ZUL-QA’ADAH 16 1430 A.H.
WEDNESDAY NOVEMBER . 4 2009.
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The steel sector and Vision 20:2020
By Ephraims Sheyin
As the natural backbone of every industrialisation process, the steel sector is seen as crucial to realising President Umaru Yar'adua's vision of propelling Nigeria to among the top 20 economies by the year 2020.
Details of the vision, indeed confirm such strategic dependence on that sector whose products are key to other sectors like power, transportation, especially bridges and the rail, and housing.
The steel products are also crucial to the growth of the manufacturing sector, especially for automobile parts and pipelines.
According to the document that outlined the path to the vision, the Ajaokuta Steel Complex (ASC) is expected to produce at 2.6 million tonnes of steel annually by the year 2015. By that year, the steel plant is expected to employ 20,000 people directly.
By 2019, the plant is expected to produce at 5.2 million tonnes per year and provide jobs to 30,000 persons, while the Delta Steel Complex (DSC) is also expected to produce 2 million tonnes, the same year.
Five million tonnes of steel are expected to be produced per year, via ``private capacities'' by 2020, taking the annual yearly steel haulage to 12.2million.
According to estimates by the African Iron and Steel Association (AISA) and other stakeholders, aside those that will be directly employed by the steel sector, ``about 1.5 million'' will be employed as a result of the multiplier effect along the chain of production, sales and consumption.
To meet that dream, Yar'Adua set up an administrative panel to ascertain the situation of firms under the sector early last year.
The panel report showed a gloomy picture and suggested the sacking of Global Infrastructure, an Indian firm to whom ASC was concessioned following an agreement with the Federal Government in 2006.
Following that advice, Global Infrastructure, which was the second foreign firm to whom ASC was concession, was promptly sacked.
The first foreign firm, Solgas of U.S., engaged in 2002, was sacked in similar circumstances in 2003, after the Federal Government confirmed that Solgas did not have the financial muscle to complete and operate the 35-year-old plant.
The report also suggested that a technical audit be carried out to ascertain the integrity of ASC on which the then Power and Steel Minister Segun Agagu, claimed that that 10 billion dollars had been spent in 2001.
The result of the audit was expected to determine whether the plant would be privatised, concessioned, or maintained.
But as the nation awaits the result of that technical audit, experts say that recent developments in the sector do not give much to cheer.
One such expert, is Dr Sanusi Muhammad, Secretary General, AISA. ``I am not feeling comfortable with developments in a key sector like steel on which much is expected toward actualising the Vision 20-2020 dream,'' he says.
He says he is disappointed that the Federal Government only recently set up the team to carry out the technical audit of the ASC, ``more than 17 months'' after it was recommended by an administrative panel.
``When we waste that much time, it does not show that we are in a hurry to meet the 20-2020 target,'' he says.
He rejects arguments advanced by the Federal Ministry of Steel Development that the team could not be set up earlier because there was no budget for it.
But even while the technical audit is still on-going, the Minister of Steel development, Mrs Diezani Allison Maduekwe, last month told the workers that they would be paid 10 months salaries, out of the 13 months they were being owed, and be retrenched.
According to her, 80 per cent of the total workforce of 4,500 workers in ASC and the National Iron Ore Mining Company (NIOMCO), Itakpe, will be laid off.
Government has always premised such action on the dearth of funds to complete the outfits or pay workers' salaries.
But while the workers are still moaning the impending sack, the National Assembly last week alerted the nation to alleged ``massive looting'' of equipment at the ASC and NIOMCO.
The law makers suggested that the Interim Management of both companies be questioned on how the items were looted.
Alhaji Aminu Shagari, who sponsored a motion on the matter, suggested additional security to secure the plants.
``The looting, I am told, is because of the rumours that government is planning to sell off the plants,'' he said.
The Minority Leader of the House, Alhaji Mohammed Ndume, who supported Shagari, said that villagers in Ajaokuta had always complained to him about the reported looting.
But while stakeholders ponder over the fate of ASC and NIOMCO, and the possible effect on the steel sector, Mr Otori Salihu, President, Iron and Steel Senior Staff Association of Nigeria (ISSSAN) is particularly worried that government is bent on selling all steel plants.
``Because government wants to privatise, it has decided to sack the workers and I think this is wrong.
``These workers, especially the mining engineers, technicians, geologists and metallurgists, have been trained at a very high cost and to just get rid of them is not good for the growth of the steel sector.
``Many of them were trained between 1983 and 1984 and it will cost 1,000 times more to train new ones,'' he says.
He says that it is ``shocking'' that Nigeria is sacking her steel workers at a time when China is recalling its retired steel workers.
On why the workers accepted the deal to collect their salaries and go, the unionist says that many endorsed the deal ``out of frustration''.
``Many of the workers are angry; salaries have not been paid for 13 months. They have been idle for long as the plants are not functional.''
He says that the dream of an industrialised Nigeria by 2020 is not possible without a strong steel sector as its products are crucial to other sectors.
``The steel sector will remain on its knees until there is the political will to develop it.''
On the way out, Salihu advises government to ``stop playing politics'' with the sector, noting that most steel companies the world are public-owned.
Salihu also disagreed with the argument that government was privatising because it did not have the money to pay salaries.
According to him, some units have been completed at ASC and could rake in the money needed to pay salaries if made functional.
Among such units, he says, are the light section mill, wire rod mill and the medium section and structural mill which produces rail lines.
Another cash raking unit, he says, is the thermal plant in ASC with a capacity to generate ``about 150 mega watts of electricity.
``The Indians of Global Infrastructure used to make N400 million monthly from selling electricity to the national growth and management can also operate the plant and generate monies for staff salaries,'' he says.
But should government go ahead to privatise the steel plants, Sanusi, the AISA scribe, believes that the idea itself is not necessarily wrong.
``What we are saying is that it should be done properly; it should be done systematically so that it will be beneficial to Nigerians.''
He, however suggests that the steel sector will be better served if government completes the ASC and operates it.
``By 2000, when government stopped work on the ASC, only 1.08 billion dollars was required to complete it. That money should not be difficult to raise if we are really committed to the steel sector,'' he says.
Sanusi alleges that there are ``very many international organisations that are bent on frustrating efforts to develop a steel sector for Nigeria because it is a captive market for steel from developed nations''.
Mr Akilu Ado, a metallurgist, who agrees with Sanusi, particularly fingered the World Bank, and recalled that its former Vice President and Chief economist, Nicholas Stern, visited Nigeria in 2002, and advised against further investments into ASC.
Stern had advised that Nigeria, should rather convert the plant to a power generating plant, and argued then that the project was ``not viable'' and a ``drain on limited resources''.
He also claimed that its blast furnace technology was ``too obsolete'' for the 21st century.
But for Sanusi, such arguments are only toward making Nigeria perpetually dependent in the area of steel, which he describes as ``an important ingredient of industrialisation.''
Records of Nigeria's steel demand appear to support Sanusi.The records from AISA and the National Bureau of Statistics show that Nigeria, on the average, requires 2 million tonnes of roll plants, and another one million tonnes for ship production, bridges, roads and pipelines.
The records further show that one million tonnes of assorted steel products are required in other areas of the economy.
With a tonne costing 2,000 dollars in the open market, Sanusi says that Nigeria spends 8 billion dollars per year to import that 4 million steel requirement.
``It is that amount that is too attractive for the developed economies to ignore and that is why they do not seem to support any growth in Nigeria's steel sector,'' he says.
Sanusi also recalled that the World Bank equally advised Egypt to privatise its iron and steel company in the 1990s.
``But the North African nation refused; now it produces more than 6 million tonnes of steel and is still public-owned.
``Those are countries that place much premium on the steel sector; the situation appears different in Nigeria,'' he laments.
For Mr Ernest Nwadioha, a metallurgist, the best way to meet Nigeria's steel demand is to hand the ASC over to TPE, the Russian firm that built it.
``TPE have always said that they are ready to complete the firm and operate it and I think they should be invited to complete what they started,'' he says.
Mr Adidi Adodo, former President, Steel Engineers and Workers Union of Nigeria (SEWUN) agrees with Nwadioha.
``The steel industry can only grow if we develop the collective will to move it forward.
``But, honestly I do not see another alternative to a strong steel sector if we are really serious about making Nigeria an industrialised economy,'' he says.
But in spite of what they described as ``not so encouraging'' picture of the steel sector, experts and stakeholders in the steel sector are still positive that the situation could be turned around.
Sanusi, for instance, is optimistic that ``a lot could change and make the 20-2020 vision a reality once the leaders can muster the political will to develop the steel sector''.
``There will be a lot of multiplier effect if we get the right platform; In fact, Nigeria can be among the top 10 economies of the world by 2020 if all things are in place.''
According to him, there will be a huge ``quantum jump'' in development in many other sectors once we have the right foundation as many steel-dependent and complementary industries will spring up.
But to ensure a viable steel sector, Sanusi particularly advised that much premium must be put to its growth.
He also cautions against frustrating steel workers, saying that all should be done to bring out the best in them as their experience was ``very crucial to the Vision 20-2020 dream''.
``It takes a minimum of 24 months to train a steel worker; many of them have been well trained to handle steel production and we should not waste or misuse such rare resource,'' he says.
(NANFeatures)
