FG Earmarks N3.79bn For Ajaokuta Steel Company

The Federal Government has allocated a total of N3,796,479,657 to the Ajaokuta Steel Complex for 2020.

The company has yet to commence full operations several years after it was conceived to drive massive industrialisation in the country.

Checks by our correspondent in the proposed budget for the Federal Ministry of Mines and Steel Development on Tuesday showed that the bulk of the money allocated to the company was for personnel cost, for which N3,532,705,883 was budgeted.

Payment of salaries will gulp N2,674,375,672, while allowances and social contributions would take N858,330,211.

The sum of N3,607,976,033 was earmarked as total recurrent expenditure, while N75,270,150 was budgeted for overhead cost.

A total of N3,855,600 will be spent on travels, while N7,820,400 was earmarked for general utilities.

Under general utilities, telephone and internet charges will cost the company N2,200,000 and N2,460,000, respectively. The sum of N2,840,400 was budgeted for water rate.

A total of N6,394,400 was allocated to materials and general supplies.

Out of the amount, N3,600,000 is for office materials/computer consumables, while newspapers and magazines/periodicals will cost N180,000 and N114,400, respectively.

The sum of N145,483,574 will be spent on the purchase of fixed assets, out of which N41,300,000 is meant for the purchase of buses.

The steel company is to purchase security and industrial equipment with N10,000,000 and N94,183,574, respectively.

Rehabilitation/repairs of the company’s fixed assets will cost N43,020,050.

Attempts to revamp the company have, so far, failed. An Indian company, Global Steel Holdings Limited, won the concession of the Ajaokuta steel mill for a 10-year period but the agreement was revoked when the Federal Government accused the firm of asset stripping, a development which led to a court case between the two parties.

The Federal Government announced in 2016 that the legal dispute had been resolved, after it reportedly ceded the National Iron Ore Mining Company, Itakpe, to Global Steel for the remaining concession period, in line with an agreement reached during mediation talks.

However, our correspondent also observed that funds were allocated to the National Iron Ore Mining Company, Itakpe, in the 2020 budget.

A total sum of N1,617,273,139 was budgeted for the iron ore mining company for 2020.

A Russian company, MetProm Group, had recently offered to put Ajaokuta steel firm into operation.

The Federal Government is yet to come out with a clear decision on the offer but the Minister of Mines and Steel Development, Olamilekan Adegbite, had at the Senate last Friday said the government was looking towards Russia in renewed efforts to revive the company.

However, there are also calls on the Federal Government to privatise the company.

PricewaterhouseCoopers Nigeria, a leading advisor in the mining sector, had recently urged the government to as a matter of urgency, resolve issues stalling the revival of the company, or ‘consider alternative approaches’.

The Bureau of Public Enterprises recently called for the privatisation of Federal Government-owned enterprises to fund the N10.33tn 2020 budget, which has a total deficit of N2.28tn.