Ajaokuta Steel: Nigeria Should Stop Victimising Investors

Ordinarily, the ongoing probe of the circumstances that led to the sorry state of Ajaokuta Steel Company and others in the sector by the House of Representatives in Abuja should be welcomed and commended by all well-meaning and patriotic Nigerians.

However, the on-going probe is neither the first nor the second and not even the sixth time Federal lawmakers in Nigeria have carried out similar inquisitions on the abandonment and non-functionality of Ajaokuta Steel Company and the National Iron Ore Mining Company (NIOMCO) Itakpe both of which are located in Kogi State as well as the Delta Steel Company (DSC) Warri, Delta State.

The question is, “Why has all the previous probes failed to produce tangible results and help to rescue these strategic national assets that are supposed help industrialise our country?” The answer is simple: The probes provide platforms where people appear to express fancy talks, emotional/primitive patriotism and semantics rather than informed views that are based on facts obtained from well-informed knowledge.

In the past, the Federal Government has been misled by the outcome of these jamborees called probe to make policy decisions and take actions that were not realistic but only satisfied “popular” opinion of the moment. One of such emotion-driven decisions was Late Yar’Adua administration’s termination of the concessions granted Dangote by former president Olusegun Obasanjo to operate some refineries in Nigeria. When Yar’Adua took that decision, many Nigerian applauded the late president, saying it was patriotic.

But over ten years down the line, Nigerian refineries are not working while we are still importing petroleum products with huge subsidies and scarcity. Yet the so-called patriotic activists that misled a nation have gone dumb while the people suffer excruciating pain and agony to access the products. Just imagine what Nigeria would have gained if Dangote was allowed to operate those refineries these ten years.

Apart from refineries, Yar’Adua also terminated the concession on the Aluminium Smelter Company of Nigeria (ASCON) in Akwa Ibom and the Ajaokuta Steel Company/NIOMCO. To date, ASCON has been a product of dispute between the Federal Government and the concessionaires which has left the plant unattended to while denying the nation and the people both Aluminium products and the foreign exchange it would have generated.

Ajaokuta Steel was even lucky to some extent. The massive plant site of the steel company which Nigeria abandoned for years after the exit of the Russians that constructed it, was resuscitated and put into effective operation by the concessionaires, Global Infrastructures Nigeria Limited (GINL) just three months after takeover.

GINL did not only begin to produce several steel products, the company took over the payment of the salaries of 3,500 amounting to N285 million monthly wage bills (about N3.4billion annually).

With that development, Nigeria’s real estate sector began to boom as steel products from Ajaokuta were available, jobs were creating out of the ripple effect among other positive impacts to the nation’s economy.

But Yar’Adua, no doubt a good man, terminated the concession because the same emotional activists told him that GlINL did not meet its target in terms of volume of production and completion of other parts of the plant. They were also accused of asset stripping.

Before the termination of the concession, the company had issued several statements in which it stated that the concession agreement invested some obligations on the Federal Government which were of critical essence to the full implementation of their own expectations.

According to GINL Federal Government’s obligations include dredging of the Escravos River in Warri, completion of railways from Warri to Itakpe through Ajaokuta, among many others. The company said that the failure of Nigeria to fulfil its own obligations affected their targets.

On assets stripping, Global said being integrated steel plant, that Ajaokuta, Itakpe and Delta Steel (which was later privatised to them) were designed to work hand-in-hand; and that the materials they took from Ajaokuta to DSC were only consumables, borrowed after necessary approvals by the Ministry of Mines and Steel as is practiced in other countries. The company released details of the consumables as well as approvals from the Ministry.

But Yar’Adua, ignoring their position, unilaterally terminated the concession and drove the investors out of the plant site which made them to go to court of arbitration in London, claiming 1Billion Dollar in damages.

During the administration of President Goodluck Jonathan, Federal Government negotiated an out-of-court settlement with GINL but could not fully implement it before the end of that administration.

When he took over as Minister for Solid Minerals and Steel Development under the current President Muhammadu Buhari led administration, Dr. Kayode Fayemi, after analysing the cost implications of the case at the London arbitration as put before him by a committee set up for that purpose, got approval from the presidency to execute the original out-of-court settlement, the condition being the re-concession of NIOMCO to GINL to operate for seven years since they had operated for three out of the 10 years contained in the first concession agreement. With the new agreement, Ajaokuta was to be freed for Nigeria to operate.

Since GINL was chased out of Nigeria in 2008, the Ajaokuta Steel plant has remained a shadow of itself. No activity has taken place there in terms of operations in the plant. While the hundreds of well trained professionals in the company agonise that they are not usefully engaged, the Federal Government is still paying the nearly N3.4billion annual salaries of the workers as well as overhead expenses which were taken off the shoulders of the Federal Government when GINL operated the plant.

Now at the on-going probe, the same scenarios are playing out with fancy talkers who claim to love Nigeria are reeling out unsubstantiated allegations aimed at criminalising the investors to the applause of a vulnerable public. Before you say Jack, the House may recommend to the executive to terminate the re-concession agreement, ignoring the consequences of an out-of-court settlement entered into at the London court, which would eventually hurt Nigeria the more.

What is happening to GINL can be likened to the distractions and frustrations that Daily Times of Nigeria has faced from the Federal Government all these years. Folio Communications Limited bought Daily Times in a well publicised privation process in 2004. Daily Times was duly handed over to Folio Communications by Federal Government through the Bureau of Public Enterprises (BPE).

But since over ten years, some asset hunters have used the Police and the Judiciary to cause a lot of distraction to Folio Communications in its determination to make the newspaper the number one in the country. That Daily Times is still rated among the best newspapers in Nigeria today is as a result of the ingenuity of its Publisher, Mr. Fidelis Anosike and the management of Folio Communications Limited as well as the commitment of the reporters and correspondents working with the organisation.

It may be important to state here that while Nigeria makes efforts to attract investors, both local and foreign, the system tends to frustrate and victimise those that dare to put their monies in the country and by that, the Nigeria has lost most of the gains it would have made over the years especially through privatisation. The continuous unilateral termination of agreements with investors is counterproductive both to the nation and the investors themselves.

Another factor is the way Nigerians look at those who come here to invest. It is wrong to derogate a company by calling them foreign companies, like ‘that Chinese company’ ‘the Indian company’ or ‘those Lebanese people’. Once investors arrive a country to set up businesses, if they go to the Corporate Affairs Commission and duly register a company according to the provisions of the law, that company so registered becomes a ‘corporate citizen’ of Nigeria.

If the company is paying taxes and carrying out its corporate responsibilities, it becomes a ‘responsible corporate citizen’ of Nigeria and therefore entitled to all the rights and privileges that citizens and local companies are entitled to. We should stop criminalising investors here.

There is no gainsaying the fact that Nigeria is in dire need of investors, especially in the manufacturing sector. Across Nigeria, what we have in abundance are churches, mosques and other religious sites as well as hotels, eateries, petrol stations and banks, all of which are in the services sector.

These ones combined, add almost nothing or at most very little to the development of any nation. Until Nigeria takes seriously the development of its steel and other manufacturing sectors, we will continue to dream of a great and prosperous nation without realising it.

At the on-going public hearing on Ajaokuta, you hear many speakers saying that Ajaokuta Steel and the others should not be concessioned or privatised.

This is primitive patriotism as most steel companies across the world are operated by private investors. Many steel companies across Europe, Asia and parts of Africa including South Africa are owned and operated by the Mittal family of India and their companies, especially Lakshmi and Pramod, President of GINL.

The Americans, the Chinese and the Russians among others are all building and operating steel companies in different countries across the globe without discrimination.

We therefore agree with both the Minister of Finance Kemi Adeosun and the Hon. Minister of Mines and Steel Development Kayode Fayemi that Nigerian Steel sector should be operated under concession or privatisation as the nation cannot afford to invest billions of Dollars again after over $8Billion have gone the drains in the sector and especially as several indigenous management of the steel companies have failed to deliver.