Russian Investor, others show interest in Concession of Ajaokuta Steel Plant

Federal Government on Wednesday confirmed receipt of over 10 unsolicited expression of interest from Russian and other international and local investors for the concession of Ajaokuta Steel complex, Kogi state.

Official of Federal Ministry of Mines and Steel Development who disclosed this at the House of Representatives during a public hearing held at the instance of the House Committee on Steel, also confirmed plans for the selection of Transaction Adviser for the Ajaokuta Steel complex in collaboration with Infrastructure Concession Regulatory Commission (ICRC).

Some of the stakeholders who converged at the hearing expressed displeasure over whooping sum of $4.5 billion spent yearly on importation of basic metals and aluminium products and 25 million tonnes of steel imported into the country annually.

While applauding ongoing efforts by the Muhammadu Buhari’s administration to revive the company, the ministry noted that the concession agreement between Federal Government and NIOMCO was terminated due to several breaches of the agreement, unfulfilled promises and unethical engineering practices by GINL.

“Following the passage and assent of the 2017 budget appropriation, the Ministry in collaboration with ICRC is preparing for the selection of a transaction adviser for the concession of Ajaokuta Steel complex.

“The work of the transaction adviser will include but not limited to ensuring that nothing short of international acceptable best practices are allowed from call for expression of interest to the final handover of the complex to a proven competent investor.

“Experience of the past failed transactions on Ajaokuta Steel plant (ASP) clearly showed that it was the failure if Federal Government of Nigeria to follow the international best practices that held the country bound since 2003.

“The committee members must have heard how an Energy company registered in Isle of Man, Messrs. Solar Energy, found its way into the Ajaokuta Steel project due to our neglect of international best practices and extant laws of the country. We enjoined all stakeholders to insist this time on strict adherence to the extant rules and international best practices,” the ministry stated

In his submission, Engr. Also Abdullahi, Director Steel of the Ministry of Mines and Steel Development, said that the Ministry is charged with the responsibility of developing a viable steel sector stressed by the need for government to create  a conducive business environment for increased steel development in the country and support for local steel development

While expressing displeasure over the challenges bedeviling the Nigeria’s steel industry despite the country’s ranking in iron ore reserves in the world, the Director argued that the exploitation and steel production remain very low.

“There are over 20 steel rolling mills in the country fed largely by steel scrap. The main inhibitors to growth of the steel industry are poor infrastructure and lack of cheap, affordable and accessible finance, limited transport infrastructure to production sites and lack of cheap, uninterrupted power.

“Lack of patronage of local steel manufacturers by international contractors is a major concern to the Ministry, but this may likely be due to the inability of the local steel manufacturers to produce different steel profiles eg. structural steel products as most of them deal in iron rod,” Abdullahi stated.

As part of efforts to encourage the operators in the sector, the ministry recommended zero duty for plant equipment and machinery, tax holidays, pioneer status and special tariff incentives as some of the strategies to be adopted by government for the development of the steel sector.

Speaking earlier, Muhammadu Idrisu, chairman, House Committee on Steel, who observed that the capital flight on steel and iron accessories has huge impact on the economy, called for deliberate action to reverse the trend.

“Nigeria spends about $4.5 billion (N887 billion) annually on importation of basic metals, made up of processed steel, aluminum products and associated derivatives consumed in the country totaling about 25 million tonnes per annum.

“We are convinced that the development of the steel sector will ensure wealth creation for the citizens, conservation of foreign exchange arising from the use of locally made products as well as increased internally generated revenue,” Idrisu said.

While declaring the hearing open, Speaker Yakubu Dogara who was represented by Yakubu Barde, Majority Whip noted that the iron and steel sector is still underdeveloped.

He proposed that the original developers of Ajaokuta Iron and Steel Company, designed to serve as the biggest integrated steel company in West Africa should be contacted to provide a lead for the company to begin production.

Dogara noted that the failure in the steel sector accounts for the influx of substandard iron and steel products into the country, adding that about N2 billion worth of cables were recently confiscated by customs as a result of the failure in the steel sector.

BusinessDay

by administrator News