The Nigerian iron and steel industry established as a basis for industrialisation has remained unproductive even as the year 2020 targeted for the country to become one of the world’s top 20 economies is barely six months away. ABAH ADAH writes.
In its drive towards becoming one of the most industrialised economies in the world by harnessing the human and natural resources that abound in its geographical space, the Nigerian government at various times over the years, initiated several economic reform policies and targets, none of which can be said to have been successful as their objectives were largely unmet.
A vibrant iron and steel sector is necessary for the infrastructural and technological development of any nation. Nigeria is blessed with all the raw materials required for steel development including iron ore, coal, natural gas and limestone. Under the third national development plan (1975 – 1980) specifically between 1976 and 1978, Nigeria commenced the construction of two integrated iron and steel plants located at Ajaokuta (Ajaokuta steel company-ASC) and Aladja (Delta steel company-DSC) and three rolling mills at Oshogbo, Jos and Katsina. The 1.3 mtpa ASC is based on blast furnace/basic oxygen furnace (BF/BOF) technology with rolling product capacity of 5.2 mtpa. DSC has a 1.0 mtpa steel melting plant for the production of 0.96 mtpa of billets and 0.32 mtpa of rolled products, while supplying 210,000 tonnes of billets each to Oshogbo, Jos and Kastina rolling mills.
These projects were expected to kick start a vibrant iron and steel sector in Nigeria. However, due to several factors including political, technical, logistical and managerial challenges, all these publicly-owned iron and steel companies folded up in Nigeria. The privately-owned iron and steel companies, which are mostly rolling mills that were dependent on the integrated mills for billets are now threatened due to lack of raw materials. The publicly-owned iron and steel companies (ASC, DSC and the three inland rolling mills) were privatised in 2000- 2005, yet most of them are still moribund.
According to a recent study , Nigeria is endowed with all the major raw materials needed for the production of iron and steel including 3 billion tonnes of iron ore, 3 billion tonnes of coal, and limestone in excess of 700 million tonnes and 187 billion SCF of natural gas.
The annual estimated per capita consumption of iron and steel in Nigeria increased from 5 kg in 1968 to 130 kg in 2012. Planning for the Nigerian steel sector started in 1958, but over 50 years after, the country was yet to establish a stable iron and steel sector despite huge investments of over $ 9 billion.
Despite the huge investments, the Ajaokuta Steel Company (ASC) failed to take off, while Delta Steel Company (DSC) and the three government-owned inland/satellite rolling mills in Oshogbo, Jos and Kastina are moribund, working under low capacity utilisation.
The reasons for the poor performance of the Nigerian steel sector include inadequate funding, poor planning and implementation and political influences Until recently, the nation’s steel requirement was substantially met since independence by imports from western nations particularly US, Great Britain, Germany, Japan and recently, by relatively cheap and sub-standard steel from some Asian nations. The country is now spending a large portion of her foreign exchange for the importation of steel products, while still investing heavily in the domestic production of steel. This is double jeopardy.
The privatisation that was carried out in 2004 – 2005 did not revive the sector, but rather transformed the companies to private monopolies. Because the two integrated iron and steel companies in Nigeria (ASC and DSC) are unable to produce billets for the 20 steel rolling mills in the country, the sector is dependent on imported billets. But due to the high cost of billet importation, many steel companies are unable to function. The few steel companies that are operational though at low capacities have had to depend on recycling of scrap iron and steel obtained mostly from municipal solid wastes.
Policies and legal framework are very important to guide development activities of any nation. Nigeria has released several fiscal and economic development policies. Vision 20: 2020 economic blueprint as approved by the federal executive council (FEC) clearly recommended that the nation shall produce 12.2 million tonnes of steel per annum by the year 2020 out of which Ajaokuta steel plant is to produce 5.2 million tonnes/ annum, DSC to produce two million tonnes per annum and the remaining by private entrepreneurs if Nigeria is to join the league of 20 industrialised nation by 2020.
Fortunately enough, most of the policies and programmes rolled out by government since the outset of this sustained democratic experience in Nigeria in 1999 such as the vision 2010, the 7-Point Agenda among others, which are now in the trash can of history having largely failed to achieve their objectives, and even the still valid Vision 2020:20 and the diversification agenda of the present administration, have similar goals-to reform the economy by revamping the non-oil productive sectors such as agriculture and solid minerals with a view to boosting local production, manufacturing and infrastructure development and ultimately transforming the country to an industrial cum economic giant among the committee of nations.
Nigeria has had two different administrations since the adoption of Vision 20:2020, each having its own economic growth plan. Under President Jonathan the Transformation Agenda was the focus. With President Buhari, it is the Economic Recovery and Growth Plan (ERGP).
However, it is noteworthy that the three plans have been predominantly based on the bedrock of driving economic expansion and an inclusive growth i.e. growth that advances equitable opportunities for every section of the society.
Going by all economic indicators now, it appears Nigeria is not prepared to take a place among the top 20 economies in 2020, which is six months away, as envisaged by Vision 2020, especially as the iron and steel sector which ought to be the chief driver of the revolution is still in limbo even as billions of naira have been sunk into developing it.
Sadly enough, the Ajaokuta Steel Company which was established at the close of the 1970s as the nation’s backbone of industrialisation and the Itakpe iron ore project meant to supply the raw materials, all in Kogi State, have remained uncompleted, about 40 years down the line, despite the huge chunks of taxpayers money expended on them over the years.
The Ajaokuta integrated steel complex was conceived and steadily developed with the vision of erecting a Metallurgical Processing Plant cum Engineering Complex with other auxiliaries and facilities. The complex was meant to generate important upstream and downstream industrial and economic activities that are critical to the diversification of the economy away from oil which has been the sole source of wealth over the years. Ajaokuta Steel Plant is therefore aptly tagged the bedrock of Nigeria’s Industrialisation.
While the project was expected to directly employ about 10,000 staff at the first phase of commissioning, the upstream and downstream industries that were to evolve all over the nation thereafter were to engage not less than 500,000 employees.
The plant by 1994 was reckoned to be at 98 per cent completion in terms of equipment erected. Some completed units of the plant reportedly operated at different times but had to short down due to non-availability of fund. And an audit carried out at the instance of the Ministry of Mines and Steel Development about a year ago to ascertain the state of Ajaokuta before investing in it towards completion, revealed that the internal infrastructure required to operate the complex was about 98 per cent completed. Receiving the report, the ministry assured that with the concerted effort of Mr President towards funding the project to its logical conclusion, the jinx which has kept Ajaokuta in the pipeline for 40 years would be broken.
But while responding to questions from the press at the close of 2018 as to why Ajaokuta has not taken off in spite of recent government interventions, the minister noted that the company cannot commence operation yet even if it was 100 per cent built because of the the complex infrastructures, some internal, others external that have to be in place for its operation to successfully commence and be sustained.
He said, “The steel company is not yet functioning because its infrastructural requirements such as specific rail system, dredging of Lokoja and Warri ports among others which are at various stages of completion.
“Ajaokuta is 98 per cent completed. Everything is in place and we have our workers there that are maintaining the place. The remaining two percent has to do with external infrastructure. We need waterways. We need viable ports and so on. Government is putting all these things in place now.
“Even if it was completed 100 per cent it would not be able to operate. If we are to bring in all the raw materials required from Itakpe, like the iron concentrate required, you need 750 trucks travelling each day to feed Ajaokuta. Imagine 750 trucks on Ajaokuta-Itakpe road daily. The road will be bad in one week.
“The policy of the government is that it will not release Ajaokuta steel just like that; what we are planning to do is to regulate and create enabling environment for the company to strive,’ he stated further.
In all of these, where is the hope of making Nigeria count among the 20 industrialised economies in the world as expected? Where is the hope of accomplishing the Vision 2020:20 objectives in the coming year 2020? Did Nigeria not start this journey to industrialisation with its contemporary Third World countries then like China, India and others who are now heavy weights among the industrialised nations? What actually has been going wrong?These are some of the questions that readily come to mind in view of the quagmire that has engulfed the Nigerian metallurgical industry over the years. To become one of the top 20 economies in 2020, Nigeria has to outperform other countries above it on the gross domestic product (GDP) ranking in 2018 and 2019. It must step up its efforts to improve economic growth.
Although the present administration has been more focused on the ERGP, if it coordinates this strategy with robust annual expenditures and favourable monetary policies, that will improve the performance of the economy. , it is hoped that the country will look back at 2010 and point to significant progress.
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