29 July 2018, Sweetcrude, Lagos — Following the exit of the former minister of steel and solid minerals, Kayode Fayemi from office to run for the governorship of his state, Ekiti, SweetcrudeReports has learnt that the Presidency will return operation of the Ajaokuta Steel to its original builder, Russia.
According to information reaching us, the federal government has initiated moves to return the plant to Russian technological company, Tyazhpromexport, TPE, for completion.
Thirty-eight years after it was established to launch the country into an industrial era, the Ajaokuta Steel Company Limited has failed to properly take off, despite billions of dollars committed to it, due to controversies bedeviling its completion.
“Now that Fayemi is out of the way (since he was the one vigorously pushing for Ajaokuta to be given back to the Indians), the federal government will hand it over to its original builders. They built it from the scratch and know everything about the technology,” our source said.
“Returning the plant to Russia is the best decision to take in this matter,” he added.
SweetcrudeReports found out that despite the modified agreement said to have been signed with the Indian firm, Global Steel Holding Limited, GSHL (the company which had operated the plant for five years), the plant is still not anywhere near completion.
Again, the government had in recent times, inaugurated a Senate investigative committee into the Ajaokuta concession and other arising issues from the agreement.
We learnt the investor is yet to take over NIOMCO for operation.
There are three contentious issues responsible for GSHL delay in the take over of the plant: In the new deal, the railway concession agreement, which is also for the Indian firm was supposed to be revalidated. The company also demands a port for operation between Itakpe, Ajaokuta, which the Federal Government insists must be done through an open bid. And above all, GSHL wants the Government to return the Delta Steel Company to it.
We gathered that though the federal government is foot-dragging on the Delta Steel Company being handed back to GSHL, which managed it for five years before it was sacked, it has asked the latter to carry out an inter-company indebtedness review.
The review of inter-company indebtedness is being redone by Price Water House Cooper, PWC, creating the impression that the implementation of the modified agreement is on course.
In an earlier investigation, Sam Nwanbuokei, a Director with Global Steel Holding, had told the International Centre for Investigative Reporting, ICIR, that the out-of-court settlement between the federal government and the company incorporates the renewal agreement of the concession for the National Iron Ore Mining Company, Itakpe.
He explained why there has been stagnation in the implementation of the agreement: ‘other aspects of the signed agreement, like the rail, the port, and Delta Steel are yet to be fully resolved’.
“The settlement agreement incorporates the renewal agreement of the concession agreement for Itakpe, which has been done; we signed it on August 2, 2016.
“That is how we came to be based there. In addition to that, the railway concession agreement was supposed to be revalidated.
“Thirdly, we need a port, so they were supposed to use their best endeavour if a port is available to lease it or concession it to Global Steel. A port is available, but they asked us to bid and we are doing that. Then, the Delta Steel, they were supposed to use their best endeavour to ensure that Global gets Delta Steel back.
“They said we should review inter-company indebtedness, which was done and now it is being redone by Price Water House Cooper. All these things are already in the settlement agreement; my main concern is that we are wasting so much time and resources. The Federal Government is losing resources too; manpower is there. Nobody is doing anything.”
Between August 2, 2016, when that agreement was signed and now, not much has been done to implement it.
After the signing of the agreement, Kayode Fayemi, Minister of Mines and Steel Development, said the “signing of a modified agreement between Nigeria and Global Infrastructure Nigeria Limited effectively resolved the protracted litigations surrounding the ownership of Ajaokuta Steel”.
The implication of the signing, he explains, “is that Ajaokuta Steel has reverted to the Federal Government and we can now proceed to engage a new core investor with the financial and technical capacity to run the complex.”
This means that the company will renounce any claim on the Ajaokuta Steel Company.
Recently, the Sole Administrator of the company, Mr. Isah Onobere, said the country requires a total of $1.21bn to bring the plant back to life.
This amount is $813m higher than the $400m that was required to complete the steel complex 17 years ago when an audit of the complex was conducted by the government of former President Olusegun Obasanjo.
The new funds injection include $513m required to complete the construction of the steel plant and $700m for external infrastructure.
The Ajaokuta project has so far consumed about $4.66bn. This includes the cost of the plant; the cost of an extensive estate known as the Steel Township; and that of the rail bridge across the River Niger.
However, controversies had ensued in the course of resurrecting the plant, as Mr. Fayemi had insisted on giving completion of the plant to an Indian firm, Global Steel Holdings Limited, GSHL.
Before the current administration, under the privatisation programme of the federal government, a few years ago, the Ajaokuta Steel Complex was given out on concession to GSHL for $300m.
But as a result of an alleged asset stripping by the Indian firm, the concession was canceled by the late President Umar Yar’Adua on April 1, 2008. Consequently, the GSHL approached the International Court of Arbitration for arbitration against the Federal Government.
But the present administration secured an out of court settlement that saw GSHL withdrawing its suit, while the government conceded to it the right to operate the Nigerian Iron Ore Mining Company, Itakpe, an iron ore feeder plant to Ajaokuta.
However, Barrister Natasha Apkoti had said Nigeria conceding to concession the plant to GSHL was a hoax cooked up by Dr. Fayemi to strip the country of its resources while benefiting therein, triggering several investigations into the concessioning.