When Oby Ezekwesili, a former minister of Education during Olusegun Obasanjo’s Administration said there is not much the next Nigerian President will do in four years because of the level of decay in the system, not many people took her serious.
Notwithstanding the level of decay in the system, President Muhammadu Buhari, who has thrown the country into huge foreign debts may have used substantial part of the foreign loans in providing some basic infrastructural facilities in the country. More importantly was ‘’the rescue of the 45 year –old moribund Ajaokuta steel plant from all legal disabilities in Itakpe, Okene, Kogi state’’.
The Katsina state born Nigerian President who is on his last lap in his second term in office had said on Thursday, December 29, 2022, at Okene, that 400 million of the North American country of theUnited States, US, has been spent by his Administration ‘’to transform the Steel plant in order to resume production .
There are indications that for the period the plant had remained out of production due to legal threats by the Russian firm, Global Holdings Limited, past and present government had invested over $10 billion, on the Ajaokuta Steel plant which as at 1994, was said to have reached 98 % completion.
The sad part of it was that despite the huge investments, the multi-billion dollar Rolling Mill has not produced a single Steel product that can contribute to the development of the Nigerian economy. The integrated plant, according to informed sources was envisaged to have multiplier effects on all sectors of the nation’s economy such as industrial, agriculture, transport and construction, among others.
Designed to produce 1.3 million tons of liquid steel per annum in phase one , with a built-in capacity to expand to 2.6 million tons to produce flat iron sheet and other steel products in its second phase. The plan for phase three was for it to produce 5.2 million tons of various types of steel products, including heavy plates.
As a prelude for the take-off of the transformation of the moribund steel plant, the Katsina born Nigerian President was said to have to have approved $2 million for ‘’the conduct of a technical audit-in to ascertain the condition of the facility before restarting the work by the Russian Contractors on the 45 –year old Steel Rolling Mill.
Recall that Ibrahim Garba, a Professor of Geology and a former Vice Chancellor of Ahmadu Bello University, ABU, Zaria, Kaduna state had said, that the plant chances of taking off are slim because ‘’it was predicated on low -grade iron ore, an important raw material needed for the smooth operation of the rolling Mill, but the Buhari Administration had intensified efforts ‘’to salvage the plant which is almost completed’’.
Olamilekan Adegbite, the minister of state, Mines and Steel Development , had said that the plant ought to have been Completed with the huge investment made on it over the last couple of years both not for the outbreak of the Asian country of China CORONA Virus, popular COVID 19 and the ongoing Russian –Ukraine war.
Adegbite, had blamed Olusegun Obasanjo and former President Jonathan of the then ruling People’s Democratic Party, PDP, for throwing the country’s steel space into a mess contrary to the legal advice by the ministry of Justice, which had cited the termination cost in the form of damages.
He had said that that the major issue with the Global Steel Holdings was the concession that was made in 2005 by the former President Obasanjo’s government to the company which was said to have resulted to litigation and a demand for $7 billion by it.
He had revealed that though , the Steel Company came up with a demand of $7 billion damages but a Nigeria Lawyer based in the United Kingdom, UK, hired was able to puncture holes in their case and at the end they had to settle for $496 million, thus ending 12 years of intractable Court disputes , described as one of the major albatross of the Ajaokuta Steel plant that was said to have occurred under the Obasanjo’s Administration.
Many believe that Nigerians knew little or nothing about the Ajaokuta Steel Rolling Mill, located at Itakpe, where Shehu Garba, a Senior Special Assistant to the President on Media and publicity had worked as the spokesperson, but depend on the information passed on to them by the Russian Concessionaires.
Note that the entire Iron ore deposit in the Itakpe Area was put at 300millions , which geologists had aid is small and of very low low quality of about 35% when the country needed between 50 -% 60% to have very efficient production.
An elated Buhari who has expedited action to see to the completion of the multi-billion dollar Ajaokuta steel plant had said that ‘’the investment will add $1.6 billion annual income to boost the Nigerian’s economy and create over 500,000 jobs’’. He had said that ‘’the government is ready for the concessioning the Ajaokuta Steel plant to a private investor with the right profiles to put it to work’’.
Describing the money that had been spent on the steel Rolling Mill as well-spent, he noted that as’’ the government move closer to achieving its objective of transforming the north central state of Kogi as an industrial hub as well as a solid mineral power house , he noted that ‘’no single project holds the key to unlocking the potential of the state as much as he steel complex’’ which his Administration had inherited as a long moribund complex strangulating under a tangle of local and international Commercial disputes.
Take for instance, the Nigeria government in order to resume work on the multi-billion dollar steel complex had agreed to pay the $496 million to settle the Russian state owned Global steel Holdings Limited over the control of the Ajaokuta steel company.
The deal was said to have reached under an alternative dispute resolution framework of International Chamber of Commerce. Former President Goodluck Jonathan ’s Administration was said to have revoked the agreement that has handed over the control of the steel works and the Itakpe Iron Ore Mining Company to Global steel Holdings in 2008. In cancelling the contract, the government had said that the terms of the concession at the time were unfavourable to the country.
Abubakar Malami, a Senior Advocate of Nigeria, SAN, and minister of Justice and Attorney General of the Federation, AGF, had said that the Federal government agreed to pay the Company $496 million instead of the $5.258 billion demanded by the firm to settle the disputes.
The minister had said that ‘’the seeds of the disputes could only be traced to five contracts entered between 1999 and 2007 that gave complete control over the Nigerian steel space to one company , Global Steel Group’’.
The AGF, had said that had said that if the government had waited for another 55 days , in 2008, before revoking the contract, the pact would have been terminated lawfully and the government would have collected more than $26 million from Global Steel as liquidated damages under cl.12 of the Ajaokuta Share Purchase Agreement.
But the company had taken advantage of Nigerian naivety on Steel matters to drag the Nigerian government to the International Chamber of Commerce, International Court of Arbitration in 2008 .The then Jonathan’s government was said to have Negotiated an out of Court a settlement with the company in May, 2013 but failed to implement the settlement agreement.
In 2020, the foreign Steel firm was said to have threatened a resumption of the arbitration and announced an anticipated claim in damages of over $10 billion and $14 billion against Nigeria. Buhari may not have wanted the interminable and complex disputes to linger on that he was said to have stepped in to rescue the country’s Steel space. He got it right.
The Nigeria government was said to have agreed to pay the $400 million damages to Global Steel Holdings to settle the disputes once and for all after engaging PWC Nigeria to do a Comprehensive review of the project to ensure that tax payer’s money are protected. With the payment of the $400 million damages to the Russian firm, Nigeria may have been saved the trouble from the repeated international legal threats from Global Steel Holdings thus, giving it a breather.
This may have informed why the biddings for control and Management of the Ajaokuta Steel plant has been thrown open. At the last count, 11 Multinational Steel Companies, which were said to have agreed to bring to bring their own money into the Ajaokuta Steel plant ‘’to make sure that it works are said to have been shortlisted in the concession bid for the plant. Adegbite, the minister of state Mines and Steel Development had said that three Russia n Companies are among the 11 bidders.
The Buhari’s Administration may not have wanted the mistakes of 2005 to repeat itself again that it has engaged the services of ‘’a transaction Adviser who will guide the Nigeria government through the process’’.