Nigerian MPs Are Said to Seek $1 Billion for Steel Plant

(Bloomberg) -- Nigerian lawmakers who want to block President Muhammadu Buhari’s plans to sell an idle steel plant are moving to approve $1 billion of spending from oil savings to retain state ownership even before audits to determine its value are completed.

Buhari’s administration has commissioned two audits on Ajaokuta Steel Co., one by Pricewaterhousecoopers LLP and another by the plant’s new management, with a view to award a contract to private investors to fund the complex’s completion and run it.

Nigerian MPs Are Said to Seek $1 Billion for Steel Plant

The Senate plans to follow the House of Representatives in swiftly approving the Ajaokuta Steel Company Completion Fund Bill, according to two people with knowledge of the matter. It could be as early as next week, but almost certainly by end of June, said the people, asking not to be identified because they are not authorized to comment on the matter.

The bill, seen by Bloomberg, outlines the plan and shows that the $1 billion would come from the Excess Crude Account, Nigeria’s savings from sale of crude oil above the benchmark price. That would leave about $320 million in an account that held $2.32 billion in December, before government took out $1 billion to help fight Boko Haram Islamist militants in the northeast.

Tapping Reserves

Additional money from appropriations, loans and grants would be paid into the fund, according to the documents. Some lawmakers have also suggested tapping foreign reserves or the nation’s sovereign wealth fund if needed, according to the people.

Presidential spokesman Femi Adesina didn’t answer calls seeking comment, while the phone of another spokesman for Buhari, Garba Shehu, was switched off.

Nigeria started building the Ajaokuta steel complex on the Niger River in 1979 as part of plans to diversify an oil-dependent economy. It’s cost about $8 billion in public investment without delivering an ingot of steel. Buhari, who came to office three years ago, promised to ensure the plant starts production, spurred by a decline in oil prices that contributed to the economy contracting in 2016 for the first time in 25 years.

This week’s resignation of Mines Minister Kayode Fayemi, one of the administration’s biggest supporters of Buhari’s plan to sell Ajaokuta, has encouraged lawmakers to pursue their effort. He publicly criticized them for approving a budget of 2 billion naira ($5.5 million) last year to prepare for the concession and then turning against the idea. The House of Representatives passed a no-confidence motion in Fayemi in March that didn’t require the president to fire him. Fayemi left to contest in a gubernatorial race.

“I am yet to see a nation that ever concessioned the bedrock of its industrialization and succeeded,” House Speaker Yakubu Dogara told Abuja-based PremiumTimes newspaper in a February interview.

Under the lawmakers’ plan, after the fund is created, the government will be required to hire a contractor to complete the plant, according to the people. Some companies including those who originally helped build it have already expressed interest in the job, the people said.

The money raised will be used for “construction, improvement, extension, enlargement and replacement of infrastructure and works,” according to the documents. That will include “provision, acquisition, improvement and replacement of other capital assets like vehicles, vessels, machinery, instruments and equipment required in respect of the completion of Ajaokuta steel.”

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