of both late President Umar Musa Yar’adua and that of former President Goodluck Jonathan. Both Presidents belonged to the PDP. President Muhammad Buhari’s APC government comprising western Nigeria progressive elements that helped him wrestle power from the PDP took over reins of governance in 2015. The western progressives knew exactly what they wanted in President Buhari’s Government from the outset and one of it was the Federal Ministry of Mines and Steel Development (FMMSD).

To a casual observer, there is nothing strategic or ‘juicy’ about FMMSD unlike works or petroleum or finance ministries based on Nigerian perception of looting wetlands. However, FMMSD superintends over Nigeria’s vast and somewhat untapped mineral resources that hold more promises for the future than fossil fuel. Besides, Ajaokuta Steel Plant with its allied facilities all fall within the purview of FMMSD. Therefore, feet-holds in the Ministry will accord them opportunity to acquire mining licences and leases. It will also enable the progressives remediate the wrongs done to their kinsmen through wrongful termination of the GIHL concession agreement on Ajaokuta Steel Plant; political and ideological differences notwithstanding. Is anyone still wondering why all substantive ministers of FMMSD were picked from among the western progressive stock of Mr President’s party till date?

The ministers of FMMSD have consistently and vigorously pursued ‘amicable’ resolution of the case between GIHL and the FGN involving huge monetary payouts in foreign currency and completion by the GIHL of its remaining mining leasehold of the Nigerian Iron Ore Mining Company (NIOMCO). As desirous as this outcome may seem, the FGN could ill afford the luxury of committing to paying the huge sums to GIHL especially at this critical economic period when the nation is surviving virtually on borrowings.

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Consequently, the Federal Government adopted a wait-and-see approach while hoping for a more auspicious time to act. But the progressives and the cabal are in a hurry as the end of President Muhammad Buhari’s APC led Government looms ominously in the horizon.

They must do something and quickly too before time runs out. This was where the Ajaokuta Steel Plant revival project came readily to their minds. It will sit pretty well amid the quick impact and legacy projects that were being considered for execution in the twilight of President Muhammad Buhari’s administration. The cabal and corrupt ministry officials estimated that the only thing that may prevent inclusion of Ajaokuta Steel Plant revival project being considered among the President’s legacy projects basket was funding. Hence, they hastily approached their rich Oligarch counterparts in Moscow to devise a scheme. The result of this scheme is what gave rise to current frenzy around the Ajaokuta Steel Plant. There is plenty of money to be made quickly from the resuscitation of Ajaokuta Steel Plant even if they knew that reviving the Steel Plant cannot be achieved within the remaining span of President Muhammad Buhari’s government. All that was required was for the Oligarchs to meet the Russian Government and persuade it to guarantee a loan of $1billion from AFREXIM Bank on behalf of Nigeria to be possibly augmented by a further sum of $460m from the Russian Government as a soft loan for immediate take-off of the project. On their part, the Nigerian cabal will return home to tell the Nigerian Government that Russia has indicated willingness to assist the country both technically and financially in the effort to resuscitate and operationalize Ajaokuta Steel Plant.

They will also try to convince the FGN to provide some funds to offset part of the settlement debt that is being owed to GIHL in order to remove the only legal hurdle in the way. Both parties returned to their respective countries and they succeeded in their mutually inclusive missions. Thus, the resuscitation of Ajaokuta Steel Plant project became the main agenda of a Russia-Nigeria bilateral meeting that was held by the sides during the November 2019 Russia-Africa Economic Summit that was held in Sochi, Russia. It was agreed at that meeting that Russia, through its State Owned Enterprise, TyazhPromEXPORT (TPE-Russia) will assemble a team of experts that will handle the Ajaokuta Steel project on behalf of FGN. On its part, Nigeria was to also assemble a team of experts after which both countries would meet to flesh-up technical and funding issues preparatory to commencement of the project.

Back home in Nigeria, the mines and steel cabal together with officials of FMMSD got busy designing plans and schemes that will ensure success of the project.

Although Russia had promised to guarantee the debt funding and provide additional loan to fund initial working capital, Nigeria was required to provide immediate funds for a pre-engagement technical audit of Ajaokuta Steel Plant. The technical audit to be conducted by TPE was not only to ascertain current technical and physical states of the Steel Plant, but also benchmark scope of all future works on the Steel Plant. The FGN approved some funds for the FMMSD to conduct the technical audit eventually. Meanwhile, a similar audit was conducted in 2010 at the behest of the FGN which report was submitted to it through the FMMSD. Therefore, if concerned government officials in FMMSD were patriotic as they seem, would it not have been better to first revisit the previous technical audit and perhaps re-engage the consultants to review the exercise possibly with an expanded mandate that reflects current vision of the Government? Also, would it not have been better for an independent party to conduct such technical audit and provide more realistic benchmarks for TPE that is to handle the resuscitation of the Ajaokuta Steel Plant ultimately under their arrangements rather than TPE being an arbiter in its own case?

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While using COVID-19 as excuse for the delay in conducting the technical audit that ought to catalyze further progress on the Ajaokuta Steel Plant project, the FMMSD approached the Bureau of Public Procurement (BPP) to obtain a ‘Letter of no Objection’ that would enable it procure services of TPE to conduct the technical audit. Expectedly, BPP declined to issue the letter due to what it observed as ‘flawed’ expression of interest by TPE. Suffice to state here that TPE of Russia had previously bid to conduct technical audit of Ajaokuta Steel Plant in 2009 with 10 other international consultants in which another company won the bid. Therefore, this is the second time that TPE of Russia has failed to meet prescribed minimum requirement for consideration to conduct technical audit of Ajaokuta Steel Plant. It should therefore be a sign to the FGN that what FMMSD and its patronizing cabal are bringing to the table currently is not only hollow, but may amount to additional wasteful expenditure in the name of reviving the Ajaokuta Steel Plant.

Furthermore, it is doubtful if the FMMSD on behalf of the FGN can meet the stringent requirement stipulated by AFREXIM for accessing the bank’s loan facilities. Furthermore, it is needless to reiterate the fact that the Russian loan if it materializes at all may end up being expended on some non-description foreign experts that will be working on the Steel Project while Nigeria bears the burden of repayment ultimately. I wish to conclude that the current story about resuscitation of Ajaokuta Steel Plant is like a story retold a thousand times by an idiot.

As Shakespeare averred, ‘…it is full of sound and fury, but signifying nothing.’ We need to go back to the drawing board on this very important project and quit this money spinning ‘kalo-kalo’ game by FMMSD and its cabal please.

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