Nigeria has secured a 20-year gas supply agreement for the Ajaokuta Steel Complex, raising hopes for the revival of the giant, state-owned plant that has sat idle for nearly five decades.
The state oil firm, the Nigerian National Petroleum Company Limited (NNPCL), signed a Memorandum of Understanding (MoU) to supply gas to the complex, which has struggled with inactivity since its construction began in 1979.
The Tinubu Media Support Group (TMSG) hailed the agreement as a “game-changer”, stating that it reflects President Bola Tinubu’s political will to deliver on his 2023 election campaign promise to get the plant running.
In a joint statement, TMSG Chairman Emeka Nwankpa and Secretary Dapo Okubanjo said the deal eliminates a major bottleneck that has historically hindered the plant’s operations.
Powering the complex
Under the newly signed agreement, NNPCL will transport gas to serve as the essential feedstock to power the steelworks.
The deal guarantees:
- Firm Contract Volumes: A daily supply of 3 million standard cubic feet of gas (3MMscf/d).
- Interruptible Contract Volumes: An additional daily capacity of up to 47 million standard cubic feet (47MMscf/d).
Supporters of the project believe that securing a steady energy supply will make the steel complex highly attractive to international partners.
“Now that the problematic gas supply to the plant is out of the way, potential investors would eagerly show more interest in partnering with the government,” the TMSG statement said.
A 46-year-old white elephant?
The Ajaokuta Steel Complex was envisioned as the bedrock of Nigeria’s industrialization when it was founded 46 years ago.
Despite billions of dollars in public investment over the decades, the plant has never produced a single sheet of steel, leading many Nigerians to view it as a massive drain on public funds.
While critics remain sceptical of yet another attempt to revive the facility, the government insists that local steel production is vital for boosting economic growth and creating thousands of jobs for the country’s youth.
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