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Author Topic: FG Approves Funds to Restart Ajaokuta, Itakpe Plants  (Read 1374 times)

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FG Approves Funds to Restart Ajaokuta, Itakpe Plants
« on: March 09, 2010, 06:34:18 PM »
The Federal Government has approved N650 million for the re-opening of the Ajaokuta Steel Company Limited (ASCL) and the National Iron Ore Mining Company (NIOMCO), Itakpe.
Government, however, said it had so far spent a total of $6 billion on the Ajaokuta plant since its inception in 1979.
It said the report of an audit ed on the companies’ assets would be ready in the next four to six weeks.
The Minister of Mining and Steel Development, Mrs. Diezani Alison-Madueke, who conveyed government’s decision to journalists yesterday in Abuja, said the fund would be used to resuscitate and re-operationalise some of the completed units of the two entities.

The units to be re-started comprise the section of the thermal power plant, the light section rolling mill, the wire rod mill and the engineering workshops.
Alison-Madueke said the Bergeaud plant as well as minimal mining operations and processing are also to be re-operationalised under the arrangement.
“After a series of consultations and communication with the Presidency on the ministry's proposal on the way forward for the two entities, I am happy to report to you today that the Acting President has graciously approved the ministry’s request to re-operationalise both entities, prior to privatisation.

“It is the ministry’s plan, therefore, to ensure that both entities commence operations, not later than the end of second quarter of this year.  For the entities to remain afloat, we need approximately N650 million at this time. This is to get it moving and to ensure that it is running smoothly. The amount covers only operational costs, excluding of course the cost of salaries of workers which have already been built into the 2010 budget appropriation,” she said.

She said the rehabilitation of the entire departments of the steel mill would take much greater investment to achieve.
“It will need the involvement of a joint venture partner to be able to move to that level. When we have seen how the plants are effectively run by the end of 2010, then we continue planning for 2011 and other subsequent years,” she said.
The Federal Government had ed the cancellation of the concession contract with the Global Infrastructures Limited but the Indian felt aggrieved and has taken Nigeria to the Arbitration Court in London.
However, speaking on the cancellation of the concession contract with the company which was ed in 2008, the minister said government took the decision based on the outcome of an investigative panel that looked into the operations of the steel company.

She said the report found out that the assets of the plants were stripped to the tune of N134 billion by the Indian firm.
She said this would ensure that if in the future, the two entities are to be privatised, adequate parameters would be put in place to ensure that this issue of stripping of our assets never happens again. 
According to Allison-Madueke, considering the magnitude of the fraud, government had no option than to cancel the concession contract and to set aside the agreement with the Indian firm.

She said it is not true that the Federal Government is considering an arrangement to bring back Global Infrastructure to run the Ajaokuta Steel Company but that what the ministry is doing is to liaise with the Ministry of Justice to ensure that the ongoing arbitration case with the Indian firm over the cancelled concession contract is quickly resolved once and for all.
The minister noted that as part government’s effort to address the immediate requirements of the companies and to implement actions necessary to resuscitate the entities, an inter-ministerial committee was set up in 2009.
The committee had submitted a report that recommended four business options for ASCL and three options for NIOMCO, but the two options were deemed most feasible to deal with the operational needs of the companies.
The two options include putting the completed units and workshops at ASCL into commercial use in conjunction with the generation of revenue from the sale of power and the resuscitation of the Bergeaud plant, commencement of mining and beneficiation operations.