A Review of the Nigerian Energy Industry

Steel industry operating at 30% capacity –MAN

04 October 2015, Abuja – Many steel plants in the country are currently operating below 30 per cent of their production capacity, the Manufacturers Association of Nigeria has said.

MAN-logoMAN’s Director-General, Mr. Remi Ogunmefun, at a stakeholders meeting conveyed by steel manufacturing group, African Industries, in Lagos, said four steel companies had already shut down in the last few years while many more were on the verge of closing shop.

“The steel industry has a future in the country because globally, it has a role to play in development but we are currently faced with problems in the local industry. Four companies have shut down and some others are threatening closure. Patronage is low,” he said.

The Group Executive Director, African Industries, Mr. Uche Iwuamadi, said the industry which had invested over N100bn into the nation’s economy was currently at the verge of collapse.

“Most of the steel companies in the country are now operating two weeks per month and are closed for the remaining two weeks due to lack of demand. Already, four companies have closed down and more will follow, like what happened in the textile industry if the government does not act urgently,” he said.

He said the demand for locally produced steel reinforcement bars was lower than supply due to the influx of imported steel which was as a result of duty waivers on such products.

Iwuamadi said the industry had over 30 private steel plants with more than one million people depending on it for their livelihood.

He said the industry needed intervention fund of about N50bn with single-digit interest rate to revive it, and that the government should champion local content policy to increase demand.

He said, “The major area of rescue from collapse is for the Federal Government to make a definite policy of patronising made-in-Nigeria steel products such as iron rods for all government projects.

“After agriculture, the steel sector is the highest employer of labour in Nigeria and consumption is largely driven by government initiative on infrastructure project. There is a complete neglect of the involvement of the players in the steel sector in the formulation of the Nigeria industrial policy.”

The Chief Executive Officer, African Foundries, the flagship company of African Industries Group, Mr. Sanjay Kumar, said the industry would employ more than 100, 000 people directly and more than 500, 000 others indirectly, if revived.

He said, “The Federal Government of Nigeria under the present leadership can reverse the trend for the survival and resuscitation of the steel industry, which is currently facing serious challenges with measures such as creating of a local content policy of using made-in-Nigeria iron rods in all small and big government projects and prevention of dumping of steel products in the country.

“Government should also create a special power tariff for the steel industry and make available an intervention fund at lower interest costs to prevent the immediate collapse of this private steel industry where many are operating below 30 per cent capacity and overburdened with high interest costs, while waivers/concession may not stop completely for certain infrastructural development, the portion of iron rod importation in any waiver should be expunged.”

The Director, Inspectorate and Compliance, Standards Organisation of Nigeria, Mr. Bide Obayi, said steel products manufactured in the country could compete with any other in the world as the organisation had embarked on a standardisation process with the manufacturers from 2011.

Ogunmefun called on the government to create processes that would encourage the country to diversify from crude oil to other sectors.

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