Concerns As Idle Ajaokuta Steel Company Gulps ₦29bn Personnel Cost

Economists and financial experts have expressed concerns over the vast sum of money reportedly spent on personnel costs at the non-functional Ajaokuta Steel Company Limited in the last few years.

Reports found on the official domain of the Budget Office of the Federation revealed that a total of ₦29 billion Naira was spent on personnel costs only as collated from the appropriation bill from 2016 to 2023.

The report has raised concern among those knowledgeable about the firm’s running. This is because some of them noted that the idleness of the complex is caused by interference and lackadaisical attitudes.

On his part, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said bureaucracy, political interference, and corruption were vital issues affecting the success of the Ajaokuta plant.

Also, an economist and a senior lecturer of economics at the Pan Atlantic University, Dr Olalekan Aworinde, who established that he is well informed of the firm’s running, described the company as a waste of government resources as it was currently inactive.

He, however, said that the company had the potential to significantly drive down unemployment, improve economic growth and boost the country’s foreign reserves.

An economist and accountant, also a former Chairman of the Manufacturers Association of Nigeria Export Group, Ede Dafinone, called for 100 percent privatization of the plant rather than the proposed concession.

Naija News understands that the experts raised the concern after records showed how much the steel company has gulped despite its idleness under the administration of President Muhammadu Buhari.

The incumbent government allocated over ₦3bn years ago to cover personnel costs at the Ajaokuta Steel Company each year.

Records made available in the public domain showed that between 2016 and 2023, a total of ₦29.35bn was gulped to cover personnel costs for the Ajaokuta Steel Complex.

In 2016, the Federal Government budgeted ₦3.55bn for personnel costs, which was 90.79 percent of ₦3.91bn total expenditure budget of the steel plant. By 2017, personnel cost allocation was ₦3.84bn, which was 89.92 percent of the total allocation of ₦4.27bn.

The sum of ₦3.76bn was allocated to cover personnel costs at Ajaokuta Steel Plant in 2018. This was 89.74 percent of the total expenditure budget of ₦4.19bn.

What The Funds Were Budgeted For

A breakdown of the report revealed that the funds were budgeted for specific projects such as the maintenance of power facilities for ₦106.3m, construction /provision of water facilities for ₦196.5m, lighting and security of the Ajaokuta steel plant at ₦10m, and purchase of a 30-seater bus at ₦413m.

Records have it that in 2019, the personnel allocation was ₦3.26bn, which was 90.53 percent of the total allocation of ₦3.59bn.

It also showed that salaries and wages cost ₦2.5bn, while allowances and social contributions took ₦793.6m. Also, uniforms and other clothing cost ₦2.5m, with refreshments and meals costing ₦1.8m.

Funds were also budgeted for certain projects such as the maintenance of power facilities for ₦87.7m; construction /provision of water facilities for ₦123m; lighting and security of the Ajaokuta steel plant at ₦10m, and purchase of a 30-seater bus at ₦41.3m.

In 2020, the personnel cost was ₦3.53bn, which was 94.64 per cent of the total allocation for the moribund company.

A further breakdown showed that salaries and wages cost ₦43.3m, whereas allowances and social contributions took ₦5.4m.

Also, uniforms and other clothing cost ₦273,684, and refreshments and meals took ₦1.6m. Funds were also budgeted for certain projects such as the maintenance of power facilities for ₦43m, construction/provision of water facilities for ₦94.2m, and lighting and security of the Ajaokuta steel plant at ₦10m.

In 2021, the personnel cost was ₦3.89bn, which was 92.18 per cent of the total expenditure budget of ₦4.22bn.

A further breakdown showed that salaries and wages cost ₦3bn; allowances and social contribution took ₦846.5m; uniforms and other clothing took ₦2.5m; while refreshments and meals cost ₦1.8m.

Fund was budgeted for only one project in 2021: the construction/provision of water facilities for ₦80m.

By 2022, the sum of ₦3.94bn was allocated for personnel costs, which was 88.14 per cent of the total ₦4.47bn expenditure budget for the Ajaokuta company.

A further breakdown showed that salaries and wages cost ₦3.01bn; allowances and social contribution took ₦924.6m; uniforms and other clothing cost ₦2.5m, while refreshments and meals cost ₦1.8m.

Funds were also budgeted for certain projects such as the maintenance of power facilities for ₦53.5m, construction/provision of water facilities for ₦87.7m, and lighting and security of the Ajaokuta steel plant at ₦27.5m.

In the proposed 2023 budget, the Federal Government allocated ₦3.58bn to cover personnel costs, which was 96.5 per cent of the ₦3.71bn expenditure budget for the steel plant. Russia’s Tyazpromoexport built the plant, which was incorporated in 1979.

Despite the regular budget, the steel company is yet to commence full operations in over 42 years, with the government making failed attempts at privatisation and concession, Naija News reports.