Ajaokuta Steel Company: FG spends N1bn annually in pensions, salaries despite shutdown

The Federal Government is incurring about N1 billion every year on pensions, salaries, taxes, and administrative expenses for the moribund Ajaokuta Steel Company Limited (ASCL), according to Prof. Linus Asuquo, Director-General of the National Metallurgical Development Centre (NMDC), Jos.

Prof. Asuquo disclosed this on Thursday during a panel session at the maiden National Steel Summit in Abuja, where he spoke on “Dissecting the Current Policy Framework: Identifying Gaps and Building a Robust Institutional Regulation.”

Citing BudgIT’s 2024 accountability report, he noted that Ajaokuta’s financial drain has continued unchecked, with about ₦1.11 billion spent within the past two years alone.

He outlined the steel company’s woes as including heavy financial liabilities, mismanagement, corruption, and a broken value-chain structure.

According to him, Nigeria has poured over $8 billion into the Ajaokuta project over more than four decades, but persistent policy failures and poor management derailed its progress. He cited failed concession agreements involving Japan’s Kob Steel and India’s Global Steel Holdings Limited (GSHL) as examples of missed opportunities.

Asuquo added that ASCL remains crippled by its non-functional supply chain since iron ore from the National Iron Ore Mining Company (NIOMCO) in Itakpe is not in operation.“Rail line for transporting ore from Itakpe to Ajaokuta was delayed, vandalised, it was only completed and inaugurated in 2020,” he said.

He further lamented obsolete technology, degraded equipment, and unresolved local displacement, noting that 13 villages were uprooted when the plant was established.

Prof. Asuquo recommended rebuilding the supply chain and transitioning to modern mini-mill technology. He urged a shift from large blast furnaces to compact strip production (CSP), which is cheaper, more energy-efficient, and faster to set up.

Other proposals include private sector concessions to replace government control, strategic partnerships, and community engagement backed by Environmental and Social Impact Assessments (ESIA).“The way forward includes-manufacturing and pulsed revival of the plant, community and civil society engagement through (ESIA) Environmental and Social Impact Assessment. It (ASCL) can be used as an industrial park and free trade zone,“ he said.

He stressed that Nigeria’s steel assets remain underutilised and outdated, adding that comprehensive reforms, investment, and public-private collaboration are critical.“Revitalising Nigeria’s legacy steel assets is a national imperative. With political will, coherent policies, private sector collaboration, and sustained investment, the steel sector can become a key driver of industrialisation and economic transformation,“ Asuquo said.

The summit, themed “Rebuilding and Consolidating Nigeria’s Steel Industry: Collaborative Action for Sustainable Growth and Global Competitiveness,” gathered stakeholders to chart a new course for the sector.