…FG to settle $496 million claims over steel plants
Nigeria’s economy might be on the verge of roaring again if the Federal Government succeeds in paying off the $496 million claim by Global Steel Holdings Limited, the company that bought Ajaokuta Steel Company and get the multi-billion dollar asset on its feet again.
The economic benefits associated with the steel company are enormous.
Ajaokuta integrated steel complex was conceived and steadily developed with the vision of erecting a Metallurgical Process Plant cum Engineering Complex for generating upstream and downstream industrial and economic activities that are critical to the diversification of our economy into an industrial one.
If it resumes operations, upstream and downstream industrial and economic activities will be intensified in the various facilities of the Complex including the iron rod rolling mill for the construction industry, foundries for forging spare parts for industries and the machine tools to manufacture mechanical parts and perform machining and repair various sizes of work up to 9,000 metric tons per annum.
With 94 percent of its equipment supplied and installed, the Ajaokuta Steel Company was able to meet the demand for its services by three of the four NNPC refineries in the country, all the Cement companies in Nigeria except one; the Defence Industries Corporation of Nigeria, Cadbury Nigeria Limited and Nigeria Printing and Minting Company Ltd, to mention a few.
Going by these activities in the facilities of the complex, it would gradually achieve its role “as a strategic industry, a job creator and a foreign exchange saver and earner.
It was envisaged that the Company would generate a myriad of socio-economic benefits and increase the productive capacity of the nation through its linkages to other industrial sectors.
The Steel giant would provide materials for infrastructural development, technology acquisition, human capacity building, income distribution, regional development and employment generation.
While the project would directly employ about 10,000 staff at the first phase of commissioning, the upstream and downstream industries that will evolve all over the nation will engage not less than 500,000 employees.”
The 10,000 employees would be spread and engaged at the 2, 610, 000 tons capacity Sinter Plant; Coke-Oven byproducts plant to produce 880,000 tons of Coke, 48,000 tons of Tar, 12,000 tons of ammonium sulphate, 210,240,000cm of Coke Oven gas and 350,000 tons of Steam per annum.
Some of the workers will be operating the Blast Furnace which has an installed capacity to produce 1.350 million tons of liquid metal; 155,000 tons of pig casting machine and 685,000 tons of blast furnace slag per annum. The steel making shop has a liquid steel production capacity per annum of 1,350,000 tonnes, and a continuous casting machine with a capacity for 1,813,000 tonnes per annum, which will equally be manned by the workers.
Other benefits of putting the Ajaokuta Steel Company on a sound and sustainable productive trajectory include feeding the gradually expanding railways with spare parts from its foundries; supplying materials required to produce a Nigerian car to the Zaria-based Nigerian Automotive Design and Development Council (NADDC) and in supporting the entrenchment and deepening of local content in the lucrative Oil and gas industry.
The mining and agricultural sectors, two of the three pillars propping up the diversification of the economy in the era of President Muhammadu Buhari, will most likely benefit from the completion of Ajaokuta as mining and equipment and agricultural mechanisation tools can be more cheaply forged with iron products from the Company.
Manufacturers of products that need moulds to design and manufacture their wares in the plastic and packaging subsector and can source the moulds from Ajaokuta, which has hundreds of patterns and shapes out of which many can almost certainly meet their needs.
The Ajaokuta Steel Company has a thermal power generation plant that can produce 110 megawatts of electricity for its operations, supplying the homes of its staff and, of course, some of the settlements around its territorial limit as part of its corporate social responsibility outreach.
Global Steel, which is linked to India’s Mittal family, had between 2004-7 acquired rights to Nigeria’s entire state steel industry via five major concessions and share purchase contracts. The deal also included access to Nigeria’s iron ore reserves and the central railway network.
Reuters news agency quoted Abubakar Malami, attorney-general of the federation (AGF), as saying the federal government managed to get a 91 percent haircut on the original claim of $5.258 billion.
“I pay tribute to President Buhari for his dedication to resolving this problem and wrestling back a crown jewel of our national industrialisation plans rather than leaving the endeavour to the future administration to deal with,” Reuters quoted Malami, who led the negotiations on behalf of the government, as saying.
Global Steel Holdings Limited, with headquarters in the United Arab Emirates (UAE), acquired Nigeria’s entire state steel industry via five major concessions and share purchase contracts.
The deal also included access to Nigeria’s iron ore reserves and the central railway network.
However, the contracts were revoked in 2008 when the federal government accused the firm of asset stripping – a development that led to a court case between the two parties.
According to the report, Global Steel sought arbitration at the International Chamber of Commerce, Court of Arbitration in Paris, the same year.
Global Steel and the Nigerian government made several attempts to settle but the efforts did not yield the expected result.
olusola Bello