Nigeria has reached an agreement with Russia to revive the country’s biggest steel plant after decades of inactivity.
Mines and Steel Development Minister, Mr Olamilekan Adegbite disclosed this in Abuja following a deal sealed by President Muhammadu Buhari and his Russian counterpart, Vladimir Putin on the gigantic project which has the potential of accelerating Nigeria’s technological and industrial development.
Specifically, talks on the plant were sealed when Buhari and Putin struck a government-to-government agreement last week at the Russia-Africa summit in Sochi.
Adegbite, who spoke in an interview in Abuja said: “We’ve come to the realisation that it’s best to go back to those guys who did it initially,”
On financing, he said: “We are going to sign the details later,”
According to him, a Russian engineering and construction group would undertake the necessary work to bring the facility into operation, financed by the state-owned Russian Export Center JSC and the Cairo-based African Export-Import Bank.
That company would complete, operate and eventually transfer the plant back to the Nigerian government after training when Nigerian engineers would take over.
The two governments plan to conclude the deal by January, after which it should take a maximum of two years to complete the blast furnace, the key component of the facility that will turn domestic iron ore into liquid steel, Adegbite said.
He added that while that work takes place, they are considering whether to “kick-start” some of Ajaokuta’s smaller manufacturing units using imported steel billets.
The Russian Export Center and the African Export-Import Bank are considering taking part in financing Ajaokuta,” the Moscow-based development institution said in an emailed response to queries, declining to elaborate further.
In April, Buhari refused to disburse $1 billion from the state’s oil savings, as voted for by lawmakers, to complete Ajaokuta.
“No public funds is his priority,” Adegbite said; adding: “as for the exact method of solving the problem, that was left open.”
Construction of Ajaokuta Steel Company began in 1979 with assistance from the then-Soviet Union, but the facility never started production and has sucked up $8 billion of public money.
Repeated attempts to revive the flagship project by transferring it to private investors failed and the government terminated the concessions.
Ajaokuta’s output would go some way in realising President Buhari’s plans to diversify the economy away from oil and encourage local production.
Africa’s biggest producer of crude gets 90 percent of its export earnings from the commodity.
Ajaokuta was designed to produce as much as three million metric tons of steel a year, and would have largely eliminated the need for importation.
Boosting steel-making and mineral production feature prominently in Buhari’s plans to diversify Nigeria’s economy and Adegbite is aiming for mining to contribute three percent of the country’s GDP by 2025.
While Nigeria has sizable untapped deposits of commodities including iron ore, gold, zinc and lead, the nation does not have any large-scale industrial metal production and the sector accounts for less than 0.1 percent of GDP.
AFP
