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Nigeria’s dilemma over failing steel mills

By Eromo Egbejule, in Lagos
Posted on Monday, 12 August 2019 07:37

The forer Minister of Mines and Steel Development Kayode Fayemi had promised an Ajaokuta renaissance back in 2016 REUTERS/Afolabi Sotunde

Nigerian legislators are confident three idle steel mills will begin production by 2023.

There is a painful irony for seasoned watchers of Nigeria’s economic scene.

While Dangote’s largescale refinery project has been delayed, partially because of difficulties in importing steel, Nigeria’s own steel sector remains mothballed.

The three mills, Ajaokuta, Katsina, and Aladja, have been moribund for years, yet government continues to pay salaries, and pensions.

  • “At the end of four years, I want to tell you by the grace of God, we will see the Ajaokuta Steel Company working very well,” said Abdullahi Halims, chairperson of the House of representatives’ committee on steel.
  • “We will see the Aladja Steel rolling out mills, we will see the Katsina Steel rolling out mills and the entire steel sector making gains out of production,” he said.

Funded by Russian aid, the $4.6bn Ajaokuta steel company has not produced a single bar of steel in 40 years.

The project was intended to help Nigeria gain self-sufficiency in steel production.

Successive governments have commissioned audits on the steel firm. Since his first term in 2015, President Muhammadu Buhari has sanctioned at least two audits.

  • Last April, he refused to sign the Ajaokuta Steel Company Completion Fund Bill, preventing a $1bn allocation to the project from the Excess Crude Account.

However, labour unions are lashing out at the government, accusing it of lacking political will. They believe Ajaokuta could deliver 50,000 direct jobs after completion.

  • “For selfish reasons, the United States of America, Britain and other European countries have continued to frustrate all efforts geared towards revamping the company, and successive governments over the years have not demonstrated any political will to revive Ajaokuta,” said Jimoh Salami, chairman of the local mineworkers union.

Sources of funding remain unclear for Ajaokuta steel company. The parliamentary committee says it is working it with the president’s Economic Recovery and Growth Plan.

Bottom Line: Nigeria is facing a difficult choice: cut its losses by shutting down the steel mills, or risk fresh funding to revive them.

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