Why Ajaokuta Steel must go private

WHEN Ajaokuta Steel Company was envisioned as “the bedrock of Nigeria’s industrialisation,” hopes were high that it would catalyse its leap into the comity of developed nations. Conceived in the 1970s along with steel rolling mills in Jos, Aladja, Osogbo and Katsina, this was meant to galvanise Nigeria’s quest for an industrialised economy. Ajaokuta was also projected to supply steel to Nigeria and West Africa.

Instead, the steel complex and its host community today risk being disconnected from the national electricity grid over unpaid bills.

The Nigerian Electricity Regulatory Commission, in its just-released 2025 Annual Report, said the steel company and the host community failed to make any payment towards energy invoices and service charges issued by the Nigerian Bulk Electricity Trading Plc and the Market Operator during the year.

The company received an energy invoice of N4.96 billion from NBET in 2025 but allegedly made no payment. It also reportedly failed to pay the N500 million service charge invoice issued by the Market Operator, bringing the total outstanding obligation to N5.46 billion.

NERC said the continued non-payment had become a matter of concern, prompting it to escalate the issue to relevant Federal Government ministries for intervention.

It warned that failure by Ajaokuta to settle its electricity obligations would put the complex at risk of being disconnected by its service providers.

Nearly five decades after the initiation, with about $8 billion spent, the Ajaokuta dream is far from actualised. This includes a $495 million arbitration payout in 2022 to settle a dispute with an Indian concessionaire. The same affects the Nigerian Iron Ore Mining Company.

It is befuddling that this latest challenge coincides with reported moves by the Federal Government to revive it.

The 24,000-hectare complex has been mired in legal disputes, policy somersaults by succeeding administrations, raw material shortages, obsolete technology and bureaucratic bottlenecks.

The ASC was conceived as an integrated metallurgical complex capable of producing up to 5.2 million tonnes of liquid and finished steel products annually.

Instead, Nigeria spends an estimated $4 billion (about N5.6 trillion) annually on iron and steel imports, says the Minister of Steel Development, Shuaibu Audu.

Its planned output included heavy plates, flat sheets, wire rods, bars, structural shapes and industrial chemical by-products.

The complex continues to drain the Nigerian economy as it remains at “98 per cent completion.”

Cheap steel imports and recycled rebars flood the country, which could make it difficult for Ajaokuta to scale and attract returns on the $8 billion spent.

Yet, it could be a game changer for the Nigerian economy like the Dangote Refinery, Indorama Fertiliser and Petrochemicals and Olam.

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An economist and public policy expert, Dan Kunle, in an open letter to President Bola Tinubu in July 2026, had called for a final and decisive decision on the future of the Ajaokuta Steel and NIOMCO.

His regret that Ajaokuta had failed to supply steel for railways, power infrastructure, construction, defence equipment and manufacturing is valid. The failed target to provide commercial steel, as well as the underutilisation of its associated facilities, is indefensible.

A vital consideration might be the unbundling of the complex and sale to private investors with a track record of managing steel plants. The model behind the successful development of the Nigerian Liquefied Natural Gas is a workable example to consider. The complex can be split into separate, commercially independent business units.

Experts advise that the non-steel facilities should be separated from the industrial plant, and parts of the area transitioned into a modern industrial free trade zone. They also proposed consistent, cost-effective gas supplies from the Ajaokuta-Kaduna-Kano pipeline and blended power solutions before production can resume.

Additionally, there is the urgent need to upgrade the Itakpe-Ajaokuta-Warri rail line, as well as connecting roads and ports.

The drain on the economy extends to the payment of salaries and pensions for doing nothing. In the 2025 Budget, N6.21 billion was earmarked for salaries.

Ajaokuta has been buffeted by abrupt concessions, revocations, lawsuits, and opaque deals.

Proponents of revival argue that though there are formidable obstacles, they are not insurmountable.

They point to the technical audit now underway and to potential Chinese financing as signs of seriousness.

They cite success stories where privatisation and fresh capital turned around moribund assets: Brazil’s Companhia Siderúrgica Nacional became Latin America’s largest steel exporter after leaving state hands; South Korea’s POSCO, once state-owned, now ranks among the world’s top producers.

Egypt produces about 10.6 million tonnes of steel annually, South Africa around 4.9 million, while Japan, despite importing iron ore, produces nearly 90 million tonnes.

Nigeria, with over three billion tonnes of iron ore, manages only about 2.2 million tonnes a year, mainly from scrap and imported billets.

Ajaokuta’s theoretical capacity of 1.9 million tonnes, expandable to five million, could change that equation, but only if it operates competitively.

Otherwise, it will remain a sentimental, crumbling relic overshadowed by imports that meet builders’ needs more cheaply and reliably.

If it is no longer workable, the best option is to sell it off for another project. Nigeria must bite the bullet and avoid unproductive advice from foreign interests. It can no longer afford to keep dumping scarce resources into a sinkhole.