Manufacturers seek N50bn bailout as steel industry totters

one million jobs at risk

The Nigerian steel industry is at the brink of collapse as the failure of successive governments to pay adequate attention to its growth, coupled with harsh operating environment and influx of imported steel products granted waivers, are forcing the local steel manufacturers to their knees, stakeholders said on Monday.

Uche Iwuamadi, group executive director, African Industries, the largest steel-manufacturing group in Nigeria, disclosed that within the past one year, four steel firms had shut down and hundreds of workers sent home.

The ones managing to survive currently face imminent collapse, in what could lead to additional loss of over one million direct and indirect jobs, at the time the economy is battling rising unemployment rate put at 8.2 percent by the second quarter of this year, Iwuamadi said.

According to the stakeholders in a paper titled “imminent danger facing private steel industries in Nigeria,” at least, N50 billion lifelines will be required to bail out the industry, they say comes next to agriculture in terms of employment generation.

Sanjay Kumar, chief operating officer (steel), African Industries Group, who spoke during a session with newsmen in Lagos, Monday, said there were over 30 private steel plants producing various steel products in Nigeria with an investment worth over N100 billion since inception, but this huge investment was in danger if there was no immediate intervention.

“Federal Government of Nigeria under the present leadership can reverse the trend for the survival and resuscitation of the steel industry, which is currently facing serious challenges with measures such as creating of a local content policy of using made-in-Nigeria iron rods in all small and big government projects and prevention of dumping of steel products in the country.

“Government needs to create a special power tariff for the steel industry and make available an intervention fund at lower interest costs to prevent the collapse of this private steel industry, where many are operating below 30 percent capacity and overburdened with high interest costs.

“While waivers/concession may not stop completely for certain infrastructural development, the portion of iron rod importation in any waiver should be expunged. Government should consider curtail of the multiple taxation imposed by the federal, state and local government agencies and review the high cost of gas, considering that Nigeria has huge gas reserves. The cost of gas in Nigeria is $7.31/mmbtu as against $4.2/mmbtu in USA,” Kumar said.

Bide Obayi, director of inspectorate and compliance, Standards Organisation of Nigeria (SON), who gave a further insight, said steel products manufactured locally were of standard quality, but that the local firms needed some support in the area of patronage.

He said if Nigeria was to realise its dream of industrialisation, much more needed to be done to encourage local manufacturers of iron and steel.