- FG earmarks N9.2bn for troubled firm in 2025 budget
- Bogus expenditure on salaries, overheads raises concern
Despite its moribund state, Nigeria’s steel complex, Ajaokuta Steel Company Ltd, gulped N51.23bn in budgetary allocation between 2016 and 2025 under former president Muhammadu Buhari and President Bola Tinubu, The Point investigations have revealed.
The figure is based on an analysis of the budget allocation for the steel company under the administration of former President Buhari and the current President Tinubu
In April 2024, the Minister of Steel Development, Shuaibu Audu, had told Nigerians that the government was embarking on a three-year plan to resuscitate the moribund complex.
Audu had said he intended to visit Russia on a formal invitation from Tyazhpromexport (TPE) and other consortium partners to engage in further discussions to secure funding to the tune of about $2bn required for the revival of the entire steel plant.
But the moribund Ajaokuta Steel has enjoyed N51.23bn in budgetary allocations for salaries, overheads, and capital expenditure in the last 10 years, from 2016 to 2025.
Investigations by The Point showed that despite its moribund state, the company is still enjoying huge annual budgetary allocations from the Federal Government.
Out of the N51.23bn allocated to the company in the nine-year period, the sum of N39.59bn representing 77.28 per cent went for personnel costs.
The Federal Government, under former President Buhari, budgeted N28.42bn for Ajaokuta Steel out of which N26bn was used to fund personnel cost.
Under President Tinubu, between 2023 and 2024, a total of N13.61bn was budgeted for the steel company.
From this amount, about N7.98bn was used as personal cost.
A breakdown showed that under Buhari, N3.88bn, N4.27bn, N4.28bn, and N3.59bn were allocated to the plant in 2016, 2017, 2018, and 2019 respectively.
For the 2020, 2021, and 2022 fiscal periods, the government allocated the sum of N3.73bn, N4.21bn and N4.46bn to the steel plant respectively.
In the 2023 budget, the government allocated N4.14bn for the moribund steel company. Checks by The Point further showed that personnel cost gulped N3.58bn and out of this amount, N2.7bn was for salaries and wages. Overhead for the year was N80.17m and capital expenditure was N482.85m.
The government also made another budget of N40m for concessions of the steel company. Another allocation of N80m was made with the title, ‘Transaction Advisor Services for the Resuscitation of the Ajaokuta Project.’ Consequently, N4.16bn was budgeted in total for the company.
In the 2024 appropriation, the Federal Ministry of Steel Development, led by Shuaibu Audu, allocated N4.45bn for the moribund company.
A breakdown showed that N4.4bn was for personnel cost; N150m for overhead and another N150m was budgeted for capital allocation.
Another N4bn was allocated for the concession of the steel company with code ERGP1100950. N800m was also allocated with the title, ‘Transaction Advisor Services for the Resuscitation of the Ajaokuta Project (ERGP30185618).’
Audu’s ministry also budgeted N200m with the title ‘Revitalizing the Ajaokuta Steel Company Limited and the National Iron Ore Mining Company.’ The code is ERGP3205686.
The ministry budgeted a total of N9.45bn for the company in 2024.
The Federal Ministry of Steel Development also plans to spend a total of N9.2bn on the Ajaokuta Steel Company, figures from the 2025 budget have revealed.
It has budgeted N6.21bn for salaries of workers of the moribund company, according to the proposed 2025 budget.
This is an increase of N1.92bn or 44.76 per cent from the N4.29bn allocated in the 2024 budget despite the inability of the company to produce a single sheet of steel since its inception.
When the 2025 budget is approved, the Federal Government will have budgeted a total of N45.11bn for the moribund steel company in 11 years.
A breakdown of the company’s annual budget between 2014 and 2024 showed that a total of N29.11bn was budgeted in salaries and wages, and N9.8bn in allowances to its staff.
The Senate ad-hoc committee set up to investigate alleged cases of corruption and inefficiency at the Ajaokuta Steel and the National Iron Ore Mining Company from 2002 to the present had raised alarm over the bogus personnel budget by the troubled company.
At the resumed hearing which involved key stakeholders from the Ministry of Mines and Steel Development represented by the Permanent Secretary, Directors from the Central Bank of Nigeria, and the Bureau of Public Enterprises, the Nigerian Society of Engineers, and the Steel and Engineering Union Workers of Nigeria, among others, the committee had expressed shock that the troubled company could budget N4.2bn in the 2024 budget for workers when in actual fact less than 10 workers were always turning up for work daily.
Experts advocate public-private partnership to revamp ailing firm
However, experts are of the opinion that the best option was to privatise the company for effective maximisation of its potential.
Speaking on how to resuscitate the plant, the Group Managing Director of KAM Holding Ltd, an iron and steel manufacturing company, Kamoru Yusuf said in an interview that government should adopt the model used by the People’s Republic of China which later transformed the country’s steel industry within 25 years which led to massive development of the industrial sector in China.
He said, “What the Chinese Government did was to indigenize one of the country’s major industries – the iron and steel, into the hands of their people with the government holding only 25 percent interest while local investors were allowed to own 75 per cent stake.
“I urge Nigerian government to redirect its policy on the industry because haven expended close to 40 years experimenting a particular model without result, it should be clear and in fact obvious that the commercial interest of the offshore investors does not match the developmental interest of the government of Nigeria as well as the industrial aspiration of her citizens.”
An economist and researcher, Paul Alaje, said the payment of workers at the moribund company amounted to a waste of the country’s resources, calling for a public-private partnership to revamp the company.
Alaje, who is the chief economist at an economic development research firm in Lagos, SPM Professionals, said, “It is a waste. But the truth is that labour has to be paid. It is not their fault that the place isn’t working. It is the government that doesn’t have work to give them.
“It is the work of the employer to provide what labour will do. But when the employer is laid back, there is an issue.
“That is why the Federal Government needs to engage in public-private partnership immediately or allow the foreigners who started the projects to partner with the Federal Government for the completion of the Ajaokuta steel mill.
“We lose hundreds of millions of naira at different offices of government to people not working. It is not that they don’t want to work, but there is no work for them to do.
“I will not support a total disposal of the Ajaokuta steel mill. I will support a situation where we partner with the private sector. We can do 60-40, or partner with the foreign company that started it.
“The best thing to do is to move the workers at the company to agencies in need of workers, but that will also mean that there are no more eyes on Ajaokuta steel mill. Some of the fixed equipment will disappear overnight. Why can’t we make it work? Some people are in the steel business in Nigeria. Can’t we give part of the shares to them?”
On its website, the company said it directly employed about 10,000 workers at the first phase of commissioning, while the upstream and downstream industries that would evolve all over the nation would engage no fewer than 500,000 employees.
Ajaokuta Steel Plant, aptly known as the bedrock of Nigeria’s industrialisation, is more than just a rolling mill—it’s an Integrated Iron and Steel Plant.
It boasts four distinct rolling mills: the Billet Mill, the Light Section Mill, the Wire Rod Mill, and the Medium Section and Structural Mill.
The plant utilises blast furnace technology, which is the most prevalent method for steel production, representing about 70 per cent of global liquid steel production.
The Ajaokuta Steel Company was built on a 24,000 hectares (59,000 acres) site in 1979 under former President Shehu Shagari with the idea of large-scale national steel production.
Shagari had left the project at 84 percent completion stage in 1983.
The steel company reached 98 per cent completion in 1994, with 40 out of the 43 plants at the facility fully built.
The project was mismanaged and remains incomplete over 45 years after
Both former Presidents Olusegun Obasanjo and Buhari made unsuccessful efforts to revive the steel company.
In 2019, at the Russia-Africa Summit in Sochi, Buhari and Russian President, Vladimir Putin, had agreed on a revitalization of the steel mill with Russian support and the project funding from the Afreximbank and the Russian Export Center.
But findings revealed that it was delayed due to the COVID-19 pandemic, and the agreement was later abandoned.
In January 2024, President Tinubu opened discussions with Chinese steel company, Luan Steel Holding Group, with the aim of reviving the Ajaokuta Steel Company.
