Nigerian govt spends N30bn on Ajaokuta staff salaries, steel imports hit N5.75trn

THE Nigerian government under former President Muhammadu Buhari spent N29.606 billion on salaries of staff of the moribund Ajaokuta Steel Complex from 2016 to first half of 2023, even though the plant produced zero steel, Economy Post analysts have found.

A small fraction of the N29.606 billion (less than 20 percent) was used to settle overhead costs of the plant, including rents, utilities, office maintenance, among others.

Only N2.338 billion was deployed to capital expenditure within the period under review, showing that insufficient efforts were made to revivify the plant in seven and a half years under Buhari.

The expenditures covered 2016 when former President Buhari began to implement his own budget and first half of 2023 when he exited the government.

As money was being spent on the moribund Ajaokuta Steel plant without results, companies in Africa’s most populous nation imported base metals valued at N5.902 trillion over the seven-and-a-half-year period, as per data from the National Bureau of Statistics (NBS) data analysed by Economy Post.

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Steel imports hit N5.75trn

While the Nigerian government spent nearly N30 billion on the wages of Ajaokuta Steel staff between 2016 and first half of 2023, the country used N5.902 trillion to import base metals which Ajaokuta was supposed to produce.

From N482 billion in 2016, basic metals import cost rose to N1.060 trillion in 2021 before falling to N851.393 billion the following year. From January to June 2023, a total of N372.14 billion was spent on steel importation into Africa’s most populous nation. The importation took place mostly in dollars but Nigeria’s statistics agency converted the amounts to naira, Economy Post understands.

According to the Manufacturers Association of Nigeria (MAN), steel imports have been on the rise due to the non-functionality of Ajaokuta Steel Complex, which is supposed to produce metals for various real sector players in the country.

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Local manufacturers have spent the scarce foreign exchange on the importation of metals which Ajaokuta Steel was meant to produce. Corruption, political patronage, nepotism and stealing have stalled the plant, according to experts.

Nigeria has spent more than $8 billion on Ajaokuta Steel, but the plant has produced zero steel or metals to support the country’s industrialisation drive.

Govt delays privatisation

The Nigerian government has failed to show the required seriousness needed to privatise or concession the moribund steel plant. In 2022, the Federal Executive Council (FEC) under Buhari set aside N853.267 million for a consultant handling the concession.

Former Minister of Information, Mr Lai Mohammed, said after a FEC meeting in April 2022 that COVID-19 frustrated the efforts of the Ministry of Mines and Steel Development to revive or sell the the steel plant.

“The contract for Ajaokuta Steel was awarded in 1979 to a Russian company called TPE. By the end of 1983, the contract had reached an advanced stage. Regrettably, since then it has been suffering by 1994. TPE demobilised from the site and in 1996, the contract was determined,” Punch quoted him as saying.

“Various administrations have tried to revive the Ajaokuta steel complex without much success. However, you will recall that Mr President was on a state visit to Russia on October 22 and 24 2019 and here it was resolved that the Ajaokuta steel complex which the Federal Government has made massive investment must be resuscitated.

“We believe that with this development, we would have made significant steps in bringing back to life both the Ajaokuta and the iron ore company in Etakpe and move forward the industrial revolution of Nigeria.

“When these two complexes begin to function, then, not only are we going to save money in terms of foreign exchange, but we are going to see a lot of industrial development and also technology transfer.”

However, the complex did not function even after Mr Mohammed and his boss, Mr Buhari, exited power on May 29, 2023,

Be serious, sell the complex, experts say

Experts have asked the government of Mr Bola Tinubu to get a good private sector manager to handle the plant.

A former Chairman of the Manufacturers Association of Nigeria Steel Group and Chief Executive Officer of Qualitec Industries, Engineer Oluyinka Kufile, said the government was playing politics with the steel plant.

He said some persons were benefitting from the non-operations of Ajaokuta Steel to import all sort of steel products into the country, claiming that it was possible that some of them were not paying tariffs.

A former staff member of Ajaokuta Steel, Mr Jones Adekunle, regretted that successive governments had succeeded in killing the plant through wrong concessions, urging the government of Mr Tinubu to sell it as soon as possible.

“Get a good buyer; they are still available. Forget countries that handled it before. Get a new company that can handle it, revive it and produce. My fear, however, is that most of the plants there may have been archaic and cannot compete favourably with what we have in the global market today,” he noted.

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The Chief Executive Officer of Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, who worked in the steel plant in the past, said political interference and corruption had stalled the progress of the plant.

“Right now, what we need to do is to unbundle the plant. It is so huge, so we may need to unbundle it to separate various sections such as the machine section, the technical section, the power plant and others. After doing that, get the private sector – a competent company- to manage it,” he added.

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