A Review of the Nigerian Energy Industry

Ukraine bids for Ajaokuta Steel, to inject $2.65bn

Joseph Erunke

04 July 2012, Sweetcrude, ABUJA — UKRAINIAN government has indicated interest in taking over Nigeria’s moribund Ajaokuta Steel factory under the West African country’s privatisation programme.

The development came as the Nigerian government said it was doing everything possible to tackle all critical issues impeding the successful privatisation of the nation’s steel industry.

Ukranian Ambassador to Nigeria, Serhii Khanenko, submitted the request of his country when he led a delegation of investors from his country on a courtesy visit to the Ministry of Mines and Steel Development in Abuja.

The Ukrainian firm, Reprom Company Limited, which is to handle the project said it presently has a total of $2.65
billion to execute the project with the production capacity of 3.9 metric tons per anum.

The ambassador said Ukraine was interested in exploring areas of partnership with the Nigerian government in the
development of its solid mineral resources as well as reactivation of Ajaokuta Steel Company Limited.

Ambassador Khanenko said the Ukrainian investors were ready to inject over $2.6 billion into the reactivation of Ajaokuta Steel Company Limited. He expressed hope that the project would be given to the Ukrainian government.

Speaking at the occasion, Minister of Mines and Steel Development, Arc. Mohammed Sada said as part of the way forward for the sustainable growth of the steel sector of the nation’s economy, the federal government was poised to remove any bottleneck in the privatisation of the steel industries.

He described the visit as not only timely but important considering that President Goodluck Jonathan had given timelines on all outstanding issues affecting the nation’s steel industries in order to move forward.

“Government is working proactively towards ensuring that interests of various stakeholders are brought on board for the development of Nigeria’s steel industries”, he disclosed.

He emphasised that the government is determined to tackle all critical issues impeding the successful privatisation of the nation’s steel industries.

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  • In 2002 Solgas came up with a proposal to inject several billions of dollars to revamp the steel plant and the govt went along with the plan only to renege on it one year down the road and enter into another deal with Ispat of India, owners of Global Infrastructure Holdings. Government later terminated this agreement for reasons best known to it. Today govt is talking to other investors. Can we look at the cost of the ongoing arbitration Nigeria has been put through as a result of the termination of the two contract agreements entered earlier, the cost of stripping that took place under previous management and the current cost incurred by the nation as a result of the non-functioning status of the plant? Why cant we hold whoever took decisions that failed to get the plant up and running responsible for their decisions, why must we continue to travel the same part all over again and again knowing fully well the probable outcome.

  • The proposed 3.9metric tons per annul by Ukraine is commendable.but the completion of the Crack Chamber thus production of Flat Sheets needs to be stated in the proposals

  • I believe the crisis bedivilling the steel company is caused by the drafters of the Joint Venture agreement between Nig and foreign investors concerned. A source inside the Company once told me that the JVA between Nig Govt and Ispat of India is worded in way that placed Nigeria, the owner in a diadvantaged position. For instance, Ispat is given the power to sell off the properties of the company. Also, they can hire and fire any worker at will. Infact, the interest of Nigerian staffers of the Company is not protected. It was when Yar’adua became president that he attempted to review the JVA because it was unconscionable, before Ispat dragged Nig before London Arbitration Court. One wonders the motive of those who represented Nigeria at stakeholders meeting where the JVA was reached.