Poor Funding, Bane of Steel Industry

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Ruth Tene Natsa

— April 24, 2014

A major challenge to the development of the nation’s steel sector is the near neglect  of the Ajaokuta Steel Complex and the under utilisation of the nation’s National Steel Raw Materials Exploration Agency (NSRMEA) due to poor funding. Ruth Tene Natsa takes a look at the implications of this neglect. 
The call for the privatisation of the Ajaokuta Steel complex as a panacea to its long neglect has received various reactions from stakeholders.
Stakeholders are of the view that the development of the steel sector will not only ensure employment for the teeming unemployed youths, but will also be the solution to the nation’s huge demand for iron/steel materials needed for construction and developmental purposes, while contributing greatly to the gross domestic product(GDP) of the economy.
While that may be so, numerous challenges continue to hinder the development of the steel sector. This include poor funding, lack of equipment, lack of expertise, absence of a steel law and a total lack of political will by the government of the day to ensure the development of the steel sector. This is most evident in the long neglect of the Ajaokuta Steel Complex and the poor funding of the steel and mining sectors in general.
Speaking in an exclusive telephone interview with LEADERSHIP recently, the minister of mines and steel development, Mr Musa Mohammed Sada, said, “there is a big problem because we, the regulators, have no law empowering us to make efficient impact towards ensuring quality steel production in the nation.” He added that “the present dispensation was working towards ensuring that proper regulations are created to protect the Nigerian steel sector.
“Laws are critical because as it stands, there is nobody empowered to analyse the quality or content of steel made in Nigeria. Steel is produced from part scrap, but in some cases, we have observed that factories produce from 100 per cent scraps and there is nothing we can do about it because of the absence of a law.”
The minister revealed that the ministry had visited several steel factories in the past but maintains that the absence of a steel law hindered proper sanctioning of erring factories. He added that the matter was being presented before the Federal Executive Council (FEC) after which it will be presented to the National Assembly to ensure that a steel law was enacted to preserve the sector
The privatisation of the sector in the 70s led to its near collapse while the call for the privatisation of the Ajaokuta Steel Complex to ensure its completion continues to lead to several arguments among stakeholders.
“What I want the executive arm of government to know is that no private investor would invest $513 million or N83 billion to complete the Ajaokuta steel plant and equally invest in completing the remaining required external infrastructure because the risks are too high with changing government policies,” the chairman, House Committee on Steel Development, Sadiq Asema Mohammed, said. “We know that the steel sector is private driven all over the world like in Russia, India, South Korea, among others and in all of these countries their steel industries were first and foremost developed by their respective governments before the private sector took over. Even now in Europe and the United States of America (USA) where their steel sector has matured, their governments still keep a tight rein and interest in their steel industry.
“If we sell the National Iron Ore Mining Company (NIOMCO), our best iron ore mine, to whoever, where lies our national interest? in whose interest are we privatising the NIOMCO or Ajaokuta Steel Company Limited?”
Also an interview with the director-general of the National Steel Raw Materials Exploration Agency (NSRMEA), Mr Alex Ohikere, revealed that major challenges to the activities of the agency lay in the area of equipment.
“Because of the kind of activities we carry out, sound equipment are needed.  A few years ago, all the rigs in our possession were obsolete and we used to spend a lot of money almost on a daily basis for maintenance. But luckily in 2010/2011, government intervened and funded the supply of two new crawler-mounted drilling rigs with accessories and also funded the supply of a low-bed because the rigs need to be moved from Kaduna to where the drilling activities are ongoing. The rigs must be carried on a low-bed so one can see the number of vehicles involved in the activities we do,” Ohikere said.
The DG added, “We also need water for core drilling. So in a typical field work, we need the rig, low-bed, water tanker, and of course field vehicles; so it is capital intensive. Apart from the procurement, we try to repair/refurbish some of the obsolete plants and equipment. It’s a known fact that rigs do not die, however, they are very expensive to maintain.”
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