..Says efforts on to secure N35b to revive steel production
The Federal Government, Thursday rekindle the hope of completing the Ajaokuta Steel Company.
The Minister of Steel Development, Shuaibu Abubakar Audu said the government has been able to secure the agreement with the original builder of Ajaokuta Steel Company to return to complete the project.
Audu said they are ready to put down $2 billion needed to fund the project which has been in comatose in the last 40 years.
He spoke in Abuja at the special Sectoral briefings to.mark the first one year of President Bola Tinubu’s administration.
He also said that the administration is working hard to ensure that Ajaokuta is back.
“We have initiated discussion with the original builders of the steel plant to come back to complete the job.
To complete that we need about $2 billion based on estimates.
He said already, “the original builder has shown willingness and desire to help us complete the project bringing in the funding and using a structure that will be acceptable.”
He also said that there are lots of reserve bidder in the wings that have also shown interest, including the Chinese, Arab and India companies.
He said some Nigerian owned companies are also interested.
The Minister added that the consortium that the Russian company is leading also includes Nigerian companies and so we are factoring in local content in the the entire conversation.
So that is a very important component that we are trying to resolve.
Audu noted that the revival of the moribund Steel company has been a major priority of the president on assumption of office, saying “This is very critical for the Renewed hope agenda of Mr President whose desire is to grow the economy of the Federal Republic of Nigeria over one trillion by the end of the first term of this administration, thereby making us a G20 economy.”
He added, “The steel sector will play an important role in ensuring that this administration achieved that.
“So, we have started to put very concrete and immense measures in place to achieve that.
“The first thing that we have done to achieve this is to obtain presidential approval to raise private capital to restart the line section of the Ajaokuta steel company.
“We are at the final stages of raising over N35 billion from local financial institutions, which is around $25 million dollars to be able to restart the line section of the complex so that we can produce the iron ore.
“The line section has the capacity to produce 400,000 metric tonnes of iron rods
“I have been discussing closely with the Minister of Works, David Umahi so that we can provide iron rods.
“Part of what we are doing, we know that the ministry of works need about 7 million metric tonnes of iron over that four year period.
“Ajaokuta can produce 400,000 tonnes of rods, which is a drop in the ocean of what is required.
Because it is an important asset, the President is keen on us getting Ajaokuta to work and getting some of these iron rods that are required by the federal government.
“So this N35 billion we are raising will help us revive the light steel and up to 50,000 of iron rods.
A financial institution has given us an offer, in which I have done a cover letter and forwarded the relevant documents to the ministry of finance to be able to take the financing on behalf of the Federal government using promissory note so that it can get back to iron rod production. “
He also said that the ministry is in talks with the military and the Minister of defence on leasing one of the engineering workshop in Ajaokuta for the production of military hardwares for the military to enhance our security situation.
“So what is required is, we have a metrological development centre that has the ability to provide us with the lead and zinc that is required to be able to produce some of these military hardware whether it be a vest, or helmets or bullets or other components.
He said an MoU has been prepared for the working agreement and already dotting the Is and crossing the Ts is to ensure that we are able to obtain the required financing.
He also said the government has started to revive the Ajaokuta power plant. Ajaokuta has a 110 megawatts power plants that contributes power to not just the Ajaokuta steel complex but also to the National grid.
Because of the lack of funding and resources, what we are doing now is to think outside the box and be innovative. So we are engaging in the PPP where the assets will be used as the collateral so to say and private sector investors can come in and give us the financing
We are talking to three potential suitors right now, including Transcorp power, Niger Delta power. Those are the companies we are talking to in ensuring that the power line is back on track.
He further revealed that the ministry is working towards creating industrial parks at Ajaokuta territory.
He added, “ there is a steel territory that occupies about 24,000 hectares of land, which is almost as big as the land of Abuja
The idea, he said is to create industrial park where all steel operators in Nigeria and rest of Africa can converge.
On the efforts towards reviving thw steel industry, Audu said, “ We have drafted an internal document that gives us a ten year roadmap for the steel industry. We have also drafted an internal document that has produced a two-year document for the Revival of Ajaokuta steel.
So we have those two documents that have been produced bynour internal experts.
He however said the process will be push further by testing it against what is obtainable in the Russia, India and chinese market.
He said the government will need between $2 to $5 million dollars to be able to be able to draft the road map and put all the leg work in place.
He said financing has been a challenge but the ministry was doing everything possible to think outside the box to put the measures in place .
He also said that the ministry has engaged a Chinese steel producer and India steel company where they committed to bringing in about $5 million to set up a five million metric tonnes of steel plants.
He said another chinese firm has set $3million to set up about three million metric tonnes steel plant in Nigeria.
He said there is already a commitment in the region of $10 million in investment.
On regulation of scrap metals in Nigeria, the minister said that efforts are on enhancing regulation.
“We have engaged the scrap metals association of Nigeria so that we can.provide some regulatory oversight and overview of the scrap metal industry in Nigeria,” he added.
