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Interview with Minister Aliyu on Steel, Aluminium & Power (February 12,


Ajaokuta Steel Will Kick-Off Next Year

Daily Trust

February 12,

The Minister of State for Power and Steel, Malam Murtala
Aliyu is the youngest minister in President Obasanjo’s cabinet. Though known for
his unique contributions to the success of Afric projects consortium (APC), and
the overall success of the implementation of the Petroleum (Special) Trust Fund
(PTF) projects, Malam Aliyu is not widely known in Political circles within the
country. In this interview with our Deputy Editor, Jibril Daudu and Business
Editor, Ahmed Shekarau, he speaks about his background, the activities of his
ministry and some parastatals and companies under its supervision. Excerpts:

Quite a large number of people see you as a young
man who emerged from nowhere to become a minister. Could you briefly tell us
about your background, and how you see your appointment to serve as minister in
this government?

Thank you very much. I am not a young man, though I am the
youngest in the cabinet. But by April I’ll be 42 years. At 42, I don’t think I’m
that young, if you consider the history of the past leaders we have had in this
country. Some people led this country in their 30s. A number of people were
ministers and governors in their late 20s or early 30s, so in terms of age, I
don’t think I’m that young.

But the country has matured, and the polity itself, or the
people in power, have matured, so at the age of 41 or 42 one is considered as
being very young. My background is that I read Quantity Surveying at the Ahmadu
Bello University, Zaria and graduated in 1982. About 10 years later, I had an
MBA (Masters in Business Administration) from the same university. I am a fellow
of the Nigeria Institute of Quantity Surveyors. Again, when I became a fellow, I
was 37 year old, and the second youngest fellow.

Having toured the parastatals and companies under
the ministry, how would you describe the situation in those areas especially the
steel and rolling mills?

For the time being, the Russians that built the plant, are
negotiating its completion with government. By their own estimate it will cost
us $470 million to complete the plant. The government is also discussing with
some other interested parties.

A Japanese company called COVESTIN is also discussing with
the government. They want to bring in their own components and add to Ajaokuta.
But they are coming in as investors, and not as contractors.

There is also SOLGAS, which we are discussing with. It
intends to bring in some finance and some Nigerian expertise. But it’s not
bringing in any technology. If we are able to agree with the Russians, SOLGAS is
going to contribute financially. In the year 2002 budget we have a provision of
N7 billion only (for Ajaokuta). This provision as we understand, is going to be
enhanced, because after convincing Mr. President that Ajaokuta is a very viable
venture, he agreed that he was going to enhance the money on Ajaokuta. In fact,
it may double the N7 billion. So, really, with that we expect that by the end of
the year 2002, or at least mid way through 2003, Ajaokuta should be churning out
some products. The rolling mill part of the company is already producing.

What about the situation at the three inland rolling
mills, Jos, Katsina and Osogbo?

Katsina has been producing at an efficient rate of 98 per
cent. Jos had some electrical problems which are getting solved. They are also
producing, but not as efficiently as Katsina. while Osogbo also has some
components that need to be repaired.

I believe that by the middle of this year, its problem
would have been sorted out. As a way of encouraging these local companies,
government has increased the tariff on finished steel to 65 per cent as against
5 per cent if you are bringing in billets for the rolling mills. So, that margin
is adequate in order for anybody producing locally to make some profits. I
believe in spite of the recent lull in the steel market world wide, it is now
picking up. There is some demand from Niger Republic at least for the products
of the Katsina Mill. If our arrangements go on fine, they should be slated for
privatisation. I think this should be better for them.

You just stated that the government has waived part
of the tariff on the importation of billets. But the Delta Steel Company and the
Aluminium Smelter Company of Nigeria (ALSCON) are supposed to be providing
billets to these companies so that we will stop importing it. But what is
happening to the two companies, which were slated for resumption a number of
times, but nobody seems to have happened yet.

No, a lot has happened. In the case of Delta Steel there
is a joint venture between VOESTALPINE and OSAKA Steel. A consortium of the two
firms is supposed to rehabilitate and provide working capital for the company
for a while. What happened in the company is that the government made a
commitment of US $45 million. The VOESTALPINE aspect of the consortium promised
to source a loan of US $ 55 million to repair the plant.

Miga said until our loan rescheduling activity is
completed, it would not guarantee that loan. You will recall in our Federal
Executive Council meeting towards the end of last year, one issue that was
raised was that of rescheduling our debts with Austria, Germany and Switzerland.
Austria is the mother country for VOESTALPINE. So with the rescheduling of that
debt, Austria will be able to come up with that loan.

So Delta Steel actually is on course. In fact by June next
year it will be in full gear.

How about Itakpe Iron Ore?

Itakpe is producing. The only problem is that even if you
produce iron ore, Ajaokuta is not functioning yet to utilise such.

You know one thing with iron ore is that if you produce
too much of it and keep in a place, it will oxidise. The iron ore will acquire
oxygen, and you will see something more that you can store, it will oxidise.

But what is preventing ALSCON from resuming now,
including an earlier promise by Mr. President?

You see one thing about the Aluminium Company, is that,
today, if you start it, the machines will work. But there are certain components
that are also important, and which we are trying to complete. We are right now
talking to BILETIN, a company that is coming into a joint venture.

Is it replacing Reynolds International?

You see aluminium production is a very long process, with
over 500 pots that are connected.

The constraint we have now is that the transmission line
cannot carry more than the current 4,000 MW we are generating. However, there
are some re-enforcement programmes going on now. More transmission lines are
being put in place. Even the mechanism to distribute power to consumers is
currently being enhanced. So really, we have taken Mr. President’s mandate
seriously, and we are working towards that, and I believe that it is achievable,
because it is mostly private sector driven.

There are reports indicating that there are some
serious transmissions problems around the North-East region which mars a
hitch-free power distribution in the area.

You see certain sub-stations have been put around that
region. But that’s not just the solution. You have to put transmission lines at
all sub-stations.

A transmission line will take 18 to 24 months to take off
fully. So, before you see the result of such lines, it has to reach the year
2004, because it involves a process of tendering and so on. So there are
transmission lines already in place. Take the North-East as an example, the line
from Gombe to Jalingo through Yola, had been awarded, and the contractors had
since mobilised to site. These are the things I am saying. There is also another
one in the pipeline, which is the Gombe-Damaturu-Maiduguri line. Until these are
completed, there will still be power stability problems. So in the mean time, we
have to manage with the situation. But there are certain remedial measures taken
to enforce the power situation there. One of the examples is that of the Gombe
power sub-station, where we have two 150 MVA power transformers. One will be
dedicated to Maiduguri and Yola.

If you do that you can enhance the capacity to more than
132. There is also what is called the power transistor that will be installed in
Maiduguri and other places in the country, where the transmission point is
farther away from the supply point. This is to enable it retain the energy and
stabilise it before it is distributed. These remedial measures are to be taken
before the transmission lines are completed.

But have there been improvements in power

You mean generally?


Well, the improvements have not been so much in
distribution. It has been in generation. Within the last two years, there have
been unprecedented improvements in generation. But the distribution capacity is
also being improved. So, anywhere that there is a transformer of a hundred or
200 or 50 kilowatts (KW), it is replaced with a transformer of 300 KW or above.
This is to ensure that there is a lot of capacity in the distribution. So there
are improvements that are going on.

Like I said earlier, we might not see some of the results
of these jobs until 2004 or 2005.

We learn a particular aspect of the power supply
process may not be privatised. Which one is it?

Generation and distribution will be privatised. But
transmission will not be privatised. It will remain with the government. It is
just like the rail lines.

What will happen to NEPA staff after it is
privatised, because there are growing apprehensions over job cuts?

So, every serious NEPA staff will get a job.

Let us look at rural electrification projects. We
learn that about 300 of such projects are lying all over the country

(Cuts in) No, we have over 500 lying around now. When this
administration came in, there were 872 or so rural electrification projects that
were going on, but these were abandoned, stalled and unattended to. Some were
there for over ten years. When we came we reviewed them. Some of them are
redeemable. So we concentrated on that. These were renewed and looked at

Right now, we have about 800 of such projects, which are
almost completed. We still have about 500 that are going to be picked. We are
picking them one by one depending on the net- working. There is still some work
to be done on rural electrification, as it is a responsibility of the federal
government to electrify all parts of the country. Fortunately some state
governments, and even some local governments have been electrifying some
communities. This is a programme that is very dear to the president’s heart,
because it will open-up economic activity in all rural areas of this country.
But again, there are competing demands for funds available to the government.

Sometime last year, the Federal Executive Council
approved the importation of 4,000 transformers for distribution to various parts
of the country, which had complained about shortage of transformers. Why is it
that up to now complaints about transformer problems are still being made?

They have started arriving. Transformers are things that
are packaged and transported from somewhere (usually outside the country) and
also transported to the particular location which requires them. So, you may
find 2,000 out of the 4,000 imported, placed somewhere between Abuja and Suleja,
because everyone will say please put the transformer in front of my house.

So, they are actually arriving. Some have come and are
being transported piece meal to the strategic locations where they are required.
We expected that they would have come in by December last year. But the problems
encountered worldwide after the September 11 incident in the US delayed the
process a little bit.


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