Ajaokuta Steel spends N29bn on personnel despite being moribound

Sami Olatunji writes that the moribund Ajaokuta Steel Complex has spent a whooping sum of  N29bn on personnel cost despite not

Despite the company’s idleness the Federal Government allocated over N3bn to cover personnel costs at the Ajaokuta Steel Company each year under the present regime.

Between 2016 and 2023, a total of outrageous sum of N29.35bn has been allocated to cover personnel costs for the Ajaokuta Steel Complex.

The data were collated from the appropriation bill from 2016 to 2023 available on the website of the Budget Office of the Federation.

In 2016, the Federal Government budgeted N3.55bn for personnel cost, which was 90.79 per cent of N3.91bn total expenditure budget of the steel plant.

By 2017, personnel cost allocation was N3.84bn, which was 89.92 per cent of the total allocation of N4.27bn.

The sum of N3.76bn was allocated to cover personnel cost at Ajaokuta Steel Plant in 2018. This was 89.74 per cent of the total expenditure budget of N4.19bn.

Funds were also budgeted for certain projects such as the maintenance of power facilities for N106.3m, construction /provision of water facilities for N196.5m, lighting and security of Ajaokuta steel plant at N10m and purchase of a 30-seater bus at N413m.

In 2019, the allocation for personnel was N3.26bn, which was 90.53 per cent of the total allocation of N3.59bn.

A further breakdown showed that salaries and wages cost N2.5bn, while allowances and social contribution took N793.6m. Also, uniforms and other clothing cost N2.5m, with refreshments and meals costing N1.8m.

Funds were also budgeted for certain projects such as the maintenance of power facilities for N87.7m; construction /provision of water facilities for N123m; lighting and security of Ajaokuta steel plant at N10m, and purchase of a 30-seater bus at N41.3m.

In 2020, the personnel cost was N3.53bn, which was 94.64 per cent of the total allocation for the moribund company.

A further breakdown showed that salaries and wages cost N43.3m, whereas allowances and social contribution took N5.4m.

Also, uniforms and other clothing cost N273,684, and refreshments and meals took N1.6m. Funds were also budgeted for certain projects such as the maintenance of power facilities for N43m, construction/provision of water facilities for N94.2m, and lighting and security of Ajaokuta steel plant at N10m.

In 2021, the personnel cost was N3.89bn, which was 92.18 per cent of the total expenditure budget of N4.22bn.

A further breakdown showed that salaries and wages cost N3bn; allowances and social contribution took N846.5m; uniforms and other clothing took N2.5m; while refreshments and meals cost N1.8m. Fund was budgeted for only one project in 2021, which was the construction/provision of water facilities for N80m.

By 2022, the sum of N3.94bn was allocated for personnel cost, which was 88.14 per cent of the total N4.47bn expenditure budget for the Ajaokuta company.

A further breakdown showed that salaries and wages cost N3.01bn; allowances and social contribution took N924.6m; uniforms and other clothing cost N2.5m, while refreshments and meals cost N1.8m.

Funds were also budgeted for certain projects such as the maintenance of power facilities for N53.5m, construction/provision of water facilities for N87.7m, and lighting and security of Ajaokuta steel plant at N27.5m.

In the proposed 2023 budget, the Federal Government allocated N3.58bn to cover personnel cost, which was 96.5 per cent of the N3.71bn expenditure budget for the steel plant.

Russia’s Tyazpromoexport built the plant, which was incorporated in 1979.

Despite the regular budget, the steel company is yet to commence full operations in over 42 years, with the government making failed attempts at privatisation and concession.

In an attempt to revamp the company, an Indian company, Global Steel Holdings Limited, won the concession of the Ajaokuta steel mill for a 10-year period but the agreement was revoked when the Federal Government accused the firm of asset stripping, a development which led to a court case between the two parties.

The Federal Government announced in 2016 that the legal dispute had been resolved after it reportedly ceded the National Iron Ore Mining Company, Itakpe, to Global Steel for the remaining concession period, in line with an agreement reached during mediation talks.

However, the resolution has since turned contentious.

In 2019, the President, Major General Muhammadu Buhari (retd.), ordered the completion of the company.

In 2020, the Senate also passed a resolution urging the Federal Government to, as a matter of urgency, complete the Ajaokuta Steel Complex.

The Federal Government later inaugurated the Ajaokuta Presidential Project Implementation Team.

The Minister of Mines and Steel Development, Olamilekan Adegbite, said that the Ajaokuta Presidential Project Implementation Team would enact a pact reached between Buhari and Russia’s President Vladimir Putin, which required the East European country to assist in completing the project and finding a Russian firm to manage it on Build-Operate-and-Transfer basis.

The minister said that Afreximbank would fund the project with $1bn, while the Russians would offer $460m, adding that a Russian firm, MetProm Group, would ensure the completion and operation of the steel company.

However, the war between Ukraine and Russia has caused a setback on the proposed plan.

There had also been calls on the Federal Government to privatise the company.

The Federal Government halted privatisation move, stating that the problem with the Ajaokuta Steel Company was very complex.

Although previous efforts at concession have failed, the Federal Government is still insisting on concession of the steel plant.

In April this year, the Federal Executive Council approved N853.27m for the engagement of transaction advisors for consultancy services for the concession of the plant and the National Iron Ore Mining Complex in Itakpe, Kogi State.

The Federal Government also recently agreed to pay $496m to an Indian-Nigerian company over an awry concession deal. This has added another bizarre twist to the convoluted trajectory of the Ajaokuta Steel Company.

According to Adegbite, the Ajaokuta Steel Company Ltd. would function to capacity before the end of the regime of Buhari.

The PUNCH, however, recently reported that steelmakers were sceptical about the planned concession of Ajaokuta Steel Company Limited after Nigeria imported iron, steel, and metals valued at N837.761bn in the third and the fourth quarters of 2021.

The Chief Executive Officer of Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said bureaucracy, political interference and corruption were key issues affecting the success of the plant.

An economist and a senior lecturer of economics at the Pan Atlantic University, Dr Olalekan Aworinde, who said that he was familiar with the establishment, described the company as a waste of government resources as it was currently inactive.

He, however, said that the company had the potential to significantly drive down unemployment, improve economic growth and boost the country’s foreign reserves.

An economist and accountant, who is a former  Chairman of Manufacturers Association of Nigeria Export Group, Ede Dafinone, called for 100 per cent privatisation of the plant, rather than the proposed concession.

(Punch)