AJAOKUTA STEEL: Another sabotage in the making?
The Federal Government has terminated the concessionary agreement it had with Solgas Energy Limited, the United States-based energy company, which won the contract to rehabilitate and operate Ajaokuta Steel Company Limited.
In its place, an Indian Company, ISPAT, which currently operates steel plants in Bulgaria, Philippines, Bosnia and Libya has been granted a l0-year concession to rehabilitate, complete and manage Ajaokuta Steel plant.
The minister of power and steel, Liyel Imoke, had received a letter from Mr. Seun Oyefeso to the effect that his company, Solgas, could not raise the funds for the completion of the project. He said that he won’t allow his company to obstruct success of the steel plant, knowing full well that it is financially incapable to raise the required funds, as that would amount to sabotage. Mr. Oyefeso, therefore, suggested that government should engage ISPAT of India because of the latter’s expertise and financial strength.
ISPAT is believed to have a global experience in integrated steel business, and also has the financial capability and technical know-how required to competently operate the plant and produce steel before the end of next year.
Right from the onset of the concession agreement with Solgas, the Senate Committee on Power and Steel, in a rare show of foresight, doubted the ability of Solgas to deliver, describing the contract as a rip-off. In addition, the Senate enjoined its Committee on Power and Steel, Justice and Legal Matters to look into the concession agreement with Solgas. Their report asserted that what was required to turn Ajaokuta round was $1.5 billion and not the $3.6 billion quoted by Solgas, which the Senate described as exaggeration and a fraud. The Senate went ahead to call on the Economic and Financial Crimes Commission to investigate the transaction.
Meanwhile, the African Iron and Steel Association (AISA) through its executive secretary, Sanusi Mohammed, said that the American Company lacked the expertise and financial capacity to rehabilitate Ajaokuta Steel. Said he: “Even if Solgas is given 30 years to work on the plant, it would still not perform.” That is now proved to be true.
Mr. Seun Oyefeso, the managing director of Solgas, has himself admitted that it has been stressful to oversee the affairs of Ajaokuta in the last one year. He also admitted the problem was as a result of his company’s inability to source the funds required to resuscitate Ajaokuta plant.
However, Mr. Oyefeso said that “I am not surprised at the call on EFCC to investigate our activities at Ajaokuta. If those complaining thought Ajaokuta was not workable, they would not be fighting hard for other companies to take over.”
The problems of Solgas emanated from the doubt cast on its ability as an energy company to run a steel mill. Four months ago, there was an allegation that Solgas was selling the properties of the steel company such as scrap metals, crop ends and burnt cables, as a means of raising funds, for which the company was queried by the Bureau of Public Enterprises, BPE.
This allegation was denied by Seun Oyefeso as he said, “Solgas has never thought of selling Ajaokuta properties as part of efforts in sourcing funds for the completion of the project as alleged.”
Steel industry observers, however, agreed that Solgas’ foray into Ajaokuta was not a total waste. This is because the Ukrainian engineers brought by Solgas succeeded in rehabilitating the wire rod and the light sections of the plant. They also cited the thermal plant, which has been successfully put back to work; this in addition to the repaired water-treatment plant is the scorecard of Solgas Energy Limited. It should be recalled that the Ajaokuta Steel plant started in 1978 and has gulped over $5.5 billion pissed-off by successive administrations in the last 25 years.
The people of Kogi State are worried that there may be a national conspiracy to sabotage the plant because of where it is situated. They said but for this theory of sabotage, “why should a company take a generation to be completed?” Even the paramount ruler of Ebiraland, Ohinoyi Ado Ibrahim, shares the view of his people that there are people in government, who may have resolved to abort the Ajaokuta project.
Many questions are hanging in the air as to the failure of government to verify the ability and capacity of Solgas Energy before entering into the concession agreement. It is now known if government also cared to find out the genuineness of ISPAT or its Nigerian affiliate, Global Infrastructure Nigeria Limited as a company and its capacity to deliver before the 10-year contract was signed. Among the questions are: what is the role and interest of Liyel Imoke in Solgas? Who recommended Solgas and on what merit? Why was Solgas granted the right to recommend their successors in Ajaokuta? Are all these part of the sabotage theory? Only the future can tell.
– Reports by Ohi Ohida @ large
Culled from Our VISION, Vol.5, No.6, 2004