Ajaokuta: Jinxed and Junked

Here we go again on the road to nowhere. Ajaokuta Steel Plant is back in the news once more, as the government ramps up efforts to create the impression that it means business this time. That is, the business of trying to get the steel plant working.

Early last week, the federal government set up the inelegantly named Ajaokuta Presidential Project and Implementation Team, APPIT, for that purpose. It is chaired by Boss Mustapha, secretary to the government of the federation, SGF, with the minister of state for mines and steel development, Uchechukwu Ogah, as his deputy.

The committee’s inauguration is a follow-up to the agreement President Muhammadu Buhari reached with President Vladimir Putin during the Africa-Russia summit in Sochi, Russia, last year. The agreement calls for the completion of all projects, including Ajaokuta Steel Rolling Mill, that Russia’s state companies were handling for Nigeria. The estimated $1.46 billion cost of funding Ajaokuta’s completion will be provided jointly by the Afreximbank (Africa Export and Import Bank) and the Russian Export Centre.

Apart from the SGF and the minister of state, there are 11 other members of the committee. During its inauguration, Mustapha said the event was meant “to kick-start the process of re-directing the activities of the steel plant with the aim of bringing (it) back to life for the growth and economic development of our dear nation.” These words are like a war cry of a general motivating his weary soldiers to make one more effort to storm the seemingly impregnable enemy lines.

Except that we have heard similar war cry over Ajaokuta so many times that we have lost count of such pretentious posturing by the government. It means nothing and will produce nothing different. Ajaokuta will always be Ajaokuta: forever jinxed and junked.

Forty years in the making and $6 billion down the drain, Ajaokuta is an advertisement of Nigerian government’s limitless profligacy and debilitating incompetence. The project plan was conceived by Prime Minister Abubakar Tafawa Balewa government in the First Republic. The plan was further developed by the military government headed by General Olusegun Obasanjo and handed over to President Shehu Shagari’s administration in 1979, which accelerated its construction.

The agreement for the project was signed during the heydays of the defunct Soviet Union that was notorious for building industrial complexes on a massive scale. It was to have housing estates for all categories of the workers, schools, a hospital and other complementary facilities that service a town or small city. It was supposed to employ thousands of workers and be the foundation of Nigeria’s industrialization drive. The rich iron ore deposits of Itakpe, in Kogi State as Ajaokuta, were to supply the raw materials for the mill.

It’s time the country cuts its truly horrendous losses in grandiose white elephant projects that it can’t sustain long term.

In addition to Ajaokuta, the Delta Steel Plant, costing $2 billion, was built in Alaja, Warri. While the Oshogbo, Jos and Katsina Steel Rolling Mills, smaller in scale than Ajaokuta and Delta, were also built. The smaller mills were to be supplied primary steel products by the big two for them to manufacture specialized products for different purposes.

As part of the plan to make the country a serious steel manufacturer, a rail line was built to link Itakpe to Ajaokuta and the latter to Delta Steel plant. While all the other mills were completed, commissioned and went into production, construction of Ajaokuta, the giant of the mills, was never finished. It was eventually abandoned. Jos, Katsina, Oshogbo and Delta ran into trouble and were mothballed. Today, none of them is producing any steel. Delta was concessioned to private investors. The first one was sacked for failing to meet the terms of the concession, while the second and current investor is tied up in litigations over the plant.

So, no matter the airy promise by the government to ‘finally’ bring the long saga of Ajaokuta to a fruitful end, we already know the outcome of this latest initiative for the plant – another grand failure. This is because the federal government’s promises are just that, promises. That the APPIT was inaugurated at a time the Covid-19 pandemic has dislocated the global economy, shows that the latest attempt to fix Ajaokuta won’t get off the drawing board. It is going to amount to motion without any movement.

And no one would be surprised if tomorrow, the government set up another special task force to fix the dead refineries. They have ceased to produce anything since last June, about 11 months now. All the country’s petroleum-product needs are being imported by NNPC.

We have got used to every new boss of the public oil corporation promising to turn the refineries around. They never do because nobody has ever been held to serious account for the gross mismanagement of the refineries. And there’s lucrative rent to be accrued from the long-standing arrangement of trading crude oil for refined products by all those feeding off the carcasses of the refineries.

It is clear that the government has given up on the refineries, as it’s no longer pretending to be concerned about them. Like the rest of the country, the government is waiting for the $13 billion Dangote refinery and petrol-chemical complex to come on stream and bail it out.

Simultaneously cajoled and encouraged by President Obasanjo, Bluestar Consortium floated by Aliko Dangote, Femi Otedola and others, had paid $750 million for a 51 percent stake in the Port Harcourt and Kaduna refineries in early 2007. Obasanjo had lost patience with NNPC’s management for its serial failure to get the refineries working at their maximum capacity.

Because the transaction took place just before Obasanjo’s second term ended, it was easily derailed after his exit as Bluestar was yet to take control of the refineries. NNPC’s management worked with the Labour unions to pressurize President Umaru Musa Yar’adua’s new administration to scuttle the deal. Bluestar got its money back. And the then NNPC boss, Abubakar Lawal Yar’adua (no relation of the president), promised that he could fix the refineries with about $100 million. He got $80 million to perform the magic. But he had no trick to pull. And the refineries have not stopped declining since then.

The government never learns any lesson from so many disastrous investments in huge projects that it cannot manage. Otherwise, it would not be making yet another attempt to do the impossible and needlessly wasting more scarce public funds. So long as the government is fronting the revival of Ajaokuta, it’s doomed to fail. What it should do is look for serious and reputable global steel conglomerates to take over the plant at very generous financial terms. That would encourage them to make the needed investments to complete the plant and get it running.

But still fixated on public ownership of such key industries and lacking the political will to pivot to a new paradigm of private sector-led industrialization process, the government remains deluded that it can fix Ajaokuta. The result would be an addition of another $1.5 billion dollars to the already humongous national debt. And Ajaokuta will never produce any steel.

It’s time the country cuts its truly horrendous losses in grandiose white elephant projects that it can’t sustain long term. Admitting failure is best for it and the country. It would save us tons of money that could be invested in upgrading the university teaching hospitals and reducing the costly medical tourism by the president, his family, top government officials and wealthy Nigerians.

Ajaokuta Steel Plant Photo
Ajaokuta Steel Plant
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