Buhari’s Last Lap , Plans Concessioning Multi-Billion  Dollar Ajaokuta Steel Plant  To A Private Investor

Elizabeth Cukwuma

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 . 

Ajaokuta Steel Plant: Ready For Concessioning To A private Operator

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.

Malami: san, Minister Of Justice And AGF

 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’’.   

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