The Nigerian government says it has agreed to pay $496 million to settle a multibillion-dollar claim by Global Steel Holdings Limited over the control of Ajaokuta Steel Company.
Attorney-General Abubakar Malami said the federal government will pay the company $496 million instead of the $5.258 billion demanded by the firm, to settle the dispute. The deal was reached under the alternative dispute resolution framework of the International Chamber of Commerce, said a statement by Mr. Malami’s spokesperson, Umar Gwandu.
The dispute followed the federal government’s revocation in 2008 of an agreement that handed control of the steelworks and the National Iron Ore Mining Company to Global Steel Holdings Limited, an Indian firm. In canceling the deal, the Umar Yarádua administration said the terms of the concession at the time were not favorable to the country.
The steel company, located in Kogi State, was conceived to serve as the pillar of Nigeria’s industrialization. It was built by the Soviets between 1979 and the mid-1990s but has never produced steel as the project was never completed. It was also mismanaged.
The government said the seeds of the disputes can be traced to five contracts entered between 1999 and 2007 that gave complete control over the Nigerian steel space to one company group, Global Steel group.
In May 2020, Global Steel threatened a resumption of the arbitration and announced an anticipated claim in damages of over $10-14 billion against Nigeria.
The government said it agreed to pay over $400 million to settle the case once and for all after engaging PwCNigeria to do a comprehensive review to ensure taxpayers are protected.
With this development, the statement said President Muhammadu Buhari has now “rescued the steel industry from interminable and complex disputes as well as saving the taxpayer from humongous damages.”
