Stakeholders in the Nigerian steel sector have regretted that submissions made by those who appeared before the House Committee that recently probed the concession of Ajaokuta Steel Company Limited, ASCL, and the National Iron Ore Mining Company, NIOMCO, were mostly based on semantics and emotional sentiments rather than reality and facts on ground.
The minister of mines and steel development, Dr Kayode Fayemi, had revealed that the House of Representatives duly appropriated the sum of N2,096,500.00 for the concessioning of the Ajaokuta Steel Complex in the 2017 budget, stressing that both the Ministry and the National Assembly had been on the same page regarding the need to concession the Steel Complex.
The stakeholders however called on the government to find competent private investors to operate the steel companies as obtains in other parts of the world, noting that successive indigenous managements have proved that they cannot effectively operate the steel companies which they said have gulped billions of Dollars in the last three decades.
This was the crux of an open letter to the Speaker and members of the House of Representatives dated 26th March, 2018, which also copied President Muhammadu Buhari and the Minister of Mines and Steel Development, Kayode Fayemi, the National Union of Steel Marketers and End Users of Nigeria, NUSMEUSN.
The letter, which was signed by Alhaji Murnil Saa’id Abubakar and Ekechukwu Ibe Nwoke, National Chairman and National Secretary respectively, stated that some of those that appeared before the House were sympathetic to the current operators of Delta Steel Company, DSC, Warri, adding that DSC needs iron ore from NIOMCO to function, therefore the reason why Global Infrastructures Nigeria Limited, GINL, was being harassed and maligned.
The union alleged that the campaign by some people for the termination of the reconcession granted GINL was to chase the company away in order to pave way for Premium Steel Company to take over NIOMCO, pointing out that the House did not give adequate publicity to the public hearing it conducted on the steel sector. It stated that the open letter is necessitated by the inability of the union to make a presentation as has been the case in the past.
Part of the letter reads, “However, we want to state that in spite of the honesty and integrity that many Nigerians know Mr. Speaker with, most of the people that appeared and made presentations before the House Committee only fed you with fancy talks and semantics that were far from facts and realities. This is so because we have taken time to watch the proceedings on videos recorded by the Nigeria Television Authority (NTA) and others obtained from Youtube.
“Mr. Speaker, most of those that made presentations before you and the Hon. Members were sympatric to Premium Steel and Mines Limited which is currently operating Delta Steel Company Aladja in Delta Steel. Please note Sir, that Premium Steel is owned by the Vaswani brothers that have been deported out of Nigeria by many Federal administrations including the administration of President Olusegun Obasanjo and that of President Muhammadu Buhari on allegations of many sorts of economic crimes.
“What is at stake Mr. Speaker is that Premium Steel cannot effectively operate Delta Steel without Iron Ore which is the primary raw material needed to run a steel plant. The game therefore is to terminate the re-concession granted Global Infrastructures Nigeria Limited on the National Iron Ore Mining Company NIOMCO, Itakpe so that Premium Steel can open discussion on the need for it to have NIOMCO in order to begin the production of Steel out of Delta Steel.
“Therefore all the arguments and dramatisation that took place by those claiming to love Ajaokuta more than others are coated around that singular objective to get Global Infrastructures Nigeria Limited out of the way so that Premium Steel can take over NIOMCO. But like Bob Marley sang many years ago, ‘You can fool some of the people sometimes but you can’t fool all the people all of the times’,” the group said.
Going down memory lane, the union said that the Russians that built Ajaokuta Steel Company left in 1994 and that for 10 years after their exit, Ajaokuta was abandoned by the Nigerian government while billions of Naira was paid by the government to the over 3,500 workers annually, until GINL came, resuscitated and put the company into effective operation, just within three months of takeover.
“From 1994 up to 2004 the plant site lay prostrate as there were no productive activities there. Yet, the Federal Government was paying monthly wage bill of about 3,500 workers of the company amounting to N285 million which comes to (about N3.4billion annually). Then President Olusegun Obasanjo out of frustration and based on expert advice that Nigerians cannot operate the plant effectively decided to concession it alongside NIOMCO and to privatise Delta Steel.
“Ajaokuta was first concessioned to SOLGAS promoted by Thomas Russell, an American. SOLGAS could not muster the financial resources to fund the operation of the plant so the agreement with SOLGAS was terminated. SOLGAS went to arbitration and made a lot of money out of Nigeria. Global Infrastructures Nigeria Limited then came and after negotiations, Obasanjo approved that Ajaokuta be concessioned to them. Therefore, it is not true as some people told the probe committee that GINL came to Nigeria as technical partners to SOLGAS. NIOMCO was also concessioned to GINL because it would need Iron Ore to operate Ajaokuta.
“Three months after GINL took over Ajaokuta Steel was resuscitated and put into effective operation by them, same with NIOMCO. GINL also took over the payment of the salaries of the 3,500 and over 2,600 workers of NIOMCO. For the three years GINL operated Ajaokuta and NIOMCO, the company was paying a total of N5.2billion annual salaries of workers of the two plants which was a great relief for the Federal Government. Since the termination of the concession granted GINL by Late President Yar’adua, government is the one paying these humongous salaries till date. The Ministry of Solid Minerals is there to supply you these figures,” the letter read.
The group blamed late President Umaru Musa Yar’Adua for terminating the concession in the first place, saying that the Yar’Adua was carried away by the noise of the so called activists clamouring for the reversal of every policy put in place by Obasanjo.
The letter reads, “Late President Yar’Adua came to office and began with his Rule of Law and Due Process mantras, people who call themselves activists began to send in hundreds of petitions against concession and privatisation. Most of them were however agents of companies that lost out in the bidding contests conducted by Obasanjo. So Yar’Adua then terminated the concession on Ajaokuta and NIOMCO alongside that of Refineries granted to Dangote as well as that of Aluminium Smelter Plant ASCON. Mr. Speaker you can imagine where Nigeria would have been by now if Dangote was allowed to operate Nigerian refineries from then to now, if GINL was still operating Ajaokuta and NIOMCO up till today, the same with ASCON. It was the termination of the Ajaokuta concession that put all our Union members out of business with no remedy as not even one pin has been produced from there ever since,” the Union stated, adding that such a unilateral termination had gave and injurious consequences against Nigeria.
“Yar’Adua terminated Ajaokuta/NIOMCO concessions on two grounds: One, that GINL did not meet set targets on volume of production and completion of plant site and second, that GINL stripped assets of the plant. GINL in defence stated that the concession agreement gave some obligations to the Federal Government which include but not limited to dredging of the Escravos River and completion of railway lines among others, stressing that the failure of the government to execute its own obligations frustrated its efforts as those were of critical essence. On assets stripping, GINL said it borrowed only consumables and not equipments as was the practiced internationally since Ajaokuta, NIOMCO and Delta (which was privatised to them) were integrated steel plants meant to depend on one another for their operations. It also said those consumables were even brought to Ajaokuta by GINL while it was rehabilitating the plant, adding that all the consumables borrowed received the approval of the supervising Ministry. It was because of the approvals that made Nigeria not to tender the documents on assets stripping at the London arbitration court.”
Continuing, the union stated that “Contrary to the impression created at the House probe, Nigeria was on the heat on the case because of the two important factors stated above, that Federal Government had obligations which was not fulfilled and consequently affected GINL’s target as well as the approvals given to GINL to borrow consumables from Ajaokuta for use in Delta Steel. It was on those premises that the previous administration decided to go for out of court settlement to free Ajaokuta of legal encumbrances.
“It is self contradictory to say that Nigeria having paid Russia its own debt can tell GINL to go to hell on their claims. Since Nigeria opted for out of court settlement and the agreement entered at the London court, every lawyer would know the consequences of breaching the terms. It should also be known to Nigeria that huge interest has been accruing on the debt in Dollars.
“When he took over as Minister for Solid Minerals and Steel Development under the current President Muhammadu Buhari led administration, Kayode Fayemi, after analysing the cost implications of the case at the London arbitration as put before him by a committee set up for that purpose, got approval from the presidency to execute the original out-of-court settlement, the condition being the re-concession of NIOMCO to GINL to operate for seven years since they had operated for three out of the 10 years contained in the first concession agreement. With the new agreement, Ajaokuta was to be freed for Nigeria to operate.
The letter countered the argument that Ajaokuta Steel was built to manufacture arms and therefore should not be privatised to foreigners, adding that most steel companies the world over are built and operated by foreign companies.
“Some people told the probe committee that it was not in the interest of Nigeria for foreigners to operate a steel company that has capacity to manufacture weapons. Ajaokuta was never designed to manufacture weapons, NEVER. Again, most steel companies around the world are operated by so called foreign companies. Then British Prime Minister sold British Steel to Tata, an Indian company. Many steel companies across Europe, Asia and parts of Africa including South Africa are owned and operated by steel companies from India. The Americans, the Chinese and the Russians among others are still building and operating steel companies in different countries across the globe without discrimination.”
The union therefore recommended that government should go ahead with concession and privatisation of the steel companies to capable private investors as is the practice internationally, stating that “we wish to impress on Mr. Speaker and Hon. Members of the House of Representatives that the suggestions that Nigerians can crowd fund Ajaokuta Steel Company is only funny while the most laughable recommendation was that Ajaokuta can be completed and put into operation with the so-called Abacha loot when recovered. It does sound like building castle in the air, doesn’t it?
“Nigeria should do away with primitive patriotism that does not align with global reality. The Federal Government should as a matter of fact quickly handover the steel companies to competent private investors with proven records to operate the companies. Payment of salaries of workers of the steel companies alone is enough burden on Nigerian tax payers when the companies are not even bringing in one penny to the national treasury,” the letter concluded.