A Review of the Nigerian Energy Industry

House of Reps goofed on Ajaokuta steel concession – Ministers

Ajaokuta Steel plant

…As House calls for cancellation of controversial concession

Princewill Demian
17 March 2018, Sweetcrude, Abuja – The Minister of Mines and Steel Development, Dr. Kayode Fayemi, and the Minister of State, Hon. Abubakar Bawa Bwari, have faulted the position of the House of Representatives on the concession of the moribund Ajaokuta Steel Complex, in Kogi State.

The House of Representatives on Thursday advised President Muhammadu Buhari to stop Mines and Steel Development Minister, Dr. Kayode Fayemi, from concession moves of Ajaokuta Steel Company.

The House said that the stoppage was to give time for the conclusion of the review of the process ordered by the chamber as part of its drive to get the company back on stream.

The ministers, in a statement issued in Abuja by the Special Adviser on Media to the minister, Mr. Olayinka Oyebode, said they have not contracted any transactional adviser for concessioning of Ajaokuta Steel Company as wrongly asserted by the House.

They also said the ministry has not spent a dime from the N2, 096,500.00 appropriated by the House for concessioning of Ajaokuta Steel Company in the 2017 Appropriation Act.

They said it was rather worrisome that the House of Representatives could devote an entire day to non-existing matter.

The statement noted that, “The attention of the Minister of Mines and Steel Development, Dr. Kayode Fayemi, and the Minister of State for Mines and Steel Development, Hon. Abubakar Bawa Bwari, has been drawn to the debate by members of the House of Representatives on the Ajaokuta Steel Complex, where the House adopted a resolution to stop the planned concessioning of the steel company.

“Whilst the ministers are convinced the Honourabe members mean well as patriots concerned about an important national asset, it is also a fact that they have grossly misunderstood the ministers and other stakeholders working with the Ministry on this exercise.

“In view of this and the need to set the record straight for the sake of the general public and the investing community, it is important to state as follows: The Ministry of Mines and Steel Development has not contracted any transactional adviser for the concessioning of Ajaokuta Steel Company, as wrongly asserted by the House.

It added that, “The process for the appointment of a Transactional Adviser is on, but cannot be completed until it gets the approval of the Federal Executive Council (FEC).

“The Ministry has not spent a dime from the N2, 096,500.00 (Two billion, ninety six million, five hundred thousand naira) appropriated by the House for the concessioning of Ajaokuta Steel Company (in the 2017 Appropriation Law).

“The mediation process that led to the amicable settlement of the legal encumbrances on Ajaokuta Steel Complex has not ended. There are still a few more steps to be taken as outlined in the terms of (out of court) settlement. And the Ministry is following up on this.”

The statement further noted that it is also important to state that no one has been hired. “We find it rather worrisome that the House of Representatives could devote an entire day to an issue that has not even arisen.

“The Ministry remains committed to making Ajaokuta Steel Plant function effectively, convinced that steel remains the most important engineering material and backbone of industrialisation in any economy.”

The House resolution for the stoppage of the concession followed a motion by Rep. Ahmed Yerima (Zamfara-APC) and 24 other lawmakers.

The motion is entitled “Urgent Need to Investigate the Circumstances under Which the Federal Ministry of Mines and Steel Engaged the Globally Discredited PricewaterhouseCoopers (PwC) to audit Ajaokuta Steel Complex for Purposes of Concession.”

Moving the motion, Yerima said he was aware that Fayemi recently announced, “and it was widely published’’, that Ajaokuta Steel Company would be given out on concession after an ongoing audit.

He disclosed that audit of the company was undertaken by PricewaterhouseCoopers, which he alleged, had been discredited, “having been sanctioned in India with a two-year audit ban for infractions of over one billion dollars”.

The lawmaker said that the firm was also sanctioned in Brazil for which it paid 50 million dollars as fine, and was fined in the United Kingdom for 5.1 million pounds.

He also said that the firm paid 225 million dollars and 25 million dollars, respectively, as fines to TYCO shareholders in the U.S and Bank of Tokyo-Mitsubishi for laundering money for Iran, Sudan and Myanmar.

He added that it was blacklisted for roles in terrorism and human rights abuses, among other infractions and irregularities in its operations, “which has left its reputation in tatters.”

Yerima expressed concern by the allegation that PricewaterhouseCoopers was informally engaged by Global Steel to assist and advise them on how to recover Ajaokuta Steel Company and National Iron Ore Company (NIOMCO), Itakpe, from the Federal Government.

He said he was worried that the minister engaged a company whose antecedents may suggest that they were engaged to audit and prepare reports which may skew the outcome in a preconceived manner.

According to him, it may have done to favour parties which the minister may have lined up or which may represent the interests of their former clients (GINL).

The legislator wondered why Bureau of Public Enterprises (BPE), and Infrastructure Concession Regulatory Commission (ICRC), established by law, was not involved in the audit and concession process.

He accused Fayemi of deliberate plot to concession Ajaokuta Steel Company to a pre-determined group.

He decried the minister’s submission that government could no longer spend additional funds on the company “when he is already spending N2 billion for the concession process’’ and where Nigeria spent over 3.5 billion dollars on steel importation.

Yerima said since NIOMCO was handed again to Global Steel in “so called modified concession for a seven-year period with an option of a further 10 years, the plant which is integrated with Ajaokuta Steel Complex has remained moribund’’.

According to him, this development is an indication of likely failure of yet another concession.

Supporting the motion, Rep. Nicholas Ossai (Delta-PDP) said “this is a man that says that Ajaokuta cannot be brought to life but has spent N2 billion on the company.

“This has to be investigated in line with section 88 of the 1999 Constitution.”

In his contribution, Rep. Mohammed Abdu (Bauchi-APC) said “we know that the five countries of the world that have become world powers have their roots in steel industry. We cannot play with our common sovereign wealth.”

Similarly, Rep. Bashir Babale (Kano-APC) reminded members that “this is a government that promised change and to fight corruption.

“How much are we spending to import steel in this country? I wonder why the minister was in a hurry for this concession.

“We need to be patriotic enough to make sure that what we do, we do it for Nigerians. I urge my colleagues to support this motion.”

On his part, House Leader, Mr Femi Gbajabiamila, called for a Bill to stop the concession of Ajaokuta Steel Company or amend existing law to check the process.

Many lawmakers, including Edward Pwajok (Plateau-APC), Toby Okechukwu (Enugu-PDP), Aminu Shagari (Sokoto-APC) and Emmanuel Orker-Jev (Benue-APC) supported the motion.

The House agreed that the decision to stop the concession process was in the interest of the nation’s economy and the anti-corruption fight of the Buhari administration.

In adopting the motion, the lawmakers resolved to expand the mandate of its Ad Hoc Committee on Ajaokuta Steel Complex to include urgent consideration of the possibility of a bill for completion of the company and prohibit its concession.

It equally mandated the committee to inquire into the rationale of engaging “a globally discredited firm, PricewaterhouseCoopers (PWC) to audit the company, without due process.

The House consequently urged the Senate to concur on the motion and resolved to amend the National Council on Privatisation (NCP) Act to delete Ajaokuta Steel Complex from the list of companies for concession.

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