The Federal Government has allocated N4.45 billion to the moribund Ajaokuta Steel Company in the 2024 budget.
This is as it seeks N35 billion from funding institutions to revive the light steel mill in the Ajaokuta Steel Plant, which has been dormant for over 42 years.
N4.45 billion budget
Nairametrics observed that N4.45 billion for 2024 is higher than the N3.71 billion allocated to the company in 2023.
Personnel cost makes up over 90% of the N4.45 billion budgetary allocation for Ajaokuta Steel Company. About N4.3 billion will be spent on maintaining the personnel at the moribund steel plant. The remaining amount will be spent on maintenance of power, water and equipment.
Aside from what has been allocated to the company, there are other allocations.
It is observed that the Ministry of Steel Development has a separate N4 billion for the concession of the steel plant.
The ministry also has a budget of N200 million to revive the Ajaokuta Steel Company Limited (ASCL) and National Iron Ore Mining Company (NIOMCO)
N35 billion revival financing
The Minister of Steel Development, Shuaibu Audu, has said that the government needs about N35 billion funding from financial institutions to revive the moribund Ajaokuta Steel Company.
To restart the Light Steel Rod Mill in Ajaokuta and begin iron rod production, Audu said the partnership with financial institutions aimed to find the most suitable funding solutions.
The minister disclosed this during his meeting with a Stanbic IBTC Bank delegation on Tuesday in Abuja, according to a statement issued by the ministry’s chief information officer, Tine-Iulun Maureen.
The statement read:
“He [referring to the minister] noted that it has become imperative to seek funding of about N35bn to enable it to re-start the Light Mill Section of the Ajaokuta Steel Plant for the production of iron rod to achieve the Present Administration’s Renewed Hope Agenda, adding that the Ministry plan to revive Ajaokuta in phases in accordance with its set timelines and benchmark.”
Continuing, Audu revealed that the ministry has an agreement with the Works Ministry to offload the produced rod and with the Ministry of Defence to construct a military complex in Ajaokuta. He went on to say, “We have huge opportunities in Ajaokuta and potentially a lot can be achieved.”
Earlier, Wole Adeniyi, CEO of Stanbic Bank, and Debola Seriki, Head of Industrials, conveyed the bank’s readiness to collaborate with the Ministry and asked for additional information to help bring the project to fruition.
In a similar spirit, the statement stated that the minister met with senior executives from the United Bank of Africa and Voda Infrastructure Management Ltd to ensure that funding is generated for the prompt launch of the project for sustainable growth of the Steel Sector.
More Insight
The steel company, despite maintaining a consistent budget, has been unable to resume full operations for more than four decades due to the government’s unsuccessful efforts at privatization and concession.
An Indian company, Global Steel Holdings Limited, secured the 10-year concession of the Ajaokuta steel mill as part of an effort to restructure the organization. However, the agreement was subsequently revoked after allegations of asset stripping by the Federal Government, which sparked a legal dispute between the two entities.
The Federal Government ended up paying an Indian-Nigerian company $496 million in relation to a shady concession agreement.
Despite the lack of success in prior endeavours to secure concession, the Federal Government remains resolute in doing this and reviving the steel facility.
