In
the quest to develop its policy in the steel sector the Federal
Government of Nigeria under General Gowan era promulgated Decree No.19
on April 14, 1971 setting up the Nigerian Steel Development Authority
(NSDA) which was charged with the responsibility for the planning,
construction and operation of steel plants in the country. It was in
addition tasked with carrying out investigations related to geological
surveys, market studies and metallurgical research. The NSDA also
embarked on short and long-term training of staff in overseas countries
such as India and the Soviet Union on the operation and management of an
iron and steel plant. Hence, in 1973, Tiajpromexport (TPE) of the then
USSR was commissioned to prepare a preliminary project Report (PPR) on
the iron and steel industry in Nigeria. The Report submitted in 1974,
studied alternative production schemes based on both local and imported
raw materials and was accepted in 1975.
A contract for the
preparation of the Detailed Project Report (DPR) signed in 1975 with the
USSR was submitted to the Nigerian government in October of 1977. With
the assistance of Sofresid of France as consultants, a variant of the
steel plant was accepted in June 1978.
The DPR specified
broadly the general layout, composition and requirements as well as a
tentative master schedule of the Ajaokuta Steel Plant. It was on the
basis of this Detailed Project Report that the Global Contract was
signed on the 13th of July 1979 between Nigeria and Tiajpromexport of
the Soviet Union for the construction of the Ajaokuta Steel Plant. The
signing of this contract signified major commitments on the part of the
Nigerian government and the USSR to the development of an iron and steel
industry in Nigeria.
The Nigerian government on 18th of
September 1979 promulgated the National Steel Council Decree No.60
dissolving the NSDA. The new decree provided for the formation of the
Ajaokuta Steel Plant as well as five other limited liability companies.
These are the Delta Steel Company Ltd., Aladja; the Jos Steel Rolling
Mill, the Oshogbo Steel Rolling Mill, the Katsina Steel Rolling Mill,
and the then Associated Ores and Mining Company Ltd., now, National Iron
Ore Mining Company (NIOMCO) at Itakpe. However, the very long gestation
period of the Ajaokuta project meant that the rolling mills had
problems of inadequate supply or lack of billets to operate optimally.
This contributed significantly to the poor performance of the Nigerian
steel sector. The steel companies, rolling mills and the mining company
have all now been incorporated as limited liability companies and are
expected to be self-funding (BPE, 2005).However, the government of
Nigeria wishes to fully divest its equity holdings in the rolling mills.
It seeks prospective core/strategic investors with an initial sale plan
of acquisition of 80 per cent shares of the rolling mills, while the
remaining shares will be offered to the staff of the company as well as
the local community (Bureau of Public Enterprises, 2003).
1.1 THE AJAOKUTA PROJECT OVERVIEW
The
Ajaokuta project was established on the 18th of September 1979, with
formation of Ajaokuta Steel Co. Ltd. Which was charged with the
responsibility of constructing and operating the Ajaokuta integrated
iron and steel plant. The project at inception was envisaged to produce
1.3 million tonnes at its first stage, 2.6 million tonnes at its second
stage, and 5.2 million tonnes per annum at the third phase of long and
flat products. The principal units of the Ajaokuta Plant include the
iron making plant, steel making plant, the rolling mills, repair
facilities, auxiliary facilities and the electric power supply system.
The envisaged features of the Plant include 150mm Wire Rod Mill, 320mm
Light Section and Bar Mill, 700mm Medium Section and Structural Mill and
900/630 semi-continuous Billet Mill Cross Section of ASCL: Source:
Julius Berger Plc; Construction period, 10/1980-06/1990
ASCL,
1990). The Ajaokuta integrated plant, which is based on the blast
furnace process of iron making, has a raw materials preparation unit
that includes the Sintering plant, Coke-oven and By-product unit under
the
iron-making unit. The rolling mills are four, two of
which, namely, the light section and Wire Rod mills were supposed to be
the priority rolling mills. In terms of product mix, the Preliminary
Project Report (PPR), proposed equal amounts of flat and long products.
However, during this period, the national economy was buoyant with the
construction industry enjoying a boom, and this led to the decision that
the first stage of the plant would be devoted to long products only,
while the second stage - an expansion to 2.6 x 106 tones, would be for
the production of flats. The first phase was therefore designed to
produce long products like iron bars, wire rods, angles, squares,
channels, beams, and structures. Most of the products were expected to
be used in the civil engineering construction industry. However,
hindsight shows that the change of the original concept of the plant was
a serious error (Ogbu et.al, 1995).
1.2 COMPLETING EFFORTS OF THE AJAOKUTA PROJECT
Several
successive administration of the federal government had taken measures
in the completion of the Ajaokuta project since its inception yet till
date the project had not attained the first phase of its installed
capacity. In line with the industrial policy of the civilian
administration, a Joint Venture Agreement (JVA) between FGN and a
Japanese firm, Kobe Steel Ltd, was entered into on May 31, 2002 - to
provide a Fastmelt Technology for the completion of the plant-phase I. Six months later,
another agreement (Financing Agreement - F.A) was reached with SOLGAS
of USA to finance the project between the FGN and Kobe Steel Ltd on the
29th November, 2002. In a space of another seven months ON June 30, 2003
the Federal Government signed yet another agreement with the same
SOLGAS: to extinguish earlier agreements reached and to move ahead to
manage the project leaving in the wake too many loopholes, thereby
putting into serious questions our techno-managerial ability. As this
arrangement was in progress, there was on standby TPE to stage a come
back. TPE actually submitted to the ministry to rehabilitate the plant
at the cost of $300million. The recent effort of the government is the
constitution of the 16-man Interim Management Committee after the
concession of Ajaokuta steel company to an Indian based company, Global
Infrastructure Nigeria Limited (GINL) failed in 2008 on the ground that
the Indian firm was short-changing the interest of the country (Olaitan,
2010). The Ministry of Mines and Steel Development received the
business plan of the Interim Management Committee for
re-operationalising. With this, the seed fund of Six hundred and fifty
(N650) million naira only was approved by the federal government to be
released to the Interim Management Committee for re-operationalising the
Light section mill, the Wire rod mill, the engineering workshops, the
Thermal Power Plant at the Steel Plant. According to the Minister the
immediate phase is re-operationalising, the second is completion of the
plants and the third phase is privatization
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