FG Spent N1trn On Steel Imports In Nine Months

Federal Government has spent $1.038 trillion on iron and steel imports in the last nine months.

In a similar fashion, the Federal Government pumped N21.3 billion into the moribund Ajaokuta Steel Complex between 2016 and early 2022.

The total value of basic metal products imported between July and December 2021 N748.529 billion, while that of iron and steel was N88.232 billion.

In the first three months of 2022, Africa’s biggest economy imported metals valued at N201.08 billion. The value of iron and steel, however, was not captured by the NBS report in the first quarter of 2022.

Data collated from the appropriation bills available on the website of the Budget Office of the Federation showed that N295.1m was allocated to Ajaokuta in 2016, with N135.2m released by October of that year.

In 2017, the total allocation was N4.3bn, with recurrent expenditures at N3.9bn and capital expenditures at N354.1m.

In 2018, the total allocation was N4.3bn, with recurrent expenditures at N3.9bn and capital expenditures at N354.1m.

In 2019, the total allocation was N3.6bn, with recurrent expenditures at N3.3bn and capital expenditures at N262m.

In 2020, the total allocation was N3.7bn, with recurrent expenditures at N3.6bn and capital expenditures at N147.2m.

In 2021, the total allocation was N4.2bn, with recurrent expenditures at N4bn and capital expenditures at N253.9m.

In 2022, the Federal Government approved N853 million for consultancy services targeted at the steel complex’s concession.

In total, Ajaokuta Steel Complex has taken N21.3 billion within the six-year period.

The Manufacturers Association of Nigeria estimates that the country has pumped over $8 billion into the idle steel plant so far.

The situation is riling the major players in the sector who wonder why the Federal Government watches the country’s huge import bill while Ajaokuta and the local steel sector struggle.

Former Chairman of the Manufacturers Association of Nigeria Steel Group and Chief Executive Officer of Qualitec Industries, Engineer Oluyinka Kufile, said there was nothing happening in Ajaokuta, wondering why the government was yet to summon the will to privatise the steel complex.

Kufile said, “There is nothing happening in Ajaokuta Steel. The local companies that are supposed to benefit from it are dying off. Who then is gaining from it?” he queried.

He lampooned government policies for the weakening of the steel sector, noting that concessions of Ajaokuta done over the years had not worked due to lack of political will to put the plant into the competent hands.

“How many steel companies exist today? Initially, we were many in the industry, but today, we are not usually more than nine company representatives any time we have a sectoral meeting.”

The Federal Government recently engaged CPCS Transform Consortium at N853 million for consultancy services of Ajaokuta Steel Company, including the National Iron Ore Mining Complex in Itakpe.

Different schools of thought are providing perspectives on ways of handling the behemoth. One school of thought wants the government to rehabilitate and operate it, while the other wants some form of private sector involvement to ensure efficiency.

“But the problem is that the technology there may have been overtaken by 21st century,” said market analyst, Ike Ibeabuchi in a note, stressing that “rehabilitate and sell will be the best option.”

Read Also: FEC Approves N853m Contract for Ajaokuta Steel Company Concessioning

Export Manager of the Lagos-based Aarti Steel, Okhai Ehimigbai, had argued that the best strategy was to privatise it, rather than concession it.

Ehimigbai had said that attempts to concession the steel complex did not work in the past, justifying the need for the government to hands off the plant.

He said that the inactivity in Ajaokuta Steel had crippled the steel sector in Nigeria.

“If Ajaokuta is working, we will not be importing hot-rolled steel for production today,” he said.

He warned that the plant should not be handed over to a company from countries where iron and steel products were being imported.

Chief Executive Officer of Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, suggested a total unbundling of the steel complex.

Yusuf said, “There is a need to unbundle Ajaokuta Steel before concession because it is a massive project. When you do that, get a company with the technical and financial capabilities to manage it. You can also decide to concession the power plant, then the machine shop and other segments separately,” he said.