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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.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Economy

Nigerians Struggle as Sachet Water Prices Hit Record Highs Amidst Economic Hardship

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As economic challenges persist in Nigeria, citizens face yet another hurdle of soaring prices of sachet water, a vital source of drinking water for many.

Sachet water, colloquially known as ‘pure water,’ served as a convenient and inexpensive option for hydration, with prices starting at N5 in the early 2000s.

However, over the years, the cost has steadily climbed to as high as N50 per sachet.

This exponential increase has forced many Nigerians to seek alternative sources of water, including boreholes and wells, despite concerns about their safety.

Residents across the country, from Lokoja to Abuja, lament the financial strain caused by the inflated prices.

Marvelous Sanni, a resident of Lokoja, recounts how a bag of sachet water, once priced at N200, now sells for N400 to N500.

Families like hers have been compelled to turn to borehole water, raising questions about sanitation and health risks.

The situation is dire for households like that of Margret Danjuma in Abuja, who can no longer afford the daily consumption of sachet water.

Resorting to purchasing water from boreholes, Danjuma reflects the broader struggle faced by many Nigerians in securing clean and affordable drinking water amidst economic turmoil.

Local businesses, too, feel the pinch, with some restaurants discontinuing the provision of water to customers or resorting to unconventional methods like selling water in nylon bags.

The Association of Pure Water Producers attributes the price surge to rising production costs, including the cost of materials and treatment.

Experts and consumer protection agencies express concern over the unjustifiable price hikes, attributing them to greed and cartel-like behavior within the industry.

Calls for government intervention to regulate prices and ensure affordability resonate amid the growing hardship faced by Nigerians nationwide.

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Port Harcourt Refinery Receives Over 450,000 Barrels of Oil – Mele Kyari

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NNPC - Investors King

The Nigerian National Petroleum Corporation Limited (NNPC) has announced a significant milestone in the rehabilitation of the Port Harcourt refinery, with over 450,000 barrels of oil already stocked into the facility.

Mele Kyari, the Group Managing Director of NNPC, disclosed this development during a press briefing after appearing before a Senate Ad-hoc Committee investigating the various Turn Around Maintenance projects of the country’s refineries.

Kyari’s revelation underscores the progress made in the rehabilitation efforts of the Port Harcourt refinery, which has been undergoing mechanical works alongside the Warri and Kaduna refineries.

The influx of crude oil into the Port Harcourt facility signals a crucial step towards its operational revival, following years of underperformance and neglect.

Addressing the Senate committee, Kyari reiterated NNPC’s commitment to fulfilling its promises regarding the refinery rehabilitation projects.

He emphasized the importance of regulatory compliance testing before commencing operations, assuring stakeholders that the Port Harcourt refinery is poised to restart operations within the next two weeks.

The news of the refinery receiving a substantial volume of oil injects optimism into the Nigerian energy sector, highlighting the potential for increased domestic refining capacity and reduced dependence on imported petroleum products.

It also aligns with the government’s broader agenda of revitalizing the country’s oil and gas industry to drive economic growth and self-sufficiency.

As the Port Harcourt refinery gears up for a potential restart, attention now turns to the forthcoming regulatory compliance tests and operational readiness assessments.

The successful revival of the refinery holds the promise of not only bolstering Nigeria’s energy security but also stimulating broader economic development and job creation initiatives.

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CBN Governor Transfers N100bn Worth of Fertilisers to Agriculture Ministry for Food Security Enhancement

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The Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso, handed over N100 billion worth of fertilisers to the Federal Ministry of Agriculture and Food Security.

The ceremonial handover took place at the ministry’s headquarters in Abuja, where the Minister of Agriculture and Food Security, Abubakar Kyari, received the substantial contribution.

During the handing over ceremony, Governor Cardoso emphasized the CBN’s commitment to maintaining price stability, identifying the cost of food as a critical component of inflation.

He noted that addressing food inflation is pivotal due to the significant portion of household expenditure allocated to food and non-alcoholic beverages in Nigeria.

Despite the implementation of various measures by the CBN to curb inflation, the inflationary pressures remain largely driven by escalating food prices.

Cardoso acknowledged the challenges posed by transient inflationary pressures but expressed optimism about substantial alleviation by the third quarter of 2024.

The collaboration between the CBN and the Ministry of Agriculture aims to mitigate the surge in food prices by enhancing food productivity and security.

In alignment with its strategic shift, the CBN veered away from direct quasi-fiscal interventions and transitioned towards leveraging conventional monetary policy tools to execute monetary policies.

As part of this strategy, the CBN announced the allocation of 2.15 million bags of fertiliser valued at over N100 billion to support the Ministry of Agriculture in its efforts to enhance food productivity and security.

Minister Kyari praised the CBN for providing fertilisers, emphasizing their significance as the majority cost value in agricultural production inputs.

He highlighted the challenges faced by the agriculture sector due to various factors, including the COVID-19 pandemic, flooding, climate change, and the naira redesign policy.

However, Kyari expressed optimism about mitigating these challenges and reiterated the importance of fertilisers in agricultural production.

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