– HOW RUSSIA WAS FORCED OUT OF THE AJAOKUTA STEEL PLANT
AJAOKUTA STEEL COMPANY (ASCL): NIGERIA AND AFRICA’S BIGGEST
BRIEF HISTORY:
Ajaokuta Steel Company Limited (ASCL) is a steel mill in Nigeria, located in
Ajaokuta, Kogi State, Nigeria.
Built on a 24,000 hectares (59,000 acres) site starting in 1979, it is the largest steel mill in Nigeria, and its coke oven and by products plant are larger than all the refineries in Nigeria combined but, the project was mismanaged and remains incomplete 40 years later.
The project was undertaken by the Soviet Union under a cooperation agreement with Nigeria.
The Ajaokuta Steel Company Limited was incorporated in 1979, and the steel mill reached 98% completion in 1994, with 40 of the 43 plants at the facility having been built and completed by the Soviets.
To supply the Ajaokuta Steel Mill with raw materials and connect it with the world market, a contract was awarded in 1987 for the construction of Nigeria’s first standard gauge railway, from the iron ore mines at Itakpe to the steel mill at Ajaokuta and continuing to Aladja steel rolling mill and finally the Atlantic Ocean through Warri.
The Ajaokuta Steel Mill cannot be fully commissioned because the 3 of the 40 remaining plants also has to be built but this has to do with processing the raw materials to be brought from Itakpe through the rail line that also needs to be completed and qas only partially finished in 2020 since 1987. After several failed attempts at privatisation, the Nigerian government took back control in 2016.
The full story:
1958 to 1979
1958 – the colonial administration conducted a feasibility study on iron ore deposits in Nigeria.
1967 – the United Nations Industrial Development Organisation (UNIDO) survey identified Nigeria as a with rich iron ore deposit and market for steel and steel products following which Nigeria started prospecting for partners who could build the steel plants. As this was during the civil war, not many government or private sector were interesting in assisting Nigeria to build the plants. Nigeria government made contacts with the SOviet Union who showed interest which led to the signing of a bilateral agreement between the Soviet Union and Nigeria.
1971 – the Nigerian Steel Development Authority was established by Decree No.9 to bring to reality the building of a steel plant in Nigeria.
1979 – during the administration of Alhaji Shehu Shagari, TyazhPromExport (TPE) a state owned Russian leading engineering company commenced construction works in Ajaokuta of the steel.plant now known as the Ajaokuta Steel Company Limited. Nigeria was supposed to build a rail line and storage and processing facilities for the plant through another arrangements.
1979 to 1994
In less than 12 years, TPE transformed a wide expanse of land to contain some giant size network of machinery meant to process raw material, iron ore and coal for the production of steel for Nigeria. Indeed, billions were spent and it is evident in the state of the art townships , roads, bridges, power plants, and air strip that were put up in Itakpe near the National Iron Ore Mining Company and Ajaokuta both in Kogi state.
In 1990, the project was nearing completion, TPE on monthly bases for 4 years wrote to the Federal Government reminders on the need to commence works on the necessary infrastructure needed to successfully operate ASCL and the facilities it (TPE) had built forNigeria at the Nigerian Iron Ore Mining Company (NIOMCO) and the Ajaokuta Steel plants. These facilities do not form part of the works given to TPE, they were promised to be completed by Nigeria since 1982. These are access roads to the mines and rail system from ASCL to Onne sea port in Port Harcourt.
As an alternative to the rail, TPE suggested that it may be cheaper for Nigeria to dreg the River Niger which could offer a better and more convenient route of importing raw materials and offered to do this work for Nigeria shoukd Nigeria be interested.
These infrastructure, TPE argued would benefit the public especially Northern part of Nigeria where finished steel manufactured products such as cars, parts, construction materials etc could be shipped to other states and nations once the state is fully functional as an industrial hub.
The Nigerian government from Shagari to Babangida never responded.
THE INTERNATIONAL CONSPIRACIES
A lot of people talk about the international conspiracies surrounding ASCL but very few know what actually they were or are.
Here;
In 1992, when the project was near completion and while the Russians (TPE) was persistently calling on the Nigerian government to complete the needed infrastructure works; powerful western countries namely France, America, Germany , Britain etc including the organizations like the World Bank and International Monetary Fund (IMF) started reaching out to Nigerian government to terminate the project with the Russians. The US used the INF and World Bank to mount severe pressure on Nigerian finances if Nigeria did not terminate the contract with TPE. Remember this was in 1992 when USSR had just disintegrated, and having tried to convince the Nigerian government for 4 years, Russia that emerged from the Soviet Union was not able to fight the pressure mounted by the World Bank, IMF, the US and the rest of the western States against TPE, Russia’s involvement and the need to terminate the contract of managing the plant without coming up with any alternative.
The Ohinoyi of Ebira land HRM Ado Ibrahim witnessed firsthand a plot by the IMF during a conference in NewYork where a team of Nigerian officials and foreign agents connived that ASCL should be pulled down, dismantled and completely forgotten that Nigeria does not have a comparative advantage for the production of steel and that the plant was too big. To them, Nigeria did not need to have a steel plant. Nigeria could as well buy steel from them if needed for its development. Nigerian government listened to the negative solutions without ever considering the true intentions of the so called experts from these powerful foreign countries. Russia all through stood its ground alone against France, America and co and kept on reminding Nigeria of the need to ignore the adverse opinions. Russia told Nigeria that this conspiracy was cooked by the WEST to stop Nigeria from achieving the economic strength strong enough to uplift not only itself but the whole of Africa.
According to Russia’s counter advise to Nigeria, to the WEST, Nigeria and Africa should be kept as a back market for all junk goods from the WEST. This is in line with the colonial economic model brought in by the British and so, to have Nigeria turn around its economy and that of weaker nations hitherto being exploited by the super powers, and by implication, impact negatively on the extent of influence of the richer countries sent shivers at the smart future awaiting Nigeria.
Nigeria’s government was too busy focusing on ushering the 3rd Republic, June 12 saga and all. No attention was given to the Russians. TPE was no longer being paid and had not been paid for 3 going to 4 years. Apart the initial deposit paid to mobilise Russia to statt the project, the bulk of the money for the construction and completion of the project were not paid by Nigeria as Russia had proceeded to complete the project on good faith and upon the promissory note that was issued to it by the Nigerian government and the goodwill and good relations it had with Nigeria. Russia said it wanted to form a genuine partnership with Nigeria and took Nigerians to Russia for training to manage the plant. In 1994 due to being starved of funds and hostility mounted by the west, TPE left Nigeria.
SERIES OF UNFORTUNATE EVENTS
The Debt Buy Back:
Nigeria’s contract with TPE was to construct ASCL for five billion German Deutschmarks (DM) as a result of which Nigerian steel authority gave TPE promissory notes guaranteeing payment to the Russia company. When Nigerian government suspended payment and TPE left, TPE sold off these instruments (the Promissory Notes worth 5 billion Dutchmarks at less than $500m, was roughly around $650m ) to recover some of the debt owed to the company. In effect Russia had built a plant worth 5 billions Dutchmarks (approximately $4billion) for Nigeria at a cost of less than $750m, a huge loss to the Russians in these almost two decade old transaction it had with Nigeria.
In October 1995, a series of secret debt buy-back transactions took place whereby the debt instruments were sold at inflated prices to Liberian companies, that were front for the military junta purportedly owned by the Abachas – Parnar Shipping Corporation and Mecosta Securities .This involved the withdrawal in 1996 of $2.5 bn of public funds to settle the debts owed to Russia for the construction of the Ajaokuta steel plant, but which in reality had been discounted to only $500m. In 1999 Presdient Obasanjo came stopped the remaing of the illegal debt buy transactions and settled the remaining debt i.e. bought whatever was remaining of the $500m discounted debt through
SOLGAS – the first Concessionaire
In 2003, Nigeria under president Obasanjo realized the need to complete the infrastructure link and raw material storage units to complete Ajaokuta and so, SolGas, an American company which specialized in petroleum was given the concession. For a year and a half, SolGas made zero progress which raised questions as to their technical capacity to operate ASCL which led to a dispute when Solgas contract was terminated. Although SolGas claimed that Senator Liyel Imoke and Gbenga Obasanjo brought in Global Steel Holdings Limited/ ISPAT to short- change it from performing. To this end, Nigeria terminated contracts with Solgas. There were no minutes recorded to document deliberations engaging or terminating with Solgas.
GLOBAL STEEL HOLDINGS LIMITED (INDIAN) – the second Concessionaire
This is an Indian company that was first operating under the name ISPAT before changing its name to Global Infrastructure Holding Limited and now Global Steel Holdings (GSH). The company were helped into Nigeria by Sen. Liyle Imoke and Gbenga Obasanjo under President Obasanjo’s tenure in August 2004. The agreement was such that the company would own 60 percent of the shares of the steel mill, ridiculous as to how the assets of a nation such as Ajaokuta plant could be hacked off to a private company, but that was what happened. The Federal Government would keep 30 percent while 10 percent shares would be sold to the public. This company GSHL owned by Mr. Primod Mittal is not affiliated with ArcelorMittal, which the world’s renowned steel giant ArcelorMittal, is owned by LakshmiMittal and a cousin to Mr. Primod Mittal.
This concession saw the taking over of ASCL and Itakpe ore mines and is termed one of the biggest scams in the history of Nigeria. The plant, probably worth $11 to 20billion to build to day was hugely undervalued for $300m and GSH was to pay nothing to the government but was required to inject its funds to revive the plant with a number of conditions some of which were:
– 1. That the Federal Government should give GSHL two oil blocks.
– 2. That GSHL be allowed to be lifting crude oil from Nigeria.
– 3. That the Sapele Power Plant be given to GSHL to operate.
– 4. Concession of Delta and Warri Ports to GSHL to operate.
– 10. The supply of Natural Gas to GSHL at “competitive and reasonable tariff”.(GSHL came up with this condition after it failed to sign a Gas Supply Agreement with the Nigeria Liquefied Natural Gas Company. GSHL offered to pay N5.00 per cubic meter of Gas as against the market price of N30.00). It also inserted in its conditions that “Gas price should be kept reasonable and consistent.
After all these conditions, ASCL still deteriorated as equipments of ASCL were removed to Delta steel (which GSHL also took over in 2005) while some were moved to other privately owned Indian steel factories in the name of “borrowing”. The furnace constructed in Ajaokuta bybthe Russians was one of the 6 biggest in the world only in Ukraine (also constructed by Russians when Ukraine was in USSR) and Russia itself could similar sized furnaces be found.
The federal government under President Yaradua realized the huge mistake that Nigeria under Obasanjo made and once again made and sought to terminate the contract with GSHL.
The then Director General of the BPE, Ms Bolanle Onagoruwa stressed that the approval of the concession of Ajaokuta by president Obasanjo was in violation of the BPE Act.
At Senator Ahmed Lawan led Adhoc Committee, the Minister of Mines and Steel Development, Architect Mohammed Musa Sada also revealed that the federal government under Obasanjo single handedly sold ASCL to GSHL and that GSHL ruined the Ajaokuta complex by stripping it of all valuable equipment and machineries and other valuable assets. It led to the cancellation of the entire process by the federal government.
The decision to terminate didn’t go too well with GSHL and they dragged Nigeria to the International Chamber of Commerce (ICC) Arbitration court in London, UK and demanded Nigeria pays them $1B for the termination. But the west were behind destroying Russia legacy of Ajaokuta and so, even though Nigeria had a goodbcase the UK Arbitration court dragged the matter for almost 6 years.
In 2013, after 6 years of heated negotiations at the ICC, the Jonathan’s administration successfully took back ASCL. GSHL also lost their case for a $1B demand, the entire transaction was fraudulent in the first instance.
2013 TILL DATE – INDIANS HOLD AJAOKUTA TO RANSOM
One would have assumed that the drama was over in 2013 but alas, the Federal Governments hands are still tied on progressing with ASCL. GSHL shrewdly crafted an arbitration clause in the contract between the government and GSHL which prohibits Nigeria from dealing with anybody until all matters with GSHL are resolved. In other words, the Indians do not want Nigerian government to proceed on completing Ajaokuta or dealing on it with anyone else until its (GSHL) unreasonably selfish condition is met – they want the Nigerian government to give Itakpe Iron Ore company to them free for 25 years.
This report was written in 2016, as of 2016 there was a modified contract containing such ridiculous terms before the minister of Solid Minerals in favour of the Indians. GSHL wants to tap Iron Ore from Itakpe for free and move this ore to Delta Steel which was in June 2015 taken over by Premium Steel, a company set up just months before the purchase of Delta Steel. Premium Steelmis probably connected with GHSL.
Premium Steel is owned by another powerful Indian conglomerate headed by the Vaswani brothers (owners of the controversial Stallion group).
Truth is that Itakpe was set up as a captive mine to savage and cannibalise ASCL. The original plan for Ajaokuta by the Russians is that iron Ore would be moved from Itakpe to ASCL for the manufacture of steel. The manufactured steel and seminfinished raw materials already processed at Itakpe and Ajaokuta would be distributed to other steel rolling mills in Katisina , Aladja and Osogbo.
But the Delta Steel in Aladja had been captured by the same Indian syndicate. The India no.ponger wants the ore to go to Ajaokuta but straight to Aladja, the steel.plant they had taken over.
If GSHL succeeds in its bid to take charge of Itakpe, the source of the raw material.iron ore as a result of its ridiculous 25 yeara ownership of Itakpe clause, then ASCL will become a sad history as there will be no Ore to feed Ajaokuta steel from. That means that Kogi state will have no steel plant of its own ever again. So no matter that amount of pacifying information the government publishes for the public on the urgency and good intention they have towards ASCL, nothing shall be done until the arbitration is terminated.
Patriotic Nigerians must call on the Nigerian Government to immediately terminate every agreement in whatever form with GSHL.
Nigeria is too big a nation to be held captive by an Indian company fronting for the IMF and Western interests to destroy our economy .
TPE, a whole Russian government owned company who built the complex did not cause this much pain to Nigeria… why would a private Indian Company whose aim was to steal equipment installed in our plant and take to its own country, India, be allowed to continue to do such a thing to us and none of them are being arrested and sent to jail?
A more worrisome question to answer is – Who are the heavyweight Nigerians behind GSHL selling us this cheap? Is it Gbenga Obasanjo and Liyel.Imoke who brought them originally otherwise, it is difficult to believe that Mr. Primod Mittal would have the courage to stand alone and dare this much pandemonium on Nigeria.
So, who are the greedy Nigerians toiling with the present and future of Nigeria and Nigerians?
No matter what, Nigerians must remember that the masses are always majority and the power to determine our future truly lies in our hands.
Our silence and ignorance has only cost us this much.
RUSSIAN TyazhPromExport (TPE) IS BACK WITH HOPE FOR NIGERIA
The Sole Administrator of ASCL Egnr. Onobere has repeatedly said that since the Russians left in 1994, no progress has been realized on the project. The following questions kept hovering my mind :
– the moment Nigeria realized their mistake in not completing ASCL and were ready to commence completion, why were the Russians not called back to resume works?
– Why did we settle for SolGas which already said it is a petroleum firm.and had not experience of a steel.plant, and,
– why compounding our problems by bringing in GSHL a front for some powerful people, and a shell company set up to strip Nigeria ofnits assets?
– From the quality of work done by the Russians evident in Ajaokuta, is there any doubt on the expertise of TPE that a decision that they be brought back should have been questioned or in doubt?
– Could it be that TPE wasn’t invited because the Russians are too straight forward and don’t engage in “smart business” the Nigerian way?
My research led me to uncover a lot of conspiracies on how TPE is no longer interested in doing business with Nigeria and some even said TPE no longer exists. My curiosity took the better part of me and I decided to look them up in the internet and I initiated contacts with them.
I sent an e-mail to TPE in mid November 2005 and another early December 2015, none were replied.
It is said that desperate times require desperate measures and that when you truly want to do something, you shall find a way; so I contacted a dear friend of mine who lives in Russia and who happens to be the acting Chairman of Russia’s Arbitration Court on International Economic Matters – Mr. Tunde Adewon. As God would have it, he is also a Nigerian; born to a father from Ondo State and a Russian mother. His father late Engr. Moses Adewon was one of the senior Russian trained Nigerian engineers who worked with the Russia’s TPE to build the Itakpe Iron Ore complex.
Mr. Adewon on behalf of Builders Hub visited TPE in Moscow, Russia on the 2nd week in December 2015. After the first brief meeting, TPE, as a precautionary measures ran a security check on me. Then Mr. Adewon was called for a detailed meeting and this were the notes of their meeting:
– TPE expressed deep sadness at the manner in which ASCL was handled.
– TPE said their heart was poured into the project in other to give Nigeria, the greatest country in Africa, the biggest steel Complex in Africa.
– That, never in all of their works across the world, not even in India, did they build a steel city as big as Ajaokuta complex, the steel.plat is the second biggest steel plant in the world and the biggest that they built outside of their own country Russia.
– That it was sad Nigeria did not heed to their warnings about the international conspiracies and Nigeria turned their back to them instead of seeing the bright future they, the Russians dreamt for us, they said that they were heartbroken at the opportunity that Nigeria missed.
– That we, by our own hands allowed our economy to be trampled amidst negative interests by other powerful countries.
– That over the past years, they had tried reaching out to the Nigerian government to allow them to come back and complete the project depute huge loss of.money they sustained in their first attempt when they completed the project but that Nigeria did not respond positively.
– That they would want nothing more than to work to revive Ajaokuta and help Nigeria create jobs for its people and take itself out of poverty.
– Nigeria, they said must wake up from its slumber and be greater than ever before for itself and for Africa.
– During a skype meeting, TPE was advised to write a letter of intent to the Minister of Solid Minerals.
I also made it clear that neither I nor Mr. Adewon were interested in any monetary reward.
We were only good citizens of Nigeria trying to use our best arsenals to contribute our quota in helping our country. They appreciated our honesty.
On the 25th of December 2015 (Christmas day), TPE wrote and sent the letter (which I have attached to this post) to the Minister of Solid Minerals Dr. Kayode Fayemi. TPE is expecting to be invited over to discuss a path forward which would first entail technical evaluation of ASCL to ascertain extent of vandalisationa and damage done by GSHL and recommend modernization and upgrade plans for completion.
TPE said they are very ready to come to Nigeria even at a week’s notice.
On Monday the 18th January 2016, I paid a courtesy visit to the Minister himself; Dr. Fayemi acknowledged reading the letter from TPE and mentioned that the Ministry would look into it.
I pleaded with him on the need to expedite actions regarding ASCL and reminded him that the TPE’s intentions should be considered a priority. 4 weeks after the letter was sent to the Ministry and no response from the Minister’s office, I visited the Department of Steel within the Ministry. To my shock, no one had seen or heard of the letter of intent.
Question – what happened to the TPE’s letter after the Minister read it. Is it not supposed to be sent to the Steel and Legal departments for action?
Do you also know that till today, (when this report was written in w0q6) no committee has been set up to investigate into ASCL?
KIND WORDS FOR HON. MINISTER DR. KAYODE FAYEMI
My dear Minister, sorry if I sound a bit hard. I don’t like it myself but like I told you in your office, I tour rural communities and interact everyday with the unemployed; the pains in their eyes are unbearable and that’s what I pour out right here… the pains of Nigerians and the huge expectations from your kind self and Mr. President.
You visited Ajaokuta on the 14th of December 2015 and promised an urgent action first by composing a think tank whose report would be submitted to the President; that’s 40 day ago!!!
The Russians worked even on Christmas day to get the letter to you. When are you going to respond and extend an invitation to at least hear out their plans for ASCL and Nigeria?
When would you constitute the fact finding committee?
How long a time would the committee have to prepare its report?
When would the President digest the report?
When would decisions be made?
Please note that Nigerians expect your efficient office to act quickly as we are fast drowning.
*Mr. Minister, I am aware you were misinformed that the Russians are not interested in the constructions works in ASCL, that’s not true sir.*
Please do not be trapped by misinterpretations. For that sake, I have decided to post TPE’s letter out to Nigerians to read.
Also, my team met with the senior management of TPE in Russia today the 26th of January 2016 and they once again expressed their readiness to work with Nigeria on Ajaokuta and other projects if need be.
Sir, do you know that TPE Russia constructed 3 of India’s largest steel plants namely – Bhilai, Bakaro and Visakhapatnam?
Do you know that Bhilai is eleven time winner of the best integrated steel plant in India?
They say the blast furnace technology in Ajaokuta is old, no thisbis not true sir, they want to steal it, thatbis why they are condemning the blast furnace.
Do you know that India recently contracted the same TPE Russia to reconstruct and modernize Rourkela (originally built by Germans) and Durgapur steel plants?
It shall interest you to know that TPE is installing the largest blast furnace in India as part of Rourkela upgrade.
Sir, please join me as we ask ourselves why India, with all its steel expertise keeps calling on TPE Russia?
It’s good and honest people that Nigeria needs, not dishinest Indians or mischievous partners from the west that Nigeria needs now.
GSHL was not invited by their government to work on India steel plants?
Better still – has GSHL ever done any steel works in India?
Was Nigeria supposed to be a guinea pig?
Little wonder they can’t let go of the stolen opportunities Nigeria and they keep holding Ajaokuta Steel plant and Nigeria hostage.
Sir, please see that the arbitration with GSHL is terminated as soon as possible.
In the meantime, TPE is at this moment writing a comprehensive letter of intent to the president, your office shall be promptly copied sir.
Thank you .
Today the 26th of January 2016, I printed copies of the letter and again took a set to the Minister’s office and a set to the Director of Steel Engr.
Also Abdullahi promised to follow up with the Minister.
Dearest Nigerians and Kogites, it is said that you can’t make the same mistake twice, the second time you make it; it’s no longer a mistake but a choice I don’t know what a third mistake is called.
We have watched our God given economic destiny being tossed twice by a few; we cannot sit back and watch it happen the third time around.
It will be a big shame unto us.
Anger will do no good.
We shall perservere and forgive everyone for every negligent decision made in the past.
Sadly we have found ourselves in the most despicable of times; we should be courageous enough to seek to take the best path forward.
Let us think deep quickly and ask ourselves – what do we have to lose or gain if the Russians come back to rescue Ajaokuta?
Now that God has ushered us a new government, … let us demand of our .. National Assembly members to make ASCL their watchword.
Let our dear royal fathers HRM the Attah of Igala, the Ohinoyi Ebira land, the Obaro of Kabba and others keep interceding on behalf of ASCL.
Let every Kogite and every single Nigerians realise that there is no better time than now to unite and seek that justice is done to ASCL.
Let every state in Nigeria join forces to call on the federal Government to revive Ajaokuta because that single project coupled with Nigeria’s intellectualism can usher us into unprecedented greatness.
“We are too poor, our youths are jobless, our future is bleak, we cannot continue to suffer this much.” Says Natasha Apoti.
The time to speak up and act is now!!!
