The Federal Government’s plan to concession the Ajaokuta Steel Plant may be slightly delayed as the National Assembly has expressed opposition to the move. Speaker of the House of Representatives, Yakubu Dogara disclosed this while speaking at an oversight visit paid to the plant.

“Anyone who tries to re-introduce concessioning as a way forward will definitely have a problem with us at the house”

Dogara also stated that the lower house would seek avenues to raise about $500 million to complete the project.

The plant has been the subject of a long tussle between the current administration and Global Steel holdings who won a concession bid midwifed by the Obasanjo administration. Global Steel, was however accused of cannibalizing the plant and the agreement was canceled. Global Steel took the government to court, but the matter was then resolved by arbitration.

As part of the terms, Ajaokuta will revert to the Federal Government while National Iron Ore Mining Company (NIOMCO) Itakpe, will remain under control of Global Steel. NIOMCO was part of the original concession agreement.

Reasons government should let go of Ajaokuta

Though the Reps motives are purely patriotic, government spending any more funds on the plant are futile. Billions of Naira have been spent with nothing to show for it. In this age and time, the government should move away from direct running of such firms to creating an enabling environment.

Minister of Steel and Mines development Kayode Fayemi, had in an interview last year stated the government’s inability to complete the plant, after an estimated $5 billion had been spent by previous administrations.

Truth be told, the Ajaokuta Steel plant has become outdated in many aspects, and even a new investor would be better off rebuilding parts of the plant, than running it in its present form. The railway line running from Ajaokuta to Itakpe and Warri is also incomplete.

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy.

1 COMMENT

  1. what value is the agaokuta steel coy that the federal government still invest public fund to the coy. why is the government adamant on having a business asset of what use and value.

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