THE reported reversion of the Ajaokuta Steel Rolling Mill (ASRM) to Nigeria, from the Indian company, Global Steel Holdings Limited, to which it was concessioned, is an advertisement not just of the crass failure of the privatisation scheme, but also of a monumental generational loss to Nigerians. That it has taken the authorities six years to undo what they should not have done in the first place is pathetic and uncomplimentary of the excitement of possible job openings being brandished by some government officials. Had there been due diligence on government’s part, the company would not have been found competent or suitable for the responsibility it was given to drive the rolling mill. Now that it has recovered the complex, government needs to go back to the drawing board to decide what exactly it wants to do with the set-up that has proved to be every inch a drain of public purse without a discernible corresponding benefit.
Disclosing the reversion of ASRM to newsmen, the Chairman Senate Committee on Federal Capital Territory, Senator Smart Adeyemi was excited that the development would lead to the provision of 10,000 new jobs. How this will materialise however is a puzzle considering that either before or after it was privatised under the concessioning programme, Ajaokuta has not yielded any product. The plants have not functioned since 2005 when they were given to the Indian company. Shortly after the privatisation, allegations of downsizing and asset stripping rocked the complex until it finally shut down operations. Since 2007, the Federal Government had been in arbitration with Global Steel and Global Infrastructure Limited at the International Chamber of Commerce, London, culminating in the reversion to the government. As part of the new arrangement, Global Steel agreed to withdraw its claim of $1 billion it initially demanded as damages.
Much was expected from the government campaigns and case studies regarding the privatisation and concessioning of unproductive public enterprises. The options appeared as urgent imperatives to reform the Nigerian economy. In particular, the argument to ‘get government out of the business of business’ appealed to the working class who were in search of jobs.
Since 1999 however, the results of the country’s privatisation and commercialisation of federal assets are mired in controversy. Nigerians are severely punished for the ASRM which concession was terminated in 2008, following an unimpressive performance of the concessionaire, including reports of unfair labour practices and of generally undermining the lofty concept of privatisation; the net result being billion dollars loss and rationalisation of the Nigerian gross capital formation. In short, Global Steel appeared to have further compounded the woes of the multi-billion dollar steel engineering complex and rendered it comatose.
No Nigerian institution, which includes the Obasanjo Presidency at the time, the labour unions, the export inspection arm of the Customs Service and, in specificity, the Bureau for Privatisation, which signed off the plant in the formal sense, was positioned to checkmate the transnational irregularities at ASRM.
Having spent the better part of six years at international arbitration over the ASRM, Nigeria is yet in several other expensive court and arbitration contentions in as many erstwhile privatised assets. This was the plant that cemented Nigeria-Russian relationship, built from the civil war collaboration, and was considerably touted by the National Development Plan 1975-80 as the metallurgical phoenix to foster Nigerian technology. An estimated $20 billion is believed to have gone into the complex over the years.
The optimism about job creation for the youths, and of patriotism over perceived neo-colonialism is misplaced in this instance. To the world at large, the issue, apart from that of pathetic abdication of post transaction diligence by the local institutions charged with that duty, is that Nigeria has invalidated yet another transaction from the privatisation and commercialisation process to join the comatose legacy of Aluminium Smelter Company, Delta Steel, Aladja, Enugu Coal Mines, Nigercem, and Virgin Atlantic among many others.
Sloppy work and reprehensible attitude have continued to haunt the country’s performance in international commerce; and the world has unreservedly come to view Nigeria as a destination with a high propensity to breach commercial contracts or for a failed public service.
Although Global Steel’s eventual gesture to relinquish its claim for damages of $1 billion on Nigeria is viewed in international legal circles as an act of benevolence bestowed on a malingering partner, that is only because the Nigerian authorities failed to properly document or take pro-active action against breaches committed at the plant. She could have obtained a binding retribution from Global Steel for asset stripping.
Nigerians are the worse for this track record, as they suffer the double jeopardy of reputational damage as an investment destination and the sloppiness of a few inflicting, very painfully, on the majority of citizens, a tradition of generational waste of capital formation.
The ASRM debacle in the London Arbitration is a lesson for the executive and legislature to cut losses at these debilitating arbitration processes and devise a solution to counter inchoate commercialisation and privatisation that have shrivelled the nation’s patrimony. A major remedy that can be officially procured for Nigerians is for government to put ASRM to productive venture, employing Nigerians gainfully, and contributing to the country’s development.
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