The Ajaokuta Steel Project and cabal fighting for its soul

By Ogacheko Opaluwa

A cautious optimism greeted a recent news by the Federal Ministry of Mines and Steel Development (FMMSD) that the Federal Government of Nigeria (FGN) and Global Infrastructure Nigeria Limited (GINL) had settled out of court, a lingering legal tussle over alleged wrongful termination of a concession agreement between both parties on Ajaokuta Steel Plant (ASP).

The Minister of Justice had specifically announced on behalf of the FGN, that government had finally accepted to pay GINL the sum of $496 million as against the sum of $5.258 billion that the company demanded initially in final settlement of the claims. There was a lot of self- adulation by the Justice Minister on behalf of the FGN as he announced the development gleefully to the nation and indeed rightly so; given the whooping amount of savings that he and his FMMSD counterpart had procured for the FGN.

Nigerians may recall that the FGN under former President Olusegun Obasanjo had concessioned the ASP to GINL in order for the later to resuscitate the moribund steel project under a Resuscitate-Operate-Transfer arrangement.

By this, GINL was expected to apply the expertise and financial muscles that it claimed it possessed at the time to the seemingly ‘white elephant’ project and bring it to life to enable the nation to realize its much awaited industrialization and by extension, national development aspirations.

However, things did not go as planned as GINL was accused by the administration of late President Umaru Musa Yar’Adua that succeeded that of former President Olusegun Obasanjo of acting in bad faith by not sticking to terms of the concession agreement. Among other things, GINL was accused of poor performance on account of patent lack of requisite technical experience, assets striping and mortgaging of Ajaokuta Steel Company’s (ASCO’s) properties with certain Nigerian banks as collaterals for loans that GINL obtained for purposes that were deemed extraneous to the concession agreement.

On the strength of these and other allegations, the administration of late President Umaru Yar’Adua terminated the concession agreement.

Unfortunately, the late President had relied on the legal advice of Federal Ministry of Justice (the same ministry that must have drafted the concession agreement in conjunction with the FMMSD in the first place) to act. It turned out that the concession agreement was heavily skewed in favour of GINL and the action of the FGN at the time, breached several provisions of the agreement.

And so, in keeping with letters and spirit of the concession agreement between it and the FGN, GINL went to arbitration in London demanding a huge sum of $5.3 billion approximately as compensation for trade disruption, loss of business as well as profits and for libelous damages. Like Nigeria’s late legendary Afro Musician, the great Fela Anikolapo-Kuti once sang, the case of the moribund ASP assumed the life and character of the man (or was it a woman?), in the late musical maestro’s ‘double wahala for dead body’ song. The moribund ASP became akin to the deceased person in Fela’s song that was killed in a ghastly motor accident and was being conveyed to its final resting place in a hearse. Unfortunately, the hearse was also involved in a fatal accident enroute the deceased person’s final destination thereby claiming more lives and spilling its human remains cargo on a highway in broad day light.

In African culture, nothing can be more ominous and disgraceful than the dual tragedy that befell the unfortunate corpse. Consequently, the arbitration processes dragged on vexatiously from the times of late President Umar Yar’Adua, through that of former President Goodluck Jonathan to the tenure of incumbent President Muhammad Buhari.

Amicable settlement as opposed to adversarial determination of the matter in court that is the remit of arbitration process became a distant dream not because the parties did not want it, but because of the humongous amount of compensation being demanded by GINL.

To the FGN at the time, it is the people and government of Nigeria that ought to demand for compensation from GINL based on the degree of malfeasance that the company was reported to have wrought on ASP in clear breach of terms of the concession agreement. Therefore, not only was the FGN reluctant to pay the amount demanded by GINL, it also considered the demands of the concessionaire company unlawful, unfair and vexatious.

Therefore, the FGN was willing to drag the matter to its logical conclusion as long as it could ultimately repossess its property for possible dealings with more qualified and better interested parties. Unfortunately, the FGN could not repossess ASP as it envisioned neither could it deal on it with other interested parties.

Herein laid the snag, legal loopholes and economic opportunities that gave rise to current incestuous conspiracy by a sectional cabal against realization of ASP for Nigerians. The arbitration panel sitting in London legally estopped the FGN from repossessing ASP and dealing with its property the way the government deemed fit and best until the matter between the government and GINL was amicably resolved.

Doing so without final resolution of the matter before the arbitration panel would result in the FGN paying more damages than was necessary and as such the government was forced to tread more carefully on the matter and wait endlessly for the intervention of some ‘dogod’.

Information that emerged in the course of the brouhaha on the concession agreement between the FGN and GINL over ASP had it that, a son of sitting former President when the deal was struck was actually the face behind GINL.

It was also alleged that former President by-passed the Bureau of Public Enterprises (BPE) that was responsible for privatization and commercialization of public enterprises in Nigeria at the time to award the concession through executive fiat to his son’s company that did not partake in the initial bidding for ASP. Meanwhile, alternate preferred bidders that were pre-qualified by BPE during the initial bidding process in which a preferred bidder, Messrs Solgas Nigeria Limited emerged were ignored after the termination of the concession granted to Messrs Solgas Nigeria Limited.

As it turned out, GINL neither possessed the requisite technical competencies nor the financial strength that it claimed it had to successfully resuscitate and operate ASP.

This is the genesis of the legal tussle that is making Nigeria to currently commit to paying GINL a whopping $496 million at a time when the country is highly indebted to local and foreign creditors and is currently borrowing to pay monthly salaries. Where the whole thing rankles the most to those that know a bit of the insider deals going on in FMMSD and Federal Ministry of Justice over ASP is that, there is a grand conspiracy by some persons from a section of this country to hijack the ASP in furtherance of their narrow interests.

I had previously highlighted in a previous article how some key and juicy ministries, so-called; including the FMMSD were conceded to the South-West geo-political alliance in the APC coalition as part of terms of the merger agreement between the parties that coalesced into APC.

That was why President Muhammad Buhari appointed Dr Fayemi, erstwhile Governor of Ekiti State as the minister in charge of FMMSD as soon as the APC government was installed. Expectedly, the immediate focus of the Minister as he assumed office at FMMSD was ensuring that members of the alliance obtained as many mining leases on the vast mineral deposits that abound in Nigeria; especially in the North-Central geo-political zone in addition to annexing ASP as a trophy project.

Does any discerning mind therefore wonder why the former minister, above partisan and other extraneous considerations, pushed for amicable settlement of the lingering case between the FGN and GINL?

It was alleged that Dr Fayemi while being in charge of FMMSD was able to at least get GINL to accept something in the region of $897 million or thereabout in addition to resumption by a subsidiary of the company at the Nigerian Iron Ore Mining Company (NIOMCO), Itakpe that was also concessioned to GIML and exhaust the agreed period of the concession. The FMMSD pushed for payment of the agreed sum by the FGN; including through instalmental payments during Dr Fayemi’s tenure to no avail.

When Dr Fayemi left the FMMSD to become Governor of Ekiti State, Arc. Olamilekan Adegbite another Yoruba man from South-West geo-political zone was installed to carry on from where Dr Fayemi stopped. In all of these arrangements, there is a palpable kindred spirit that bound the South-West alliance and their kins together on ASP for certain obvious reasons. Firstly, the settlement is to appease a former Nigerian President and his political base with the hope that they would be able to court his support for the alliance and by extension, the APC in the process.

Secondly, their common interest is to liberate ASP for speedy re-acquisition by certain Alliance interests in the APC coalition in furtherance of their common strategic vision of rapid industrialization of proposed Oduduwa Republic.

Thirdly, there are entrenched pecuniary and political interests of individuals and groups in the whole compensation deal.

For avoidance of doubt, let anyone that doubts me take a cursory look at the South-West geo-political zone and check out the number of steel and related companies that are currently operating there successfully compared to other geo-political zones. Therefore, the current haste to consummate everything concerning Ajaokuta Steel Plant is a culmination of a grand conspiracy that I have alluded to previously. In case anyone may not know, the incumbent APC Government of President Muhammad Buhari with all that it is worth currently has no more than seven (7) months or thereabouts to expiration of its constitutional tenure.

Consequently, no well-meaning government that had got a whole 8 years to reposition ASP but failed to do so, will engage in executive dash in the twilight of its tenure in order to accomplish its vision for the project. It is simply a ploy to take a ‘mouthful’ of our national pie for the road, as those that drink would say.

Also, there is no gainsaying that some people in current APC Government with vested interests in ASP are behind the on-going criminal conspiracy and shambolic arrangements meant to scuttle the very foundation of Nigeria’ industrialization quest. They are not sure if APC will form the next government and rightly so; hence the current hasty arrangements on ASP.

Nigerians must however ask certain pertinent questions about the arrangements that FMMSD in conjunction with Federal Ministry of Justice are making currently even as we bemoan Nigeria’s continuous slide into socio-economic oblivion. In whose interests are the current arrangements on ASP being made; for Nigerians or a section thereof or worst still for a group of privileged individuals? Why are decisions on ASP shrouded in secrecy most times while Nigerians on whose behalf the FMMSD and Justice Ministry claim to be working are fed lies and half-truths? Why have several cabals arisen with unflinching focus on acquiring Ajaokuta Steel Company for themselves at the expense of Nigeria and majority of Nigerians?

It was recently reported how a certain group of course with collusion of FMMSD officials had sought to surreptitiously invite the Russians under dubious and unsustainable financing and technical support arrangements to the country to help Nigeria resuscitate ASP. On the contrary, experts had advised that the previous technical audit of the plant be revisited or a new technical audit be conducted independently to ascertain current technical state and commercial viability of the steel plant before the FGN enters into any resuscitation arrangements with any party for that matter.

Thus, confronted with incontrovertible wisdom of first conducting a technical audit, the current minister in charge FMMSD against reason and ethics decided to procure services of the same Russians that his ministry is seeking to engage in resuscitating the Steel Plant to undertake the technical audit. What the Ministry failed to understand or deliberately ignored was that such arrangement will give room for abuses that will ultimately result in project cost overruns.

For example, the Russians could recommend in their technical audit report replacement of parts and technologies that may still be useful or functional in order to sell their and maximize profits. This was among numerous wrongful decisions that were associated with initial design and construction of Ajaokuta Steel Plant that made the steel plant one of the most expensive steel plants of its time as observed by experts. To illustrate how public officials put personal and group interests over and above national considerations in Nigeria, the minister in charge of FMMSD surreptitiously sought the approval of Bureau of Public Procurement (BPP) to award contract for conduct of fresh technical audit of ASP to the Russians.

However, the Bureau raised observations about the proprietary and efficiency of engaging the Russians to conduct a fresh technical audit of ASP before returning subsequently to resuscitate the Steel plant under a fresh mandate. To BPP, it would amount to the Russians returning to execute the very recommendations that they would make to the FGN. The Bureau therefore advised the FMMSD to revisit the previous technical audit that was conducted by a local engineering firm and possibly re-engage it to review the last technical audit at a lesser cost. Nothing was heard of the advice of BPP on the matter again because it neither suited their purpose nor accorded with the grand plan of vested official and private interests.

As to why has the current APC government of President Muhammad Buhari not been able to execute the government’s much vaunted resuscitation of ASP all these while, the FMMSD minister has consistently bandied COVID-19 pandemic as the main reason that prevented the Russians from coming to Nigeria to help the country revive Ajaokuta Steel Plant.

Nothing can be more spurious and pretentious than the claim of the minister. First the funding arrangement under which Russia was to guarantee some loan from AFREXIM bank on behalf of Nigeria for resuscitation of ASP fell through because the terms of the whole arrangements were not only nebulous, but also unrealistic. Secondly, although it was claimed that Russia had agreed to partial funding of initial operating expenses, it turned out that the arrangement too was predicated on certain conditions-precedent before Russia can redeem that obligation could not be accomplished by FMMSD.

Thirdly, more than 70% of Ajaokuta Steel Plant design, construction, instrumentation and calibration were executed by Ukrainian engineers and experts when the currently independent Ukraine was part of the defunct Union of Soviet Socialist Republics (USSR). Although most of the companies that were involved in the design and construction of ASP or that supplied the steel plant’s equipment from Ukraine when it was part of the USSR have wound-up, some of the engineers, technicians, artificers, instrumentation technicians, machinists, operators etc that were involved in the project are still alive and are conversant with the original plans of Ajaokuta Steel Plant.

In fact, they were said to have provided technical support to the Nigerian engineering firm that conducted the technical audit of ASP over 10 years ago which report forms the basis of FMMSD’s current efforts on the Steel Plant. These facts are known to current minister in charge of the FMMSD but because of the overriding vested interests of certain officials and cabals operating on the periphery of the Ministry, the minister still preferred the Russians.

Regrettably, both Russia and Ukraine are currently engaged in a fratricidal war and so any claim by the FMMSD about reviving Ajaokuta Steel Plant in the immediate through the Russians is not only spurious, but also self-serving.

All these, against the backdrop of news making rounds that the current Minister in charge of FMMSD told a gathering of the Alumni Association of Government College, Ibadan recently that the Federal Government is set to privatize the Ajaokuta Steel Company are what make current haste by FMMSD on ASP suspicious.

According to reports, the minister was said to have added that the operations and management of the steel company would be handed over to a preferred bidder that would be chosen from among nine (9) foreign potential investors that will work with three (3) other companies holding iron ore mining leases that have also shown interests in the Ajaokuta Steel Project. Does this not rhyme with the grand conspiracy that I alluded to at the beginning of this piece? Again, let us ask the Minister, at what time did his ministry place a new advertisement in either local or international media for pre-qualification of interested bidders for Ajaokuta Steel plant without the knowledge of Nigerians?

What exactly was the remit of the transaction advisors that was engaged by the FGN recently at the cost of N853.26 million? What happened to the proposed review or conduct of a fresh technical audit to ascertain current technical status of the steel plant and its commercial viability before any other consideration on the steel plant?

For far too long, the Ajaokuta Steel Plant project had become an official cash cow of corrupt government officials and certain cabals comprising highly placed Nigerians working behind the scene to undermine all efforts towards actualization of the steel project by successive governments.

Let Nigerians and particularly the good citizens of Kogi State on account of these revelations inform Arc. Lekan Adegbite, the Minister in charge of FMMSD that Nigerians are aware of the games that he and his cabals are playing with Ajaokuta Steel project.

Nigerians are not deceived by the seemingly ‘righteous’ haste with which he is currently pursuing the proposal on privatization of ASP, so-called. President Muhammad Buhari’s APC government has not got much time left on its hands to conclude any matter regarding Ajaokuta Steel project meaningfully unless it is being done, as I said before, for certain narrow interests.

Therefore, I urge Arc. Lekan Adegbite to tread cautiously and as a matter of urgency and appropriate officialdom, include a progress report on Ajaokuta Steel Company in his handing over brief for his successors to continue from where he stopped. If and when APC forms the next government and our next President deems it fit and necessary for current minister in charge of FMMSD to continue from where he stopped, so be it. But for now, let it be known to the minister and all his cohorts that Nigerians, particularly Kogites are watching with a keen interest and will never allow any person to leash Ajaokuta Steel Company and indeed the nation’s industrialization cradle on another murky and putrid chain of corruption, waste and some narrow ethno-regional agenda of any kind again. Enough is enough please!

Ogacheko Opaluwa is a freelance Journalist and a Public Affairs Commentator. He contributed this piece from Addis Ababa.