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Salvaging our steel industry
NIGERIA is currently
searching for a way of taking a giant leap forward towards industrial and
technological development. In this respect, the country has all the requisite
human, natural and material resources to realise this aspiration, but what is
terribly found wanting is the will and determination.
However, one of the material resources
which Nigeria is endowed with and which she could utilize to make industrial and
technological breakthrough is iron ore. This is mainly found in Ajaokuta, Kogi
State, where the Ajaokuta Steel Company Limited is sited. Instructively, the
company is charged with manufacturing, producing and dealing with steel products
for internal consumption and for export.
Needles to say, the importance of the
steel industry for Nigeria, apart from the expected export value, can be seen
now when the country is in extreme need of industrial and technological
transformation. Of course, steel provided the backbone for the 19th century
Industrial Revolution in Europe, especially in Britain. Iron and Steel can be
put to many uses, including machine tools, corrugated sheets, construction
materials and so on. Additionally, steel is a major source of foreign exchange
to countries manufacturing products related with it. Not surprisingly, countries
like the United States and Russia have been protecting their steel industry
through subsidy, in defiance of the World Trade Organisation (WTO)’s rule
against such policy and the outcry of European Union (EU) countries.
The imperative of salvaging Nigeria’s
steel industry cannot be underscored. Sadly, since the inception of the steel
project in Ajaokuta in 1979, this highly important project has been stuck in
obstacles and gridlocks. One of the problems stemmed from the termination of the
contractual agreement for the handling of Ajaokuta project, awarded to the
Russian company. TPE, by the Federal Government in 1996. Instructively, the
contract for the completion of the project was billed to be completed and
commissioned in 1986, but owing to the inability of the Federal Government to
fulfill its financial obligation to the contractual agreement with the Russian
company, there were several postponements of the commissioning beyond 1986-1989
and later 1999 and 1993. Other problems in the steel project in the country
include: Non-settlement of civil work contracts awarded to companies like Dumez,
Julius Berger, Fougerole, etc; Lack of adequate logistics and infrastructural
facilities; and inadequacy of raw materials, etc.
Undoubtedly, all these obstacles and
gridlocks being encountered by Ajaokuta Steel Company can be seen as a clear
manifestation of lack of political will and commitment of successive governments
after the civilian regime of Alhaji Shehu Shagari. All these problems have
apparently made the steel industry a sort of white elephant or a drainpipe of
public finance. Time and again, the steel company has been opened and closed and
opened again, with the attendant terrible implication of job losses and, most of
all, loss of substantial revenue expected from the project.
Since the return of civilian and
democratic rule in Nigeria in May 1999, the prospects of overhauling and
rejuvenating the mobribund steel industry in the country have appeared bright.
The present political regime, under President Olusegun Obasanjo, has, to this
end, set up a committee to understudy how to turn around the sector. This is not
to mention the Committees empowered by both arms of the bicameral National
Assembly to carry out the same assignment. However, part of the outcome of the
executive committee was the decision to privatise the Ajaokuta Steel Company,
mindful that subjection of the company to the control of government has been one
of its undoing, stemming from the resultant bureaucratic drawbacks,
mismanagement and corruption.
Notably, several foreign investors had
declared their intentions to bid for the company. One of such prominent
investors is Solgas Energy Limited which is based in Houston, Texas USA.
In the light of the above, arguments have
arisen in many quarters, including National Assembly, the media and experts, on
whether conceding the Ajaokuta Steel Company to Solgas Energy Nigeria Limited
would help salvage the company and serve the national interest. Such arguments
are inevitable and impelling against the backdrop of controversies trailing the
Joint Venture Agreement (JVA) signed between the Federal Government and Solgas
Energy Limited on May 31, 2002 (N.B: Similar agreement was signed between the
Federal Government and Kobe Steel Company of Japan). One such argument was that
the company does not have the requisite technical expertise and financial
wherewithal to manage the Ajaokuta Steel plant. There is also claim that the
Federal Government hurriedly signed the JVA with Solgas without eliciting the
opinion of stakeholders in the steel industry like MOFI, BPE, NEIC, National
Planning Commission, National Assembly, etc. This is not to gloss over the vocal
opposition to the JVA by professional groups like African Iron and Steel
Association, the Nigerian Metallurgical Society and Steel and Engineering
Workers Union of Nigeria.
Based on the foregoing, one is not
surprised by the bout of controversy ignited by the JVA with Solgas, for the
takeover of our ailing steel industry. Nevertheless, there is nothing wrong with
privatisation of our steel industry or leasing of it to foreign investors. This
is going by the truism that privatisation, as part of post-modernist market
reform programmes, would engender efficiency and competitiveness of the steel
industry and help bring, on board professionals with skill, dexterity and
expertise. Again, privatisation would not only help stave off the disturbing
notion of public corporation in Nigeria as business as usual but would also help
foster the elevated economic spirit of entrepreneurship and profit making. But
all this is with a caveat or condition that national interet and fair play
should be at the core of such privatising initiative in the steel sector or its
concession to foreign investors.
In other words, while privatisation of
Ajaokuta Steel Company should be carried out with transparency and due process,
any foreign investor interested in the company should be one with reputable
track records of integrity and performance, which, in this regard, the ability
of Solgas in serious doubt. To save our steel industry, both the various
committees of the federal executive and legislature set up to look into ways to
resuscitate the industry should work in synergy, not at cross purposes. The
committees shoud enlist the services of experts and professionals in the arcane
field of Metallurgy and related disciplines to enhance their assignment. The
committees, while doing their work, should undertake a comparative analysis of
the workings of steel industry around the world, particularly in the core steel
producing countries like the United States, Japan and Russia, which members of
the committees could visit.
In an increasingly changing world of high
technology and industrial metamorphosis, it is clear that Nigeria can ill-afford
to neglect her steel industry. This is because the industry is so crucial to
such technological and industrial drives, as obtained in several parts of the
world, especially in the United States, Europe and Asian South Pacific. In view
of this, the Federal Government should take a circumspect view of all the issue
at stake, as efforts are being made to overhaul and energise the Ajaokuta Steel
Company. More importantly, the government should address the fears and
apprehension in certain quarters about the JVA it signed with Solgas, as company
whose technical, managerial and financial ability in the steel sector has been
put to question.
To offset any set back in the steel
project, the Federal Government should consider enlisting the expertise of TPE,
the original handler of the project, to augment the effort of Solgas. What is
more, all necessary efforts should be made to check other disruptive problems
hovering over the project like non-settlement of companies involved in ancillary
services, lack of adequate logistics and infrastructural facilities and
inadequacy of raw materials.
•Hon. Gambo is the representative of the
Katsina Central Federal constituency in the House of Representatives, Abuja.
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