Eleven companies have shown interest to bid for the concession of the multi-billion-dollar Ajaokuta Steel Company (ASC), as the Minister of Mines and Steel Development, Olamilekan Adegbite, apologised for the inability of the Buhari administration to complete the process before exiting office.
The Minister who was presenting the report card of his ministry on Thursday in Abuja. said three of the companies that have indicated interest in taking over the management of the steel plant located in Lokoja in Kogi State are firms from Russia, the original builders of the plant.
The previous attempt to concession the management of the company by the Olusegun Obasanjo administration to an Indian steel firm, Global Steel Holding Limited (GSHL) ended on an acrimonious note after the Federal Government terminated the agreement.
The concession agreement involved the rehabilitation of the moribund steel complex and its affiliate facility, the National Iron Ore Mining Company (NIOMCO).
However, the Musa Yar’adua government considered the terms of the agreement between 1999 and 2007 unfavourable to Nigeria’s interest.
The administration faulted the terms, which gave the Indian Steel Infrastructure conglomerate complete control over the steel complex despite the billions of dollars spent by the Nigerian government to build the plant and later abandoned.
Following the revocation of the contract, GSHL instituted a suit against Nigeria claiming damages over the decision. The case dragged on for several years, effectively stalling subsequent rehabilitation plans by successive administrations.
At the end of the arbitration, which began in 2008, the International Chamber of Commerce, International Court of Arbitration, Paris, indicted the Federal Government for failing to implement the terms of the negotiated settlement reached in May 2013.
Further negotiations ended last September, with the Federal government accepting to pay about $496 million to settle a $5.23 billion claim by the Indian firm over the failed concession agreement.
The settlement of the case removed the barriers that stalled any further attempt to find new concessionaries for the company, with President Muhammadu Buhari approving the opening of a fresh process to select interested bidders.
Although the Minister said the impact of the COVID-19 pandemic affected the selection process and the current administration’s plan to reactivate operations at the steel company before the end of 2022, he said the process has already commenced.
“In 2019, I had promised that Ajaokuta Steel Company would start operations before the present administration leaves office. Let me apologize that is not possible anymore. Not because of a lack of effort, but especially because of the impact of COVID-19. We started the process in October 2019, when we went to Sochi, Russia, to attend a summit with Mr President,” he said.
“On the sidelines of a bilateral meeting, President Muhammadu Buhari met with the Russian team led by President Vladimir Putin, and we requested, among other things, that they should help us to resuscitate Ajaokuta Steel Company, because the Soviets built steel plant, and they acceded to that request.
“I came back to Nigeria and explained our plans to resuscitate Ajaokuta steel and said we will make sure it works.
“The first thing we were to do was the technical audit, to ascertain what was wrong, what needed to be done, what needed to be serviced and all that,” Mr Adegbite said.
The Minister said the Russians were expected to arrive in Nigeria in March 2020 to start the technical audit for three months.
The agreement, he said, was reached on the price, while everything was concluded and made available by the Nigerian government, only for COVID-19 pandemic to break out and disrupt the technical audit.
He said the pandemic went on all through 2020 and 2021, after which the government decided to consider other options by expanding the search for fresh bidders.
Under the new arrangement, Adegbite said the government was no longer restricting discussions to only Russian firms, as discussions are ongoing with at least eleven foreign firms, out of which three are Russians.
In line with the principles of the ongoing discussion, the company to be selected must demonstrate the capacity to source for funds to invest in the rehabilitation of the plant and make it work.
“If the right amount of money is put into the rehabilitation of the plant, production of steel could start in the next two years. The process to select interested investors is already ongoing. Hopefully, before we leave office, we will concession Ajaokuta Steel to an investor who would bring money and make sure it works,” he said.
