FG Takes Over Ajaokuta Steel Company After 8-year Dormancy
The federal government, in its plan to revitalise the steel sector, yesterday signed a renegotiated concession agreement with Global Steel Holdings Ltd for the Nigerian Iron Ore Mining Company (NIOMCO), Itakpe.
By the new agreement, the ownership of the Ajaokuta Steel Complex has now reverted to the federal government, effectively freeing the entity from all contractual encumbrances that had stalled its completion for decades, while GSHL retains NIOMCO.
The new agreement, which came after years of mediation, was signed at a short ceremony presided over by Vice President Yemi Osinbajo in his office at the presidential villa yesterday.
The minister, Dr Kayode Fayemi, signed on behalf of the government, while the chairman of GSHL, Prammod Mittal, signed for the company.
It will be recalled that negotiation towards the amicable resolution of the Ajaokuta crisis has dragged on since 2008, leaving the country’s steel and industrial sectors largely comatose.
But following this settlement, the steel sub sector is on the way to being revitalised and this will, in turn, solidify Nigeria’s industrial base.
Dispute over the ownership of the Ajaokuta Steel Complex and NIOMCO had made it impossible for government to make any long?term plans for the concession or privatisation of the two companies.
President Muhammadu Buhari, it was learnt, gave approval for the execution of the modified concession agreement with GSHL after he received the report of the mediation meetings from the Ministry of Justice.
A major highlight of the settlement is that the federal government was able to negotiate a higher concession fee payable to it from three per cent to four per cent of turnover.
Also, the federal government was assured of continued supply of iron ore to Ajaokuta Steel Company Ltd as a priority customer.
Speaking at the event heralding the signing of the new agreement, Prof Osinbajo hailed the mediation process that led to the resolution of the problem that had made it impossible for the two national assets to be functional for years.
“It is one of the cases of failure. It is a tragedy of immense proportion that we have both Ajaokuta Steel Complex and NIOMCO and couldn’t get anything out of them for years,” he said.
The vice president further declared that making the entities work was a top priority of the administration and urged GSHL to keep to the various timelines in the agreement, adding that it was important the concession works “so that Ajaokuta can take off too.”
Fayemi, who led the federal government side in the mediation process, explained that with the new agreement on NIOMCO, the next step was to commence the process of taking over Ajaokuta and ensuring that it is given out to a serious operator with proven technical and financial capacity.
He said: “It is our expectation that we would accomplish two things: bring NIOMCO to full function and start the process of retaking Ajaokuta, and then give it to a new operator. With this, we will move from being just a mineral nation to a mining nation.
“Once the first phase of the agreement is accomplished, it is the intention of the federal government to quickly move into accomplishing the objectives of concessioning the Ajaokuta Steel Plant to the most competent operator which meets the requirements of credible track record, technical capacity and financial competence.
“Overall, we are confident that this landmark settlement is a pointer to what to expect in the government’s determination to fix the Nigerian mining sector. This is one of the key milestones in the road map for the growth and development of the Nigerian mining sector.”
The minister commended the team from the Federal Ministries of Justice and Solid Minerals for their hard work and the GSHL team for sticking to the provisions of the laws in seeking resolutions to the problem.
He described the settlement as a landmark development that would help the diversification plans of the President Buhari-led administration.
The GSHL chairman, Mr Mittal, disclosed that the company had waited for eight years to achieve this amicable settlement, saying his organisation was committed to the objectives of the agreement.
He pledged the company’s supply of the needed raw materials, iron ore, to Ajaokuta plant and Delta Steel Company, after which it will sell what is left to other interested parties.
Mittal further assured the government of his company’s readiness to commence operation soon, adding that in the next two years, Nigeria would begin to produce steel.
According to a statement by the special adviser to the minister of solid minerals development, Olayinka Oyebode, the international mediator, Mr Richardson, lauded the government and GSHL for opting for mediation as a means of settling the dispute.