The Federal Government has said the Russian government and Afreximbank will provide up to $1.46bn to fund the resuscitation of the Ajaokuta Steel Company Limited.
The Minister of Mines and Steel Development, Olamilekan Adegbite, who disclosed this in Lagos on Tuesday, said a Memorandum of Understanding would be signed by the Nigerian and Russian governments this month for the project.
President Muhammadu Buhari, and Russian President, Vladimir Putin, agreed in October 2019 at the Russia-Africa Summit to pursue the completion of all abandoned projects initiated by both countries, including the Ajaokuta Steel Rolling Mill.
Adegbite said at an interactive session with journalists that the plant could be resuscitated “without spending the revenue that we don’t have.”
He said, “So, we agreed with the Russian government. Hopefully by the end of this month, the MoU will be signed. It was agreed between President Muhammadu Buhari and President Putin that we would complete Ajaokuta on a government-to-government basis.
“The funding will come from Afreximbank and the Russian Export Centre. Jointly, they will fund the resuscitation of Ajaokuta and the payback will come from Ajaokuta itself. Once Ajaokuta starts operation, the experts that will come from Russia will run it; of course, the terms will be agreed.”
The minister said the country had so far invested close to $6bn in the project, adding, “If you talk in terms of today’s costs, it will be a lot more than that, and we need to make this investment work.”
According to him, the Ajaokuta plant is 95 to 98 per cent complete.
He said the Russian government would complete the project, run it for many years to recoup its investment and then revert it to the Nigerian government.
“We are looking at two and half years for Nigeria to begin to produce steel and this is a game changer for Nigeria. It will save us a lot in foreign exchange. Working at full operation, Ajaokuta will employ 10,000 engineers,” Adegbite said.
He said, “Afreximbank is bringing $1bn to the table and the Russian Export Centre is bringing $460m. It is a debt, not equity; and it is coming at the rate of five per cent.
“But it is not so much a debt to Nigeria because Mr President has told us that he doesn’t want Nigerian money involved in it. The business case built around Ajaokuta is such that it will pay back by itself. So, we are not going to use taxpayers’ money to pay that debt.”
The minister stressed the need for Nigeria to start steel production in order to achieve industrialisation.
He said, “Ajaokuta has been on since about 1979. Even before then, the steel policy for Nigeria had been formulated. But it was President Shehu Shagari who crystallised this.
“The steel territory was created and it is bigger that the whole of the Federal Capital Territory. If you go through Ajaokuta, it is so vast; it has its own airstrip and port. It has a lot of facilities.”
He added that somewhere along the line, the nation missed it and Ajaokuta was not completed.