Did you know that the original feasibility study for steel production, carried out by the Soviets in 1959, recommended that it should be sited in Onitsha? They suggested using iron ore from the Udi Hills in Enugu, selecting Onitsha due to the proximity of the Niger River and the city’s existing infrastructure.
Steel production, a reduction process in chemistry, can be achieved through “wet” (water) or “dry” (gas) methods. The Soviets preferred Onitsha for easy channeling of the Niger River. The need for accommodation was also a factor, as leveraging existing housing in Onitsha was more feasible than constructing 30,000 units for workers.
Post Civil War, the Murtala Mohammed Supreme Military Council decided to site the plant at Ajaokuta, using a dry production process with gas from the Niger Delta. This decision, arguably punitive against the South Easterners, led to economic challenges for the country.
By the early 1980s, the main plant at Ajaokuta faced challenges due to the inadequate quality of the source material. The iron ore’s purity was about 45%, far below the required 67% for steel production, leading to the costly construction of a beneficiation plant at Itakpe.
Despite these efforts, the bloated costs have torn the project’s economics apart. The presence of cheaper steel from China and the shutdown of mills in the West raise questions about Ajaokuta’s profitability. Technically, electricity isn’t a major issue, as a dedicated power plant can be built. However, the initial investment choices rendered the steel plant uneconomical from conception.
Over 40 years after its establishment in Ajaokuta, Nigeria is relying on a bilateral agreement with Russia to resuscitate the now derelict steel factory complex, which is said to be between 95 and 98 per cent completed.
So much had been invested in the Ajaokuta Steel Mill for it to be neglected, and the Russian engineering and construction group, Metprom, was expected to undertake the necessary work to bring the facility into operation.
Under the terms, the resuscitation will be financed by state-owned development institution, Russian Export Centre, to the tune of $460million, while Cairo-based, African Export-Import Bank (AfreximBank), is expected to commit about $1 billion.
Ajaokuta’s output is expected to aid the realisation of the country’s plans to diversify the economy away from oil and gas, encourage local production, in addition to creating thousands of jobs.
The accord to revive the Ajaokuta project under a build-operate-and-transfer (BOT), was reached during a meeting between President Muhammadu Buhari and Russian President Vladimir Putin, in Sochi, Russia in 2021.
Construction of the Ajaokuta Steel Complex, which was supposed to produce as much as five million metric tonnes of steel annually, began in 1979. Thousands of Russian engineers arrived Nigeria with hope the work will thrive but work stalled due to government’s failure to pay the builders, Russia’s Tyazhpromexport, on schedule.
In 2004, it was taken over by India’s Ispat Industries Ltd., but unfortunately the plant was yet to produce any steel.
Nigeria’s path forward lies in restructuring, allowing regions to choose projects that bring value, thus benefiting the country as a whole. The demand for restructuring in Nigeria isn’t new. Fifty years ago, the country experienced a civil war over this very issue. Leaders from various regions have emphasized the need for a federation structure that allows each component to develop at its own pace and harness its resources
The military’s involvement in politics significantly shaped Nigeria’s current state structure. Their preference for hierarchical control led to the creation of 36 states and 774 local government areas, all dependent on the central government. This structure has been criticized for being dysfunctional and not reflecting the diverse cultural and regional needs of the country
This centralized arrangement has been identified over the years as unworkable and detrimental to the nation’s progress.
This pattern of questionable investment decisions like Ajaokuta is evident across various sectors. For example, the choice to site a refinery in Kaduna, far from any crude source and dependent on imported Venezuelan crude, raises similar concerns. These decisions, often influenced by tribalism and nepotism, have significantly hindered Nigeria’s progress, unlike countries like South Korea and Japan, which, despite corruption issues, selected projects aligned with national interests.
These examples highlight the critical issues of questionable investment decisions, project mismanagement, corruption, and lack of strategic planning in Nigeria’s infrastructure development. The country faces a significant infrastructure gap, estimated at $3 trillion over the next 30 years, requiring annual investments of $150 billion. This gap is evident in the inadequacy of roads, railways, power generation, and other facilities, impacting Nigeria’s growth and global competitiveness.
Duruebube Ignatius Chimazuru Nnadi-Oforgu
OBLONG MEDIA GLOBAL INTELLIGENCE 
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