Stakeholders seek N50billion intervention fund for steel sector

In from Ali Smart …

Worried over the dwindling fortunes of the nation’s steel sector, stakeholders have impressed on the government, the need for an intervention fund to turn around the ailing industry.

Speaking on behalf of the stakeholders at a public forum in Lagos on Monday, Mr. Uche Iwuamadi, Group Executive Director/Legal Adviser, African Industries Group said the need for intervention fund in the sector has become imperative in view of the legion of challenges operators are grappling with.

Iwuamadi who painted a very disturbing picture of the industry, said there have been a high turnover of companies in the sector in recent times as many of the operators have had to close shop due to the stifling operating environment.

Specifically, he said: “There used to be over 30 private steel plants producing various steel products in Nigeria with an investment that is well over N100billion since inception but the investment is in danger if nothing meaningful happens soon. As we speak about four of these companies have gone out of business.”

About four steel plants have completely shut down and more will follow soon because many are currently operating below 30% of production capacity, he emphasised.

“Most of these steel plants are now operating two weeks a month and are closed for the remaining two weeks of the month due to lack of demand. Cost of restarting each time is very high and adds to the cost burden of the ailing steel companies. Steel consumption is largely driven by government initiative on infrastructure projects.

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“The major area of rescue of the Steel Sector from collapse is for the federal government to make a definite policy of patronising made in Nigeria steel products (iron rods) for all government projects and give specific directive to all their contractors to buy made in Nigeria iron 30% of production capacity. There is complete neglect of the involvement of the players in the steel sector in the formulation of the Nigeria industrial policy.

“All over the world, due to importance of steel in the development of the economy, the views and opinions of the key players from steel industry are usually sought and obtained by the government in the formulation of economic policies as being done for the oil or financial sectors. Unfortunately in Nigeria, the steel sector has been left out all these years,” he stated.

He is however optimistic that the federal government under the present leadership can reverse the trend for the survival and resuscitation of the steel industry with measures such as creating of a local content policy of using made in Nigeria iron rods in all small and big government projects as well as prevention of dumping of steel products in the country.

The federal government, he said, “should also create a special power tariff for the steel industry and make available an intervention fund of N50billion at single digit rate to prevent the immediate collapse of this private steel industry where many are operating below 30 percent capacity and overburdened with high interest costs.

Iwuamadi who disclosed that the African Industries Group alone has invested well over N20billion in Nigeria, reiterated the need for government urgent support to ensure the survival of the steel industry, which is the highest employer of labour after agriculture.

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