Why We Oppose Privatisation of Steel And Rolling Mill Companies – Workers

No Comments » December 28th, 2006 posted by // Categories: Chemical Industry in Nigeria


Why We Oppose Privatisation of Steel And Rolling Mill Companies – Workers


May 6, 2003


Victor Ahiuma-Young

To start with, what informed your recent response to the
planned privatisation of the public steel sector?

SEWUN and ISSSAN have been receiving conflicting signals
from the Presidency, Ministry of Power and Steel, Managements and Bureau for
Public Enterprise (BPE) on the way forward for the Iron and Steel Sector. While
the Presidency have always assured the nation that the Iron and Steel Sector
will be completed, rehabilitated, commissioned and operated before the end of’
the life of this administrations. The Ministry of Power and Steel with the
approval of Mr. President and the Federal Executive Council as we were told
entered into agreements with counterpart funders in the following ways: a. For
the Inland Rolling Mills in Jos, Oshogbo and Katsina, Nigerian business men are
suppose(l to produce the resources by buying billets for them to roll and
collect a fee pending when Delta Steel will come on stream in and also when
there is enough resources for them to buy their own billets. b. Delta Steel
Company: We’re all aware that the Ministry of’ Power and Steel reached agreement
with VAIS of Australia and Osaka Steel towards rehabilitating and running of
Delta Steel Company which will be in phases. This is still on-going.

C. Ajaokuta Steel Company: We are aware that Ajaokuta
Steel Company and Forrestal of Germany have formed a Joint Company called ASFERO
and the Company is already operational.

Also SOLGAS, Kobe Steel and even the TPF of RUSSIA all
still have existing contracts in Ajaokuta to complete, rehabilitate and operate
the Steel Complex in phases. d. The National Iron Ore Mining project (NIOMP)
Itakpe National Metallurgical Development Centre (NMDC) Jos, National Steel Raw
Materials Exploration Agency (NSRMEA), Kaduna and Metallurgical Training
Institute (MTI), Onitsha, all have one form of on-going contract or the other
and all the Companies and projects are interlinked. A dislocation of one
automatically affects the others.

e. Government has committed a lot to the Rail Line linking
Itakpe through Ajaokuta to Delta. This rail line is a necessary concomitant for
the full operation of Delta Steel, Ajaokuta Steel, NIOMCO, Itakpe and Ipsofact
the public Steel Industry in Nigeria. This project is not yet complete. How then
do you really run Delta Steel and other Steel Companies?

Acute under-funding, lack of completion of the Ajaokuta
Steel Company, Lack of completion of Itakpe, Ajaokuta, Warri rail lines,
unfavorable tariff regime, lack of government patronage of the government- owned
steel companies even when approving or carrying out contracts that require high
usage of Iron and Steel, government undue interference in the day to (lay
running of’ the companies and Lack of protection of the local steel companies.

What are the solutions to these problems?

The state of the industry has continued to generate all
manners of suggestions ranging from, intelligent to unpatriotic ones. Among this
category are the leasing, liquidation, communication and privatization options.
In the 1996 to 1999 Budget, no appropriation was made to any of the steel
companies, which would suggest that government had surrendered to the noisy
arguments of well known enemies of the country’s progress, especially the
International Monetary Funds (IMF), World Bank and their local megaphones who
insist that privatisation is the only solution. Indeed we have no arguments
against private ownership of enterprises of any sector. What is unacceptable and
even criminal is to hand over public enterprises to private owners under the
most dubious pretexts. Those who think they can turn Nigeria into another South
Korea are at liberty to do so. But they should apply for land and construct
their own versions of Delta Steel instead of organising the pawning of
established ones. The privatisation or leasing or liquidation option is neither
new nor does it represent anything different from what the Babaginda
administration had espoused. It is our candid opinion that the Federal
Government has to be told that there is no shirking its responsibilities to
utilise the machinery of the state to facilitate this country’s technological
take-off. The privatisation agenda should therefore, be put aside for now in the
interest of the industry and the country for these reasons. The iron and steel
sector is much too strategic to be left in private hands, local or foreign. It
is crucial to national development in very many ways, including the enhancement
of the country’s defence, industrial self-sufficiency, given the steel sector’s
role as a catalyst armament development. No Country leaves such a national
security priority as well as the pace and direction of its technological
advancement to foreign and incapable private hands. The country does not yet
posses the local entrepreneurial class, which the privatisation agenda requires.
What we have is a class of hit-and-run investors mainly interested in areas of’
quick returns. Besides, the industry requires vast resources, including daily
overheads and personnel bills, which only state proprietorship can conveniently
mobilise for now. Thus, auctioning these mills to such a still under developed
business class would be a recipe for their complete collapse. As is well known,
the immediate response of acquisitors of previous state-run concerns is usually
to shed load, believing that by reducing personnel who are highly specialised
and are mostly trained abroad from the country’s foreign exchange is a positive
step forward.

The joining of the power and the iron and steel sector
into one Ministry has been “choking”. The Steel Sector has always been the
underdog in that Ministry. We are hereby calling on the government to create a
distinct Ministry of Iron and Steel to take care of the Steel, Iron, Aluminium
and Machine Tools sector of the economy.

It is unfortunate that the Nation has no Iron and Steel
Policy despite the importance of this sector to the economy. A conference of all
stakeholders should be held now to fashion out a policy for the Iron and Steel

SEWUN and ISSSAN after a careful study of the Iron and
Steel Sector demand that 8.5% of the National budget be used to develop the Iron
and Steel Sector for the next Ten (10) years after which the sector will be able
to stand on its own. The Act provides for an inter-ministerial council that
would facilitate smooth liaison among all government departments crucial to
steel development, especially the completion of outstanding projects. It is
recommended that the Act be implemented, as this would reduce bureaucratic
hitches that might affect release of allocations and in other areas critical to
the government’s revitalization agenda.

Further, it is recommended that the two unions in the
industry (ISSSAN and SEWUN) be allowed to represent workers who constitute a
major stake-holding constituency.

Some people have argued that your opposition is the fear
of job loss. How far is this correct?

Well, yes to some extent. Tied to this is the need to
ensure security of tenure for Chief Executives and Management Staff as well as
job security for the staff. Specific targets, with short and long term
dimensions, should always be set for Managements. Capacity to meet targets and
evidence of meeting targets should be the dominant means of determining the
tenure of the Managers. Steel production is highly specialised and continually
demanding. lt requires well-trained, motivated and remunerated staff. Although
the sector can boast of well and proficient personnel, there is need for routine
refresher training and enhancement of multi-skilling. Government must always
realise that the real challenge is not making the sector work but in generating
the capacity to build other steel plants using 100% local expertise. The current
staff of the Iron and Steel Sector are well trained both locally and
Internationally and all these trained staff have about ten years left in the
Iron and Steel Sector to meet the retirement age. Efforts should be made to
commence training for fresh graduates and recruits so that the Iron and Steel
dream will not die. Fresh training must commence immediately.

Some people have talked about equity shares for these
organisation. What is your position?

After government has completed, rehabilitated and operated
the sector for some time, whatever government has spent on the sector and the
asset base will now be turned to equity share capital. And it will serve as a
basis towards mobilising resources from the capital market towards further
financing and operation of the Sector. But recently, newspapers were awash with
advertisements placed by the Bureau for Public Enterprise (BPE) for the
privatisation of Ajaokuta Steel Complex, Delta Steel Complex and the three
Inland Rolling Mills.

We frankly became confused because this advert completely
negates what is currently in place in the steel sector and we believe that the
BPE option of privatisation should not be an option to be considered. More so as
there is not enough money in the Nigerian private hands to buy this and also the
fact that the world bank and the IMF (International Monetary Fund) have said
that we should scrap them, it then means no genuine foreigner will put his money

Also we see that this same IMF and world bank wants to
mobilise funds towards buying off these companies and scrapping them ultimately
as a way of making Nigerians to be fully dependent on foreigners for our
economic and technological development.

We must know that a fully operational Iron and Steel
Machine Tools and Aluminum Sector is the cornerstone of any Industrial
development in addition to its ability to generate employment for over 50,000
Nigerians in the upstream and more in the down stream sector.

We therefore urge Government and all well meaning
Nigerians to resist this attempt at further recolonisation of Nigeria through
technology by making sure that the public steel, Machine Tools and Aluminum
sector is well funded and operational.

The solution to the problems of the Sector is that
Government should as a matter of urgency complete, rehabilitate and operate them
for some time and what is spent is turned equity share capital before the issue
of privatisation or private sector participation can be discussed. To advertise
the sector for privatisation now is to play into the hands of our detractors who
will end up buying them as scrap and at very ridiculously cheap rate before
actually scrapping them.

The Trade Unions in this Sector cannot fold its hands for
this to happen. We are all ready to rise to the occasion to prevent the mad man
from entering the market place.

We must mobilise now.

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