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The Bureau of Public Enterprise on Thursday in Abuja urged the Ministry of Solid Minerals Development to unbundle the Ajaokuta Steel Company in order to ensure efficiency in its operations.
The Acting Director of the Bureau, Vincent Akpotaire, made the call during an investigative hearing on the modified concession agreement on Ajaokuta Steel Company organised by the House of Representatives.
Akpotaire described the call as an option for the management of the entire production system of the company by a single investor.
Akpotaire, who did not blame the failure of the company on the handlers, Global Infrastructure Holding Limited, said the huge cost of investment required from core investors to run the company was disadvantageous.
According to him, an option here is to identify autonomous entities in terms of production lines that exist in the Ajaokuta steel company.
He said the option included unbundling the entities “and determine those we need to concession and the ones we need to privatize and then allow Ajaokuta steel complex to remain managers of common facilities”.
Apkotaire expressed concern that some of the businesses within the production chain fed into each other, saying: “So you find out that the production output from one unit could be raw material to the next unit.
“If that happens, why do you have to have one investor running the entire production system?
“Apart from huge cost of investment required from core investor to get the complex running which is a clear disadvantage, we should consider breaking them into different units.
“And, getting each unit to start at its own pace will ultimately be to the interest of the country.
“These units will have to be unbundled and incorporated, their assets identified and properly laid out and transactions designed around those units and each of them can take off at different levels.”
Earlier, the Minister of State for Solid Minerals Development, Abubakar Bwari, said the Federal Government signed the modified concession agreement with GINL to avoid $520 million penalty.
Bwari revealed that GINL dragged the Federal Government to the International Court of Justice at the Hague for breach of concession agreement entered into in 2004.
He pointed out that Nigeria modified the agreement to ensure local steel production to serve as an alternative to the $4 billion spent on steel importation annually.
Bwari further blamed the modified agreement on the inability of steel companies in the country to produce optimally due to years of legal encumbrances that bedevilled the Ajaokuta steel company.
According to him, since the concessioning in 2004, government has invested about N10 billion with no commensurate gains.
He, however, expressed optimism that with the development, the Ajaokuta steel company would come on stream in the next 18 months.
A member of the House Committee on Commercialization and Privatization, Rep. Adekunle Akinlade, faulted the Federal Government for signing the agreement without carrying host communities and other relevant stakeholders along.
The committee, therefore, urged the Ministry of Solid Minerals Development to work with the BPE, host communities and other stakeholders to review the process and establish a way forward on the agreement in conformity with the law.
The Chairman of the Committee, Rep. Ahmed Yerima, said the committee had resolved to monitor, through effective oversight, the recommendations of the review committee of stakeholders.
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