Engineers list ways to revive steel sector
‘Why privatization of Ajaokuta firm failed’
PRIVATIZATION of the Ajaokuta Steel Rolling Mill failed because it was done before the completion of the project, the Nigeria Society of Engineers (NSE) has said.
In a statement issued at the end of a two-day stakeholders’ workshop held at the weekend, the engineers state that the iron and steel industry is not amenable to what they described as over-hastened private sector take-over because of its capital intensive nature, massive infrastructure support and high susceptibility to policies and global market situation. The theme of the workshop was ‘Iron and steel production in Nigeria – A paradigm shift in policy and investment priorities.’
The statement signed by the NSE President, Ademola Olorunfemi, said the Federal Government should only consider the privatization option upon successful completion and commercialization of the complex.
Among the resolutions of the engineers are that:
• The privatization of government- owned steel companies, such as the Delta Steel Company, Jos and Oshogbo rolling mills, has not achieved the expected private sector level of efficiency and performance; and that
• The nation’s public steel sector, especially the Ajaokuta Steel Project (ASP), is not mature for privatization due to the huge capital investment required and the absence of supporting infrastructure. Therefore, any attempt to privatize ASP at this stage of its non-completion and non-removal of the factors mitigating growth and development of the sector will not yield the desired results.”
The society also urged the Federal Government to urgently complete the National Iron Ore Mining Company Ltd in Itakpe, provide funds for reactivation of the 40 completed units and completion of the remaining three units of the Ajaokuta steel plant to speed up the process of diversifying the economy.
Other projects that would aid the efficiency of the Ajaokuta Steel Company, according to the NSE, include transportation infrastructure (rail lines: Itakpe – Ajaokuta – Warri; Jakura – Ajaokuta and Osara – Itakpe to facilitate transportation of iron ore, limestone and dolomite). They also urged the government to provide access road to mines/rail sidings and inland waterways; ensure rehabilitation of Okene – Ajaokuta dual carriage way and provide effective waterways (routine dredging of the River Niger for the provision of bulk materials handling facilities at the ports).
According to NSE, the roads and waterways that link the project sites to raw materials sources and the markets should be prioritized within the framework of the National Integrated Infrastructure Master Plan. It charged the Federal Government to fund the completion of the Ajaokuta Steel Project as a national infrastructural project and unbundle the commercially viable units to be operated by the private sector to ensure world-class efficiency.
The engineers called for a proper due diligence on prospective bidders for the acquisition of Delta Steel Company Ltd to ensure that only companies with the requisite technical and financial capacity acquire the company. “The share purchase agreement for the asset should provide milestones for the rehabilitation and restoration of the steel plant back to its optimal capacity utilization and further expansion, failing which the government reserves the right to respossess the company.”
The NSE urged government to review the current status of the dormant inland rolling mills at Jos and Osogbo and invoke any of the relevant terms and conditions of the divestment for the purpose of reactivating the companies for the good of the nation.
It hinted that Nigeria currently spends over N2.3 trillion yearly on the importation of iron and steel products into the country with the subsequent negative effects on the national economy.