The Lagos Chambers of Commerce and Industry has urged the Federal Government to adopt private sector driven management to tackle the challenges hindering the operations of Ajaokuta Steel Company Limited.
Director General, LCCI, Mr. Muda Yusuf, explained that the plant can only be revived either through outright sale, concession or joint venture partnership.
He said, “Any ofthe options would work if it is done properly. The major problem with Ajaokuta Steel Company is that it is being run by bureaucrats and you know the bureaucrats are not very good at managing an enterprise, they can manage the bureaucracy but they cannot manage an enterprise because of its structure. If they get the private sector driven management that is autonomous and with no political interference,then we are likely to get very good results.”
The LCCI boss added that though the resuscitation of the facility can happen through any of the variants of privatisation, which is concessioning, outright sale or management contract.
He noted that the steel company is not being managed properly as the government has been a major hurdle for its operations. To him, when we have a stabilised framework that allows a private sector driven management, it would be revive and contribute to the country’s gross domestic product.
Sole Administrator, ASCL, Mr. Joseph Isah, explained that it would cost about $700 million to complete the plant and put it to good use; and another $663 million in external infrastructure financing for the transportation of the plant’s raw materials and final products.
He said it was lamentable that Nigeria was spending about N6trillion per annumon the importation of steel products, while successive governments had insisted that it could not afford the resources to rehabilitate and put the steel complex to good use.
Isah said, “Recently, even though not adequate, government has begun to commit resources towards the maintenance and preservation of the equipment and facilities of the plant. This is pending the decision on the appropriate way forward regarding the completion, inauguration and continuous operation of the steel plant.
“To this end, the government is currently considering the report on various options on the way forward as advanced by a nominated transaction adviser concerning outright sale, concession and joint ventures.”
According to the sole administrator, at the time the Federal Government stopped funding the complex in 1994, the first phase of the project had attained 98 per cent completion.
He also state that in the year 2000, when the original contractor, TPE of Russia, audited the complex, only $400m was required to put it to good use within 24 months, but the Federal Government again failed to implement the proposal.
