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$652m Needed to Reactivate, Complete Ajaokuta Steel Plant –Audit

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Ajaokuta Steel
  • $652m Needed to Reactivate, Complete Ajaokuta Steel Plant –Audit

An audit conducted by Nigerian and Ukrainian experts showed that a total of $652m is required to reactivate and complete the Ajaokuta steel plant.

According to the information sourced from the company’s website in Abuja on Monday, the audit was conducted in April 2018 by Nigerian engineers, technicians, and other professionals as well as two Ukrainian experts in steel plant,

According to the audit, the controversial plant, which was started in the 1970s, had reached 95.7 per cent completion.

On its portal, the company said that the audit report was presented to a former Minister of State for Mines and Steel Development, Mr Bawa Bwari, by the Sole Administrator of the company, Mr Sumaila Abdul-Akaba.

It did not state when the report was presented to Bwari. However, Bwari took charge of the ministry (till May 29 when the first tenure of President Buhari ended) following the departure of a former Minister of Mines and Steel Development, Dr Kayode Fayemi, who had gone to contest the governorship election in Ekiti State in 2018.

The company said, “The technical audit report on Ajaokuta Steel Plant, which ascertained that the plant is 95.7 per cent erection ready has been submitted. Reactivation and completion requirement stands at $652m.

“The internal technical audit, which was conducted on the facilities of the steel plant between February and April 2018 was an updated version of the last technical evaluation done in the year 2010 by M/S Reprom Nigeria Limited.”

Abdul-Akaba was quoted as saying, “The 2018, technical audit of the Ajaokuta steel plant was undertaken fully by Ajaokuta Steel Company Limited engineers, technicians and other professionals.

“This is in line with the policy of the present Federal Government on the utilisation of maximum local content possible in the execution of sundry public works in the country.

“The Ajaokuta steel plant had been under the care of professionals over the years, some of who even partook in the construction and erection. It was therefore an opportunity to know hidden details which no outside contractor could get.

“It also afforded the company the opportunity to assemble raw information on the plants and equipment which can form the basis for future assessments and decisions if need be. This advantage was not there in the previous exercises that were wholly carried out by foreign contractors.”

The sole administrator also explained that some specialists assigned by the president of the Nigerian Society of Engineers as well as two experts in steel plant from Ukraine were involved in the audit, which produced a report presented in four parts. Part two of the report was said to be in 10 volumes.

The House of Representatives had in 2018 resisted the proposal of the government to sell Ajaokuta to private-sector investors. They asked the government to complete the plant rather than sell it to investors. The lawmakers also passed a vote of no confidence on Fayemi and Bwari for failing to appear during its probe hearing on the steel plant.

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.

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Economy

Nigeria On Path To Food Sufficiency As Buhari Unveils Mega Rice Pyramids

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Rice

With the unveiling of 13 rice pyramids (one million bags of rice) President Mohammadu Buhari today, the country is no doubt on a path is to self-sufficiency in food production.

Investors King gathered that the president, today, unveiled the FCT Mega Rice Pyramids in Abuja.

The rice pyramid, considered to be the biggest of its type in Africa, is located on the grounds of the Abuja Chamber of Commerce and Industries (ACCI) on Airport Road.

The one million rice paddy which was stacked in 15 separate pyramids at the ACCI is in collaboration of the Central Bank of Nigeria (CBN) with the Rice Farmers Association of Nigeria (RIFAN), planted and harvested from states across the country under the Anchor Borrowers’ Programme (ABP). Farmers were asked to return the bags of rice paddy that made up the pyramids in exchange for cash in order to repay the loans they received under the ABP.

Investors King recalls that the CBN’s ABP which started in November 2015 had the goal of providing aid to farmers and influencing the value chain of various commodities in Nigeria. The CBN, in 2019, revealed that it disbursed the sum of N791 billion to more than 3 million farmers across the 36 states of the Federation, under the ABP as part of its efforts towards diversifying the economy and assisting farmers with the provision of farm inputs and cash to smallholder farmers.

The president, who commissioned the pyramid, disclosed that the ABP is expected to catalyse the agricultural productive base of the nation, which is a major part of the government’s economic plan to uplift the economy, create jobs, reduce reliance on imported food and industrial raw materials, and conserve foreign exchange.

According to the CBN governor, Godwin Emefiele, the CBN, in collaboration with the rice farmers have significantly improved the productivity per hectare of the smallholder farmer from about 2.4 metric tonnes per hectares in 2015 to between about 5 metric tonnes per hectares in 2021.

The RIFAN has over 12.2 million members across the 36 states of the country who are involved in rice farming, milling, storage and management, trading and marketing, export, research and training and allied businesses.

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Economy

Nigeria’s Inflation Rate Rose in December After 8-month Decline– NBS

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Nigerian economy

The National Bureau of Statistics, on Monday announced that Nigeria’s annual inflation rate has risen to 15.63 percent in December 2021. This was higher than the 15.40 percent recorded in November 2021 when the headline inflation moderated for eight consecutive months. The increase is likely due to the usual surge in the prices of goods and services around Christmas time.

The report stated, “This is showing a slowing down in the rate when compared to the corresponding period of 2020.

“Comparing the rate to the year-on-year performance in the previous months shows that the rate has increased.

“Also, comparing the rate of price change between December and November (month-on-month) shows that the headline index rose by 1.82 per cent in December 2021. The November figure was 1.08 per cent. The rise was in part driven by a continued surge in food inflation.”

According to NBS, the composite food index increased by 17.37 per cent in December 2021 down by 2.19 per cent points compared to the 19.56 per cent obtained in December 2020.

“The average annual rate of change of the Food sub-index for the twelve months ending December 2021 over the previous twelve-month average was 20.40 per cent, 0.22 per cent points lower from the average annual rate of change recorded in November 2021 (20.62) per cent,” it said.

It further mentioned that the rise in the food index was as a result of increases in prices of bread and cereals, food products, meat, fish, potatoes, yam and other tubers, soft drinks and fruits.

The statistics showed that on a month-on-month basis, the food sub-index increased by 2.19 per cent in December 2021, up by 1.12 per cent points from 1.07 per cent obtained in November 2021.

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Manufacturing Activities, Macroeconomy Witness Gradual Growth in Q4 2021: MAN

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The Manufacturers Association of Nigeria (MAN) has said that Nigeria’s macroeconomy and manufacturing operating environment were buttressed by the marginal recovery of some key manufacturing indicators allowed a gradual improvement in the fourth quarter (Q4) of 2021.

In its Manufacturers CEOs Confidence Index (MCCI) Q4 report, the President of the association, Mr. Mansur Ahmed clarified that although changes in almost all manufacturing indicators as measured in the report are still not as desired, the fourth quarter performance is better than what was obtained in the 2021 Q3.

The MCCI is an index set up by MAN to measure changes in the quarterly pulsation of manufacturing activities in relation to movement in the macroeconomy and government policies. The Index is considered as MAN’s barometer used to aggregate the views of CEOs of manufacturing companies on changes in the economy.

In the report, Ahmed stated that manufacturers’ resilience, seasonal transactions, and passive policy support sustained manufacturing in the quarter despite the prevalence of familiar and emerging excessive tax-related challenges faced by manufacturers.

The manufacturing sector in Q4 of the year under review, overall recorded a mixed grilled performance occasioned by meagre improvement in the operating environment indices and macroeconomic ambiance evidenced by the high points. This he said, cumulatively triggered the increase in the aggregate MCCI score for the quarter to 55.4 points from 54.0 points recording the preceding quarter.

“Manufacturing performance is still below the mark,” Ahmed explained, saying, “notwithstanding the marginal improvement in the operating environment during the quarter under review, as the sector is still plagued by numerous familiar constraints. Some of these challenges enumerated by manufacturers are clearly presented in this report.”

The president further advised the government to implement mechanisms such as providing incentives to encourage investments in raw materials, pharmaceutical and petrochemical materials, iron and steel, etc. He also beckoned on the government to specifically provide security to lives and investments in industrial areas.

“In order to improve the performance of the sector, the government needs to intentionally put in place a mechanism that will address these challenges permanently by considering and implementing the following recommendation:

“Further incentivize investment in the development of raw materials locally through the Backward Integration and Resource-based industrialization initiates. Government should call for more investors to key into these initiatives with appropriate and definite incentives.

“For instance, there is need for urgent investment and production of Active Pharmaceutical Ingredients (API) in the country; investment and production of machines; iron and steel; petrochemical materials, etc to support manufacturing activities.

“Give specific attention to the security of life and investment in industrial areas; properly delineate and upscale security infrastructure in the various industrial areas in the country, particularly in the northern part of the country for priority attention. Government should also quickly invest in modern security such as drones, cameras, etc. for robust monitoring of the areas,” Ahmed stated.

The MAN president in the MCCI report stressed the need to ensure effective allocation of available foreign exchange to productive sectors, especially to the manufacturing sector for the importation of raw materials and vital machines and equipment that are not available locally.

He also buttressed the need for the government to expressly direct the Central Bank of Nigeria (CBN) to consult with the Ministries of Industry Trade & Investment and effectively engage MAN on measures to improve forex supply to manufacturing concerns.

He said that the Ministry of Science Technology and Innovation should be directed to inaugurate the Secretariat that will implement the strategies for the Executive Order and the Standard Organisation of Nigeria (SON). The Secretariat will designate local manufacturers of LPG (Liquefied Petroleum Gas) Gas Cylinders as priority provider of the 10 million Cooking Gas Cylinders to be procured by the government for 12 States in the federation.

Ahmed added, “Return milk and other dairy products to the National list in the fiscal policy guidelines to maintain consistency with the Backward Integration Programme, which has spurred heavy investments in the dairy production.

“Unify academic curriculum with industrial skill needs and requirements to guarantee the sustainable development of skilled manpower for the industries. Government should as a matter of urgency synchronize the curricular of tertiary institutions, particularly the Polytechnics with the skills requirements of industries. The various government vocational and training centers should also be re-engineered to offer those skills that are needed by the industries.

“Revisit the resuscitation of the existing national refineries to produce fuels locally, embark on the rehabilitation of major highway corridors, improve trade facilitation infrastructure and deepen the ongoing development of rails system to change the narrative on the operating environment from being a high cost to low production cost environment.”

On electricity, Ahmed said there is a need to sustain the eligible customer initiative to ensure that more power is supplied to the manufacturing sector.

The Manufacturing Association of Nigeria in its Index Report, further adviced the government to, “Strengthen the Bank of Industry (BOI) and Bank of Agriculture (BOA) to adequately provide liberal finance for the manufacturing sector;

“Monitor the implementation of Executive Order 003 to ensure compliance by MDAs so as to boost activities in the manufacturing sector, Publish the list of approved harmonized taxes and levies for the manufacturing sector by the Joint Tax Board (JTB) to address the issues of multiples taxes and levies.

“Rationalize Government Ministries, Departments, Agencies, parastatal and Commissions to resolve the issues of over-regulation and duplication; Improve the time taken to clear machines and raw-materials at the national ports while making the link road accessible.”

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