Experts lament FG spends 20 billion naira on inactive Ajaokuta Steel in six years

Recurrent expenditure gets 18.7 billion naira, capital 1.4 billion naira, under Buhari regime

The federal government allocated 20.4 billion naira to Ajaokuta Steel Company Limited from 2016 to 2021 despite the company’s inactivity.

The data was collected from the appropriation bill for each year available on the website of the Federation’s Budget Department.

In 2016, N295.1m was allocated with N135.2m released in October of the same year.

However, a detailed breakdown of expenditure for the year was not available.

In 2017, the total allocation was 4.3 billion naira with recurrent expenditure of 3.9 billion naira and capital expenditure of 354.1 million naira.

For recurrent expenses, the total staff cost was estimated at 3.8 billion naira while the total overhead costs were estimated at 75.3 million naira.

In 2018, the total allocation was 4.3 billion naira with recurrent expenditure of 3.9 billion naira and capital expenditure of 354.1 million naira.

For recurrent expenses, the total staff cost was estimated at $ 3.8 billion while the total overhead was N75.3 million.

Another breakdown showed wages and salaries cost 2.9 billion naira, allowances and social security contributions cost 895.3 million naira, uniforms and other clothing cost 2.5 million naira, refreshments and meals. cost 1.8 million naira and the purchase of buses cost 41.3 million naira.

Funds have also been budgeted for some projects such as maintenance of electrical installations for 106.3mN, construction / provision of water installations for 196.5mN, lighting and security of the Ajaokuta steelworks at 10 m N and the purchase of a 30-seater bus at 413 m N.

In 2019, the total allocation was 3.6 billion naira with recurrent expenditure of 3.3 billion naira and capital expenditure of 262 million naira.

For recurrent expenses, the total staff cost was estimated at 3.25 billion naira while the total overhead costs were estimated at 75.3 million naira.

Another breakdown showed wages and salaries cost 2.5 billion naira, allowances and social security contributions cost 793.6 million naira, uniforms and other clothing cost 2.5 million naira, refreshments and meals. cost 1.8 million naira and the purchase of buses cost 41.3 million naira.

Funds have also been budgeted for certain projects such as maintenance of electrical installations for 87.7 m N, construction / supply of water installations for 123 m N, lighting and safety of the steel mill. ‘Ajaokuta at 10 m N and the purchase of a 30-seater bus at 41.3 m N.

In 2020, the total allocation was 3.7 billion naira with recurrent expenditure of 3.6 billion naira and capital expenditure of 147.2 million naira.

For recurrent expenses, the total staff cost was estimated at 3.5 billion naira while the total overhead costs were estimated at 51.5 million naira.

Another breakdown showed wages and salaries cost 43.3 million naira, allowances and social contributions cost 5.4 million naira, uniforms and other clothing cost 273,684 naira, and refreshments and meals cost 1 , 6 million naira.

Funds have also been budgeted for some projects such as maintenance of electrical installations for N43m, construction / supply of water installations for N94.2m, and lighting and security of the Ajaokuta steel plant in N10m.

In 2021, the total allocation was 4.2 billion naira with recurrent expenditure of 4 billion naira and capital expenditure of 253.9 million naira.

For recurrent expenses, the total staff cost was estimated at 3.9 billion naira while the total overhead costs were estimated at 72.3 million naira.

Further breakdown showed wages and salaries cost 3 billion naira, allowances and social contributions cost 846.5 million naira, uniforms and other clothing cost 2.5 million naira and refreshments and meals cost 1.8 million naira.

The fund has only been budgeted for one project in 2021, namely the construction / provision of water supply facilities for N80m.

The Russian company Tyazpromoexport built the plant, which was incorporated in 1979.

The steel plant reached 98% completion in 1994, with 40 of its 43 factories built before it got bogged down, with the remaining 2% going to external infrastructure such as waterways and viable ports.

Despite the regular budget, the steel company has not yet started its full-fledged activities for more than 42 years, with the government making unsuccessful attempts at privatization and concessions.

In an attempt to reorganize the business, an Indian company, Global Steel Holdings Limited, won the Ajaokuta steel plant concession for a period of 10 years, but the agreement was revoked when the federal government accused the asset dismemberment business, a development that leads to litigation between the two parties.

The federal government announced in 2016 that the legal dispute had been resolved, after apparently handing over the National Iron Ore Mining Company, Itakpe, to Global Steel for the remaining concession period, in accordance with an agreement reached during mediation talks.

However, the resolution has since become controversial.

In 2019, the president, Major General Muhammadu Buhari (retired), ordered the completion of the enterprise.

In 2020, the Senate also passed a resolution urging the federal government to urgently complete the Ajaokuta steel complex.

The Federal Government has inaugurated the Ajaokuta Presidential Project Implementation Team.

Mining and Steel Development Minister Olamilekan Adegbite said the Ajaokuta presidential project implementation team would enact a pact between Buhari and Russian President Vladimir Putin that required the country to Eastern Europe is helping to complete the project and find a Russian company to manage it on the basis of Build-Operate-and-Transfer.

The minister said Afreximbank would finance the project with $ 1 billion, while the Russians would offer $ 460 million, adding that a Russian company, MetProm Group, would ensure the completion and operation of the steel company.

However, the concession efforts failed.

There were also calls for the federal government to privatize the company.

The federal government halted the privatization, saying the issue with the Ajaokuta Steel Company was very complex.

The punch reported in July that Adegbite said the Ajaokuta Steel Company Ltd. would operate at full capacity before Buhari’s regime ended.

The minister added that the federal government had made efforts to ensure that the Russian company that built the steel industry would come to Nigeria to conduct a technical audit of the company.

Ajaokuta steel project a waste of scarce government resources, experts say

An economist and lecturer in economics at Pan-Atlantic University, Dr Olalekan Aworinde, who said he was familiar with the facility, described the business as a waste of government resources as it is currently inactive.

He said, however, that the company had the potential to significantly reduce unemployment, improve economic growth and increase the country’s foreign exchange reserves.

He said, “I think it’s just a waste of government resources because if you go there you will see that there are a lot of workers who are paid without working.

“In addition, most of the infrastructure put in place in this country is obsolete and dying; they cannot be of any use at the moment.

“The only solution is to update the technology and the equipment. The government should be prepared to do a complete establishment overhaul; bring in the right people and the latest technology.

“Iron oil is in abundance in Itakpe. Thus, if the government succeeds in reorganizing the establishment, it can reduce the unemployment rate to a reasonable level.

“This will contribute enormously to the growth of the country’s gross domestic product. It will also lead to the appreciation of the naira as we will ask less of the dollar.

“You see all this steel that we bring into the country, they need foreign currency to get them into the country.

“In summary, a functioning Ajeokuta Steel Company will result in improved economic growth, reduced unemployment. It will also help stabilize the foreign exchange market and improve our foreign exchange reserves. ”

A former president of the Nigerian Metallurgical Society and professor of metallurgical and materials engineering at Akure Federal University of Technology, Benjamin Adewuyi, said the problem with Ajaokuta was internal.

He said, “Ajaokuta Steel Company has an internal problem, but it’s not that it can’t be revived. Ajaokuta can be revived.

“The biggest problem is that those people who benefited from Ajaokuta’s corruption in the past will not allow Ajaokuta to function.”

He added that the business could operate in six to eight months if the government implements a steel program and allows members of the Ajaokuta presidential project implementation team to operate.

He added, “We have told the government several times that in less than six to eight months, Ajaokuta will start operating if a steel program is put in place.

“If the government allows the people who have been appointed to review the situation in Ajaokuta to function, I am sure that very soon we will see the difference between the dying industry and the functioning industry.

He further stressed the need for a steel university, which he said would provide manpower for the steel company.

“If Ajaokuta starts to operate, it would take a steel university to bring in labor for the steel plant to function well,” he said.

In May of this year, the Senate passed the Nigerian University of Steel Bill after the report of the Senate Committee on Higher Education Institutions and TETFUND was passed.

Senator Sam Egwu, who presented the committee’s report on behalf of the chairman, Senator Ahmed Kaita, said that Nigeria Steel University, once established, would provide the manpower needed for metallurgical and technological advancement in the country.

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