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FG Spends $10bn on Ajaokuta Steel Company

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Ajaokuta Steel

The Minister of State for Solid Minerals Development, Mr. Abubakar Bawa-Bwari, said on Thursday that the Federal Government had spent over $10bn on the Ajaokuta Steel Company in the last 35 years.

He also said the government escaped paying damages in excess of $525m to Global Infrastructure Holdings Limited by signing a modified concession agreement with the latter to enable the firm to retain the National Iron Ore Mining Company, Itakpe. The modified seven-year concession agreement was signed on August 1, this year.

NIOMCO was designed to feed Ajaokuta Steel Company with the requisite raw materials to produce steel, but both firms have made little progress.

Bawa-Bwari, who appeared before the House of Representatives Committee on Privatisation and Commercialisation in Abuja, said, “The most important thing is that everybody agrees that Ajaokuta should work. We have spent over $10bn over 35 years and we cannot afford to continue to waste more time.

“This modified agreement is the best option available to government today. This agreement will free us from all the legal issues. We will monitor it and ensure that the GIHL too keeps to its promise that they have turned a new leaf.”

The minister spoke amid protests by steel sector stakeholders, including workers, host communities and the Bureau of Public Enterprises.

Bawa-Bwari said that the present administration signed the agreement to free NIOMCO, Ajaokuta Steel Company and the Delta Steel Company, Ovian-Alaja, from the ‘legal encumbrances’ that had stalled the operations of the steel firms for several years since they were first privatised in 2004.

The minister said that it was the administration of former President Goodluck Jonathan that first initiated the modified agreement with the GIHL in 2013 as part of ‘out of court settlement’ for the government’s breach of the original agreement it signed with the Indians in 2004.

He said that the initial concession was to last 25 years with a provision for “automatic renewal.”

However, the minister said the late President Umaru Yar’Adua reversed the privatisation of NIOMCO in 2008 without meeting the requirements of the clauses built into the agreement.

He added that the GIHL reacted by dragging the government before the Court of Arbitration, further crippling the operations of NIOMCO and other steel firms tied to it.

The minister explained how, acting on legal opinion by the Office of the Attorney-General of the Federation, the Jonathan administration opted for an out of court settlement in the form of a modified concession agreement in 2013.

But he noted that the controversy that surrounded the modified agreement again did not allow for its take-off until the current government acted on it on August 1 this year.

But the Chairman of the committee, Mr. Ahmed Yerima; the Chairman, Sub-committee on Steel, Mr. Gabriel Kolawole, and other lawmakers disagreed with the minister.

For instance, Yerima queried why the BPE was not fully involved in the process.

Some members wondered how the same government that spent over $10bn on Ajaokuta Steel was in a hurry to return to the GIHL just to avoid paying $525m damages.

The BPE, through its acting Director-General, Mr. Vincent Akpotaire, said it had not been fully involved in the privatisation of NIOMCO and Ajaokuta since 2004.

Akpotaire recalled that there was only one meeting where the BPE made proposals to the government, but stressed that the agency was not accorded further invitations.

“The way forward is perhaps to unbundle the various plant lines in Ajaokuta, which can all stand independently on their own as against going for a single core investor again,” he stated.

Akpotaire also said records indicated that NIOMCO and Delta Steel did not find their feet after the first privatisation in 2004 because the GIHL “clearly lacked the capacity” to deliver.

Workers of the steel firms and members of the host communities opposed the latest agreement on account of unresolved issues; one of which was the non-payment of outstanding benefits.

Others were calls for the payment of compensation for lives lost in the host communities during the various protests staged by their youths to oppose the privatisation policy.

The committee said it would have to report its findings to the general House.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

FG Consider Diversification To Generate Revenue

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Naira

As revenue from oil nosedives following incessant global price fluctuations, the Federal Government is now channeling efforts to the development of minerals in the mines and steel industry to shore up foreign exchange earnings.

Officials of the Federal Ministry of Mines and Steel Development said on Wednesday that while there had been concerted efforts to develop various minerals in the sector, much emphasis had been placed recently on the development of bitumen, barite and gold.

They told our correspondent in Abuja that the government through the mines and steel ministry was striving to diversify the Nigerian economy away from oil as the major foreign exchange earner for Nigeria.

They also confirmed that large quantities of gold had been discovered in various locations in Zamfara and Osun states.

Asked if the government had initiated programmes to explore the minerals and boost revenues now that the country’s income had plunged, the Special Assistant on Media to the Minister of Mines and Steel Development, Ayodeji Adeyemi, replied in the affirmative.

He said, “Indeed, the ministry has the mandate to generate revenue and diversify the economy through the mines sector.

“And bitumen is one of the key resources which the nation is abundantly endowed with, that has been identified for strategic development.”

To buttress his position, Adeyemi shared some recent presentations of the Minister of Mines and Steel Development, Olamilekan Adegbite, where the minister said his ministry was gathering data on some bitumen fields across the country to attract investors.

“A lot of people are interested in bitumen, which is coming from both local and foreign investors. However, we are still acquiring data in some of the fields,” the minister stated.

On barite, the minister said the mines and steel ministry was working on raising the quality of barite produced in Nigeria to an internationally acceptable standard, as certified by the American Petroleum Institute.

Adegbite said his ministry had contracted a consultant to help raise the standard in the local production of barite to ensure that oil industry players make use of barite produced in Nigeria as against importing the commodity from other countries.

He said, “Barite is a critical weighting material in drilling fluids used in the oil industry. We have a lot of barites but the issue is that it is not produced to API standards. However, we are putting a system in place which would be ready to launch in about July.

“We have got the millers who can produce barite to API standard. Hence we will be able to compete with foreigners and it would save Nigeria a lot of foreign exchange in import substitution.”

On the development of gold, officials at the ministry further stated that the commodity had been aggregated for the production of bullion bars and that this was the first time that such aggregation was happening in Nigeria.

They stated that the gold was sourced from artisanal miners, while the final refining to bullion was done in Turkey.

The sources stated that the ministry had registered two refineries that would now refine to LBMA standard when they come on stream. LBMA is the de facto standard, trusted around the world.

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Economy

Nigeria Sovereign Investment Authority Generates N160.06 Billion in 2020

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Naira Exchange Rates - Investors King

The Nigeria Sovereign Investment Authority (NSIA) generated revenue of N160.06 billion in 2020, according to the latest audited financial reports announced by the Managing Director of NSIA Mr. Uche Orji.

The NSIA income came from devaluation gain of N51 billion, and core income of N109 billion compared to N33.07 billion in 2019.

But Orji lamented: “Covid-19 adversely affected logistics around infrastructure projects, especially the toll road projects and the presidential fertiliser initiative.

Despite the pandemic, the Authority achieved 33 percent growth in Net Assets to N772.75 billion compared to the previous year’s performance of N579.54 billion.

Orji said the NSIA “received additional contribution of $250 million; and provided first stabilisation support to the Federal Government of $150 million withdrawn from Stabilisation Fund last year.”

The same year, the NSIA received $311 million from funds recovered from the late General Abacha from the United States Department of Justice and Island of Jersey for deployment towards the Presidential Infrastructure Development Fund (PIDF) projects of Abuja-Kaduna-Kano Highway, Lagos Ibadan Expressway and Second Niger Bridge.

In response to COVID-19, Orji said: “NSIA partnered the global Citizen, a not-for profit group, to form the Nigeria Solidarity Support Fund. Separately NSIA acquired and distributed oxygen concentrators to the 21-teaching hospital as part of corporate social responsibility; in addition to staffing support to the Presidential taskforce on COVID-19.”

In 2020, the NSIA “invested additional capital into NG Clearing, the first derivative clearing house in Nigeria to maintain NSIA’s shareholding at 16.5 per cent following the company’s rights issue of 2020″ Orji said.

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Economy

EFCC Recovers $153m, 80 Assets from Diezani, Says Bawa EFCC Chairman

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Diezani Allison-Madueke - Investors King

The Chairman of the Economic and Financial Crimes Commission (EFCC), Abdulrasheed Bawa has said the commission recovered $153 million and 80 properties from the former Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke.

Bawa said: “There are several cases surrounding that. As you may have read, I was part of that investigation, and we have done quite a lot. In one of the cases, we recovered $153 million; we have secured the final forfeiture of over 80 properties in Nigeria valued at about $80 million.

“We have done quite a bit on that. The other cases as it relates to the $115 million INEC bribery as the media has sensationalised it, is also ongoing across the federation.”

We are looking forward to the time when we will, maybe, have her in the country, and of course, review things and see what will happen going forward. The case has certainly not been abandoned.

Speaking on the trial of former Abia State Governor Orji Uzor Kalu, he said his trial will start soon in Lagos.

Bawa added: “The position is very clear. The EFCC succeeded in 12 years to get him convicted at the Federal High Court. Of course, he went to the Supreme Court, and because the judge that convicted him has been elevated, the ruling was made and the EFCC as a respecter of the rule of law, we have taken it as it is. The Supreme Court has ordered that we should go back to the Federal High Court in Lagos.

“Now, we are at the Federal High Court in Abuja, and we have applied to the court for the case to be transferred to Lagos as ordered by the Supreme Court to enable us start all over again.

“It, however, draws a precedence, and those are the issues; law as the lawyers will say, is a living thing; we had the ACJA in 2015, we have had this problem of elevation of judges from High Court to Court of Appeal, and we pushed that they should be given the opportunity to finish their cases, because some of these cases have taken a very long time.

“We thought we had succeeded in getting this in ACJA, The law was, however, not seen as such. Now, we may have to solve the problem from the constitution, and then, we will be home and dry.”

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