NIGERIA– The Federal Government has said that the Russian government and Afreximbank will provide up to US$1.46bn to fund the resuscitation of the Ajaokuta Steel Company Limited.

The Minister of Mines and Steel Development, Olamilekan Adegbite, who disclosed this in Lagos said a Memorandum of Understanding would be signed by the Nigerian and Russian governments in January for the project.

The President, Major General Muhammadu Buhari (retd.), and Russian President, Vladimir Putin, agreed in October 2019 at the Russia-Africa Summit to pursue the completion of all abandoned projects initiated by both countries, including the Ajaokuta Steel Rolling Mill.

Adegbite said at an interactive session with journalists that the plant could be resuscitated “without spending the revenue that we don’t have.”

He said, “So, we agreed with the Russian government. Hopefully by the end of this month, the MoU will be signed.

It was agreed between President Muhammadu Buhari and President Putin that we would complete Ajaokuta on a government-to-government basis.”

The minister explained that the funding will come from Afreximbank and the Russian Export Centre.

Jointly, they will fund the resuscitation of Ajaokuta and the payback will come from Ajaokuta itself.

He said, “Afreximbank is bringing $1bn to the table and the Russian Export Centre is bringing $460m. It is a debt, not equity; and it is coming at the rate of five per cent.

“The business case built around Ajaokuta is such that it will pay back by itself. So, we are not going to use taxpayers’ money to pay that debt.”

 Adegbite said, “Once Ajaokuta starts operation, the experts that will come from Russia will run it,” adding that , the terms of their stay will be agreed by both governments.

The minister said the country had so far invested close to US$6bn in the project, adding, “If you talk in terms of today’s costs, it will be a lot more than that, and we need to make this investment work.”

He said the Russian government would complete the project, run it for many years to recoup its investment and then revert it to the Nigerian government.

The minister also revealed that the steel complex may start producing steel after two and half years.

According to him, once fully operational, Ajaokuta will employ 10,000 engineers and will produce the much-needed steel products that the country currently imports and as a result saving Nigeria a lot in foreign exchange.