The controversies over the Ajaokuta Steel Complex assumed a new dimension recently when the House of Representatives passed a resolution to halt the proposed concessioning of the Complex. As the Ministry of Mines and Steel Development maintained it has not done any wrong. ABAH ADAH examines the scenario.
It was a hot and prolonged debate on the floor of the green (lower) chamber of the National Assembly through mid-morning of Thursday, the 15th March, 2018. This overwhelming proceedings attests to the controversies surrounding the concessioning and indeed ownership of the Ajaokuta Steel mill which appears to be mounting up.
The House of Representatives after the heated debate urged President Muhammadu Buhari to stop the Ajaokuta Steel Company concession move of the Minister of Mines and Steel Development, Dr Kayode Fayemi, explaining that the stoppage was to give time for conclusion of review of the process ordered by the chamber as part of its drive to get the company back on stream.
The resolution followed a motion by Rep. Ahmed Yerima (Zamfara-APC) and 24 other lawmakers. The motion is entitled “Urgent Need to Investigate the Circumstances under Which the Federal Ministry of Mines and Steel Engaged the Globally Discredited PricewaterhouseCoopers (PwC) to audit Ajaokuta Steel Complex for Purposes of Concession.”
In adopting the motion, the lawmakers resolved to expand the mandate of its Ad Hoc Committee on Ajaokuta Steel Complex to include urgent consideration of possibility of a bill for completion of the company and prohibit its concession.
Moving the motion, Yerima said he was aware that Fayemi recently announced, “and it was widely published’’, that Ajaokuta Steel Company would be given out on concession after an ongoing audit.
He disclosed that audit of the company was undertaken by PricewaterhouseCoopers, which he alleged, had been discredited, “having been sanctioned in India with a two-year audit ban for infractions of over one billion dollars’’.
The lawmaker said that the firm was also sanctioned in Brazil for which it paid 50 million dollars as fine, and was fined in the United Kingdom for 5.1 million pounds.
He also said that the firm paid 225 million dollars and 25 million dollars, respectively, as fines to TYCO shareholders in the U.S and Bank of Tokyo-Mitsubishiw for laundering money for Iran, Sudan and Myanmar.
He added that it was blacklisted for roles in terrorism and human rights abuses, among other infractions and irregularities in its operations, “which has left its reputation in tatters.”
Yerima expressed concern by the allegation that PricewaterhouseCoopers was informally engaged by Global Steel to assist and advise them on how to recover Ajaokuta Steel Company and National Iron Ore Company (NIOMCO), Itakpe, from the Federal Government.
He said he was worried that the minister engaged a company whose antecedents may suggest that they were engaged to audit and prepare reports which may skew the outcome in a pre-conceived manner.
According to him, it may have done to favour parties which the minister may have lined up or which may represent the interests of their former clients (GINL).
The legislator wondered why Bureau of Public Enterprises and Infrastructure Concession Regulatory Commission (ICRC) established by law were not involved in the audit and concession process, accusing the Minister of deliberate plot to concession Ajaokuta Steel Company to a pre-determined group.
He decried the minister’s submission that government could no longer spend additional funds on the company “when he is already spending N2 billion for the concession process’’ and where Nigeria spent over 3.5 billion dollars on steel importation.
Yerima said since NIOMCO was handed again to Global Steel in “so called modified concession for a seven-year period with an option of a further 10 years, the plant which is integrated with Ajaokuta Steel Complex has remained moribund’’.
According to him, this development is an indication of likely failure of yet another concession.
While joining in adopting the motion, House Leader, Mr Femi Gbajabiamila, called for a Bill to stop the concession of Ajaokuta Steel Company or amend existing law to check the process.
The House consequently urged the Senate to concur on the motion and resolved to amend the National Council on Privatisation (NCP) Act to delete Ajaokuta Steel Complex from the list of companies for concession.
In a swift response, a statement from the office of the Minister refuted the allegations, saying the House deliberated on a non-existing issue, while claiming that the law makers misunderstood what the ministry is doing.
The statement which denied the contracting of any transactional adviser for the concessioning of Ajaokuta Steel Company however noted that the process of appointing a Transactional Adviser is on, but cannot be completed until it gets the approval of the Federal Executive Council (FEC).
“The Ministry has not spent a dime from the N2,096,500.00 (Two billion, ninety six million, five hundred thousand naira ) appropriated by the House for the concessioning of Ajaokuta Steel Company (in the 2017 Appropriation Law).
“The mediation process that led to the amicable settlement of the legal encumbrances on Ajaokuta Steel Complex has not ended. There are still a few more steps to be taken as outlined in the terms of (out of court) settlement. And the Ministry is following up on this.
“It is also important to state that no one has been hired,” the statement clarified further.
Who is telling the truth on this issue leaves so much to be desired, considering the series of setbacks suffered by the giant project believed at conception to be the bedrock of Nigeria’s industrialisation. Controversies have surrounded the steel company project for decades, compelling past administrations to abandon work on the site.
The neglect was borne out of allegations and counter-allegations and law suits around the peripheral of its construction. The continued neglect was on until the President Muhammadu Buhari-led government showed the desire to bring back the lost glory by reigniting the zeal to complete the much talked about steel project.
However, an earlier statement credited to the minister, Dr Fayemi that the company was to function as a private entity has opened another chapter in the present administration’s quest for the completion of the steel project. In a press statement made available to journalists by the Head of Media to the Minister in Abuja then, Fayemi stated that it was time for the company to become a public entity. He said: “The government is putting a lot in place to ensure that the Ajaokuta Steel Complex gets back to life. The company would no longer be run as a public concern.” The minister said the government was committed to ensuring Ajaokuta works, because it believes that a functional Ajaokuta Steel complex would greatly assist the country’s developmental drives.
He stated that experts with proven track records and required financial capability would be encouraged to key into the scheme through a competitive bidding process that would be transparent.
However, industry stakeholders believe that the company is not yet matured for privatisation as doing so without completing the project would amount to selling the company as scrap to buyers.
The consensus of stakeholders in the iron and steel sector of the country was revealed at a joint press briefing held in Abuja recently. The event was convened by the African Iron and Steel Association, the Nigerian Society of Engineers (NSE), representatives of the host communities and other critical stakeholders in the sector.
A professor of Extractive Metallurgy and Material Processing, who is also the co-chair of the Iron and Steel Development Committee of the NSE, Prof. David Esezobor, said that any attempt to privatise the company would yield no positive result as the government should be more focused on completing the project, providing the supporting infrastructure and commercialising the company for some years before privatising it.
Esezobor said the stakeholders were against the concession of any steel plant in the country, including the recently signed modified concession agreement for Itakpe Iron Ore Mining Company to Global Infrastructure Nigeria Limited. He urged the Federal Government to invite the original builders of the Ajaokuta Steel Company to complete the project instead of attempts at concessions.
The convener of the stakeholders’ forum, Dr. Sanusi Muhammed, of African Iron and Steel Association, said Nigeria needs $1.1 million to complete the Ajaokuta Steel project – about $420 million to complete the plant and $500million to complete supporting infrastructures such as roads around the plant. He said at the moment, 40 units of the plant had been completed, with only three units remaining, which the government could complete before privatising the company.
Dr. Muhammed revealed that a company, Ajaokuta Kogi Nigeria Limited had been registered at the Corporate Affairs Commission (CAC) to acquire Ajaokuta Steel Company, a development which, he said, the stakeholders were already moving against.
The Federal Government of Nigeria has recently said the Ajaokuta Steel Company, ASC, and the National Iron Ore Mining Company Limited, NIOMCO, Itakpe, belonged to it despite a deal agreed recently to settle a legal dispute over the plants.
After several years in limbo, a deal between the Indian Steel giant, Global Steel Holding Company, and the federal government to facilitate the reactivation of the plant, collapsed, throwing the company into a prolonged ownership crisis.
The disagreement had precipitated a legal tussle at the International Court of Justice at The Hague with parties seeking an amicable settlement.
Last September, the federal government and the Indian firm’s subsidiary, Global Infrastructure Nigeria Limited, GINL, said they had reached amicable terms to settle the dispute.
The Minister, Dr Fayemi, who announced the deal, said both parties agreed to sign a ‘Modified Concession Agreement,’ which would allow GINL be involved in the management and operation of NIOMCO”for some years.”
Following the agreement, Mr. Fayemi said the government was proceeding with its plans to conclude arrangements to restart operations at the Ajaokuta Steel plant, with the recent appointment of a Transaction Adviser.
But, thereafter, a director of Global Steel Holdings Limited, GSHL, the parent company of GINL, S. O. Nwanbuokei, dismissed Mr. Fayemi’s claims that the protracted litigation surrounding the ownership of Ajaokuta Steel Company had been resolved.
Mr. Nwanbuokei said in a statement that although GSHL expected to be party to the resolution the minister made reference to, he was neither aware of the resolution, nor any settlement reached over the matter.
Recently too, in protest of move to concession Ajaokuta Steel Company and the Itapke National Iron ore Mining Company, in Itakpe, the host communities have petitioned the Senate over what they called “rip-off of our national assets in the name of concession and flagrant deconstruction.”
The petition was submitted to the Senate, by Senator Ahmed Ogembe, who is representing the host communities of Kogi Central Senatorial District, at the National Assembly and signed by over 20 associations from the area.
Ajaokuta steel project, started in 1979 by the Soviet Union under a cooperation agreement with Nigeria, is located on 24,000 hectares of sprawling green-field land-mass. The plant itself is built on 800-hectares of land. The chosen technology for steel production is the time-tested Blast-Furnace – Basic Oxygen Furnace route for Steel Production.
The Ajaokuta integrated steel complex was conceived and steadily developed with the vision of erecting a Metallurgical Process Plant cum Engineering Complex with other auxiliaries and facilities. The complex is meant to be used to generate important upstream and downstream industrial and economic activities that are critical to the diversification of Nigeria’s economy into an industrial one. However, it has never produced any steel, and it is non-operational to date.