25 January 2017, Sweetcrude, Lagos – The success of Federal Government’s current plan to build a railway to supply iron-ore to the idle Ajaokuta steel plant could be the biggest sign that President Muhammadu Buhari is implementing his policy to diversify away from oil, according to an expert.
The Ajaokuta project began in 1979 with what the World Bank in 2002 called obsolete Soviet technology, and has never been finished.
The government wants to revive it as part of Buhari’s efforts to lessen the economy’s dependence on oil, which accounts for 90% of export earnings and the price of which has dropped 62% from a 2008 record. Ajaokuta cost more than $4.5 billion from 1979 to 1993, according to the World Bank.
If successfully executed, it “would be one of the strongest indicators to date of the government’s stated commitment to economic diversification,” said Manji Cheto, senior Vice President for West Africa at New York-based Teneo Intelligence. “How the government deals with this will be important to watch.”
The 275-kilometre (171-mile) railroad will link the plant to an iron-ore mine in the central Kogi state, the port city of Warri to the south and Kaduna state in the north before 2019, Transport Ministry Permanent Secretary Sabiu Zakari said in an interview this month. It will award the operating concession after that, he said.
Besides the 800-hectare plant, Ajaokuta was designed to include a town comprising 10,000 houses, a hospital, and school. But almost nothing has been completed since building started 38 years back, and most of the infrastructure and equipment is dilapidated.