Ajaokuta Steel: FG to spend N99b on infrastructure
Chiawo Nwankwo, Abuja
The Minster of Power and Steel, Chief Lyle Imoke, disclosed on Tuesday that the Federal government would need N99 billion to complete roads, rail lines, electricity and other infrastructures at the Ajaokuta Steel plant, needed to make it operate optimally.
He also said that all the staff sacked by Solgas, during its one year stint at the firm had been recalled by government.
The firm has 4,600 workers, with a monthly wage bill of N150million.
He stated these in Abuja, while briefing the House of Representatives Committee on Steel, on the new concession agreement entered into with Indian Firm Isopat
The firm, which took over from Solgas, whose contract on Ajaokuta was terminated recently, for lacking the financial and technical know-how to turn around the 30 year old firm, promised to produce blast furnace (steel) with in 12 months after taking over.
Giving details of Isopat Imoke said the Indian firm based in London, has an assets base of $17 billion and had been involved in steel production in Libya, Bulgaria and India.
The Isopat contract, Imoke said, was a remarkable improvement from that of Solgas, as penalty clause for non-performance was included.
Other details include the provision of manpower clause, deletion of tax exemption clauses as was the case with Solgas and making it impossible for Isopat to use the deed document to secure loans from banks.
On how the N99 billion budget was arrived at, he said a ministerial committee on Ajaokuta determined the amount while discussing the financial needs of the firm during the 2003 pre-budget session
However, this could not be included in the budget' and Imoke pleaded with the House to ensure that adequate funds were provided in the 2005 budget, to be presented to the National Assembly next month.
He also disclosed that Julius Berger was owed N24 billion on the rail construction contract, which it had abandoned because of government's indebtedness to it.
"We have 26 kilometres of rail lines that is uncompleted. We owe N24 billion to Julius Berger for the rail and until we can iron that out with it, we cannot do anything. Right now, we are discussing with the Ministry of Transport," he said.
He noted that draining the River Niger and some of our ports were imperative for the Ajaokuta project to succeed, but regretted that some of the works to be done belonged to the ministries of Works and Transport.
The vessels that would use these areas were of the 25,000 category.
According to the minister, a team of auditors had been set up to examine SOLGAS activities for its one year involvement in Ajaokuta steel, stressing that government would make its finding public.
The chairman of the House Committee, Alhaji Ahmed Saiki, told the Minister that SOLGAS withdrew N30 million from Ajaokuta Steel's N100 million account with Pacific Bank.
To ensure that no loose ends were left untied, Imoke said that government had written the Speaker of the House, Alhaji Aminu Bello Masari, to appoint two members of the house that would be part of the team that would visit ISOPAT steel sites in India, Libya and Bulgaria next month.
Ajaokuta Steel, which has a 1.3 million productive capacity, has an outdated technology, which the minister said, ISOPAT were thinking of introducing a new automation that would modernize it, as well as to increase its capacity.
He promised to release the contract document to the committee, with the proviso that it must remain confidential.
"We must be careful because we don't have many investors who want to come to Ajaokuta. The task however, is challenging but achievable," he said.
He was however silent how much ISOPAT was investing in Ajaokuta in the 10 year agreement, but added that it would take between $200 million and $400 million to get the firm on stream.
Ajaokuta he said had gulped $5billion from the Federal government for the past 30 years.
