The National Assembly has increased budgetary allocation from N4.45 billion in the proposed 2024 budget to N5.18 billion in the approved version for the dormant Ajaokuta Steel Company.
This is an increase of N730 million as the Federal Government plans to revive the moribund steel plant, which has been dormant for over 42 years.
However, Nairametrics observed that the increase was due to the addition of community projects not related to the steel plant and outside Kogi state.
Personnel cost overshadows other expenses
Personnel cost makes up over 83% of the N5.18 billion budgetary allocation for Ajaokuta Steel Company. About N4.3 billion will be spent on maintaining the personnel at the moribund steel plant, with salaries gulping N2.62 billion.
In the proposed budget, the remaining amount (after the personnel cost has been subtracted) is meant to be spent on the maintenance of power, water, and equipment.
However, seven new capital projects have been introduced in the approved budget for the steel plant.
These new capital projects include the supply of farm feed and farming materials for farmers in Obalende, Okofaji, Olowogbowo, and Isale Eko areas of Lagos for N99.19 million, entrepreneurial development training and empowerment for women and youth across Kwara North senatorial district for N30 million, and provision of all-in-one solar streetlights with high breed lumen and 80 watts led lights in some selected rural communities and farm in Niger east senatorial district, Niger state for N200 million.
Others include the supply and installation of 5all in one solar streetlight in some selected communities across Kwara south for N100 million, rehabilitation of roads, and supply and installation of solar streetlights in Obalende, Okofaji, Olowogbowo, and Isale Eko areas of Lagos for N100 million, and provision of all-in-one solar streetlights with high breed lumen and 80 watts led lights for Shiroro, Gurara and Bosso LGAs in Niger east senatorial district, Niger state.
Nairametrics observed that about N400 million (55% of the total new addition) will be spent on solar streetlights in a single senatorial district in Nigeria, which is the Niger East senatorial district, represented by Mr Mohammed Musa of the All Progressives Congress (APC).
Other allocations for Ajaokuta Steel Company
Aside from what has been allocated to the company, there are other allocations observed by Nairametrics.
It is observed that the Ministry of Steel Development has a separate N4 billion for the concession of the steel plant.
The ministry also has a budget of N200 million to revive the Ajaokuta Steel Company Limited (ASCL) and National Iron Ore Mining Company (NIOMCO)
There is another N800 million to be paid to transaction advisor services for the resuscitation of the Ajaokuta project.
More Insight
The steel company, despite maintaining a consistent budget, has been unable to resume full operations for more than four decades due to the government’s unsuccessful efforts at privatization and concession.
- An Indian company, Global Steel Holdings Limited, secured the 10-year concession of the Ajaokuta steel mill as part of an effort to restructure the organization.
- However, the agreement was subsequently revoked after allegations of asset stripping by the Federal Government, which sparked a legal dispute between the two entities.
- The Federal Government ended up paying an Indian-Nigerian company $496 million for a shady concession agreement.
- Despite the lack of success in prior endeavours to revive the steel plant and secure concession, the Federal Government remains resolute in this path.
- The Minister of Steel Development, Shuaibu Audu, recently said that the government needs about N35 billion in funding from financial institutions to revive the moribund Ajaokuta Steel Company.
- To restart the Light Steel Rod Mill in Ajaokuta and begin iron rod production, Audu said the partnership with financial institutions aimed to find the most suitable funding solutions.
- The Federal Government is partnering with a Chinese company, Luan Steel Holding Group, to deploy the moribund Ajaokuta Steel Plant to produce military hardware.
- Also, the Federal Government aims to generate N35 billion for the Ajaokuta project by tapping into the local financial market.
- This is as the firm currently struggles with an N33 billion electricity debt that led to its disconnection by the Transmission Company of Nigeria (TCN).