Ajaokuta Steel is in a coma over international politics, says former presidential adviser
A former senior special assistant to the president for financial sector development, Biodun Adedipe, has expressed doubts about the federal government’s assurances that the rehabilitation of the Ajaokuta Steel Company will soon be completed.
The steel plant could not start its activities because, according to Adedipe, it was a victim of international politics.
Adedipe, who recently spoke on a watched show, said Nigeria needed courageous leaders to actualize the rehabilitation of Nigeria’s main steel mill to spur wealth creation.
The former presidential aide, who recalls working with consultants from the federal government and the World Bank a few years ago, regretted that the factory had not yet started operations and had no impact on the economy.
He said, “By the way, I was involved with the Ajaokuta project in 1988 when we asked the Federal Government and the World Bank to do a study on the steel sub-sector in Nigeria.
“As early as 2004, I clearly remember writing a memo to the presidency stating that this project was over 90% complete. What we had then was only $500 million, and that was when we had external reserves of about fifty billion dollars.
“I wrote a memo and said that if the management of this company is paying the required $500, it’s to get raw materials, as they call it, that will last them nine months in their cycle. And a once they get that, they won’t need any more support and the factory will become independent.
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“Also don’t forget that there is an angle with international politics. The policy is also that you cannot afford to hand over Ajaokuta to a foreign company. Remember that the latest foreign technology in Ajaokuta comes from Russia.
He pointed out that until Ajaokuta is completed, Nigeria cannot achieve value in the steel sub-sector.
Nigeria aspires to turn around its automotive sector with the National Automotive Policy. However, the lack of breakthrough in the steel sub-sector remains a major obstacle.
The results showed that the government’s inability to revive steel companies and also develop local petrochemical plants stalled the local automobile development program, resulting in a loss of $10 billion a year due to large-scale import. scale of fully built motor vehicles and alloy components used for local assembly.
Steel accounts for about 60% of raw materials used in automobiles, while petrochemicals are used for plastics and foam used in vehicle interiors.
Nigerian iron and steel imports were worth $1.18 billion in 2020, according to the United Nations COMTRADE international trade database.
This amount of foreign currency spent on imports puts pressure on scarce foreign currency and weakens the naira, analysts say.
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As a result, the lack of a functioning steel plant has made manufacturers highly dependent on imported spare parts, accounting for 80% of all vehicle components and valued at over $10 (about 5 trillion naira) in capital flight each year.
The federal government had introduced the National Automobile Industry Development Plan (NAIDP) in 2013 to revive local assembly and auto manufacturing over a period of time.
But more than seven years later, the dream of local manufacturing remains ambitious, as most notable auto companies assemble imported and fully knocked down and semi-knocked down equipment in their auto companies.
Meanwhile, Minister of Mines and Steel Development Olamilekan Adegbite recently said that following President Muhammadu Buhari’s visit to Russia in 2019, all hope was not lost in reviving the economy. ‘Ajaokuta Steel Company.
Giving updates at a recent ministerial briefing in Abuja, Adegbite said: “In October 2019, Nigerian President Muhammadu Buhari and Russian Vladimir Putin met at the Russia-Africa Summit in Sochi and agreed to relaunch the unfinished Ajaokuta steelworks.
He noted that the constraints posed by the outbreak of the global COVID-19 pandemic have delayed the start of the project.
The minister, however, expressed concern that the steel company may not be fully revamped under the current administration as previously promised.
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He said, “I already said that when we came back from Russia. Yes, I went to the public and said, “look, we will deliver Ajaokuta before the end of this term”. And I pray for a chance to go back and apologize and explain what happened to people before I left office.
“It’s through no fault of ours. Everyone was ready to go, but unfortunately the COVID arrived. It is therefore a case of force majeure,” Adegbite said.