…Nigeria’s Ajaokuta steel gamble, is the giant finally ready to wake? Will the $8bn question finally get a gas answer?
…The steel giant that never worked, from national dream to national liability…can the nation break the Ajaokuta curse?
•Has Nigeria finally found a credible route to turning Ajaokuta from a symbol of failed industrial ambition into a functioning steel industry, or is this simply the latest chapter in a 47-year saga of promises? It is important to note that the recent federal government’s a 20-year gas supply arrangement intended to provide an important piece of the infrastructure required to restart the complex, is not quite the same thing as a guarantee that Ajaokuta can now produce steel. NNPC Ltd’s own announcement describes an MoU and a 20-year Gas Sale and Aggregation Agreement involving NNPC E&P, the Gas Aggregation Company of Nigeria and Ajaokuta Steel. The contract provides 3 million standard cubic feet per day (MMscf/d) of firm gas and 47 MMscf/d of interruptible gas, primarily as feedstock for the power plant serving the complex. That is important—but it is an energy-security milestone, not proof that the blast furnaces are about to start producing commercial steel.
For nearly half a century, Ajaokuta Steel Company has occupied an almost mythical place in Nigeria’s national imagination.
It was supposed to be the industrial furnace around which a modern Nigeria would be built: producing the steel for bridges, railways, cars, factories, buildings, pipelines and machinery; creating skilled employment; reducing dependence on imports; and giving Africa’s largest economy the industrial muscle to diversify beyond oil.
Instead, Ajaokuta became something else—a monument to Nigeria’s extraordinary capacity to build, spend, promise and postpone.
Now, after decades of abandoned plans, disputed concessions, arbitration battles and successive governments announcing one revival scheme after another, the federal government has secured a 20-year gas supply arrangement intended to provide an important piece of the infrastructure required to restart the complex.
Signed in July 2026 during NOG Energy Week in Abuja, the agreement between Ajaokuta Steel and entities within Nigeria’s gas industry provides for 3 million standard cubic feet per day of firm gas and a further 47 million standard cubic feet per day of interruptible supply. The gas is intended to provide feedstock for the power plant serving the steel complex and other critical operations. NNPC Ltd says the broader agreement also envisages cooperation on producing steel pipes and other materials needed for major gas infrastructure projects.
For President Bola Ahmed Tinubu’s administration, it is being presented as a significant step towards industrialisation.
For Nigerians who have heard promises about Ajaokuta for most of their lives, however, the appropriate response may be less celebration than cautious optimism.
Because Ajaokuta has been here before. And that history is precisely why the latest breakthrough deserves scrutiny.
The project that was supposed to industrialise Nigeria
The story began in earnest in the 1970s, when Nigeria, flush with oil revenues, embarked on an ambitious programme to establish an integrated steel industry.
The Ajaokuta project was formally launched in 1979 under the Shehu Shagari administration, with the Soviet Union’s Tyazhpromexport involved in its design and construction. The first phase was conceived around an annual steel-making capacity of roughly 1.3 million tonnes, with the ultimate design envisaging several million tonnes of annual production.
The ambition was enormous.
Ajaokuta was not merely intended to be another factory. It was conceived as the foundation of an industrial ecosystem.
Steel would feed engineering. Engineering would support manufacturing. Manufacturing would support construction, transportation, energy and defence. A domestic steel industry would, in theory, reduce the need to import the basic material on which industrial economies depend.
The location was also tied to Nigeria’s mineral resources, particularly the iron ore deposits around Itakpe in neighbouring Kogi State.
But the grand industrial architecture was never completed as intended.
By the early 1980s, substantial portions of the complex had been constructed. Historical accounts put completion of the project at about 84 per cent by 1983. By 1994, claims of approximately 98 per cent completion were being made, with 40 of 43 plants reportedly constructed.
And yet the central miracle never happened.
Ajaokuta never became the fully integrated commercial steel producer Nigeria had spent decades trying to create.
That discrepancy—between repeated claims of near-completion and the absence of commercial-scale steel production—is at the heart of the Ajaokuta mystery.
How much has Nigeria actually spent?
This is where the numbers become as complicated as the politics.
There is no single universally accepted figure for the total cost of Ajaokuta over its entire history, partly because the project’s costs changed repeatedly, different governments made additional investments, and estimates have been reported in different currencies and at different exchange rates.
A 2018 House of Representatives hearing cited about $5.1 billion as having been invested in the project at that point, while the government estimated that another $1.4 billion could be required for completion and associated infrastructure.
Other estimates have been considerably higher. The Manufacturers Association of Nigeria was cited by BusinessDay as estimating that more than $8 billion had been spent on Ajaokuta, while other historical accounts have put cumulative expenditure above $10 billion.
The disagreement itself is revealing.
A project that has consumed public money for generations should, in a functioning accountability system, have a transparent ledger showing exactly what was spent, by which administration, on which contract, to which contractor, and with what measurable result.
Instead, Ajaokuta’s financial history has become a maze of contracts, renegotiations, concessions, audits, settlements and competing claims.
That is one reason the federal government’s current technical and financial audit is so important.
The Ministry of Steel Development says the updated audit is intended to establish a transparent, data-driven basis for decisions on the plant’s future. It also says the previous 2018 technical assessment found the general condition of the plant to be robust, although replaceable components had deteriorated and manual control systems needed automation.
In other words, the government’s own position is more nuanced than the popular image of an entirely rusted-out industrial relic.
The problem is not simply whether the machines exist. The question is whether the whole industrial system required to make steel competitively exists.
The $496 million reminder
Ajaokuta’s history becomes even more complicated when politics and private concessions enter the picture.
In 2004, the government awarded major concessions involving Ajaokuta, the National Iron Ore Mining Company and other assets to Global Steel Holdings.
The arrangement subsequently collapsed.
The Yar’Adua administration revoked the Ajaokuta concession in 2008, citing concerns including alleged asset stripping. Global Steel challenged aspects of the government’s actions, leading to years of legal and arbitration disputes.
In 2022, the federal government announced a settlement of $496 million with Global Steel, describing it as a major reduction from a claim of $5.258 billion. Government officials argued that the settlement avoided potentially much larger liabilities.
But the payment generated another political controversy.
Critics pointed to earlier government statements suggesting that Nigeria had already recovered Ajaokuta and resolved the relevant disputes, asking why the country subsequently found itself agreeing to a payment approaching half a billion dollars.
The controversy was sufficiently serious that the transaction later featured among the dealings reportedly attracting scrutiny around former Attorney-General Abubakar Malami.
The episode is important because it illustrates something larger than one disputed payment.
Ajaokuta has repeatedly demonstrated how institutional discontinuity can turn industrial policy into financial liability.
One government signs a concession. Another cancels it. A third renegotiates it. A fourth announces that everything has been resolved. Then another dispute emerges. The plant remains idle. The taxpayer keeps paying.
Is corruption the explanation?
It is tempting to reduce the Ajaokuta story to corruption.
There is certainly a substantial body of allegations surrounding the project.
Investigations and media reports over the years have alleged inflated contracts, political interference, poor procurement practices, concession controversies and financial mismanagement. In 2024, groups also called for investigations into alleged recruitment and salary irregularities within the company. Those allegations should not be treated as established facts without the findings of competent investigative or judicial authorities.
But corruption alone is not a sufficient explanation.
Ajaokuta’s failure also reflects poor industrial planning, changing governments, inadequate infrastructure, technology obsolescence, unreliable energy supply, unresolved raw-material logistics, financing problems and the absence of a consistent national steel policy.
A particularly important complication is that 98 per cent completion is not the same thing as commercial readiness.
A factory can have 98 per cent of its physical structures completed and still be commercially incapable of producing steel if the remaining two per cent includes critical systems.
The same applies to railways, power, gas, raw materials, maintenance, process controls, environmental compliance, working capital and management.
Ajaokuta’s history demonstrates this distinction painfully well.
The importers’ conspiracy: fact or convenient suspicion?
There is another theory that has survived for decades: that some politically connected interests benefit from keeping Nigeria dependent on imported steel—and therefore have little incentive to see Ajaokuta succeed.
The argument is intuitively attractive.
If Nigeria imports steel worth hundreds of millions or billions of dollars, somebody somewhere benefits from the import business.
Nigeria’s dependence is real. World Bank World Integrated Trade Solution data show that the country imported about $225.7 million of iron and steel under HS Chapter 72 in 2024, with China accounting for about $156.4 million and India about $28.3 million. This category, however, does not capture every steel-containing manufactured product or all steel-related imports, so it should not be confused with the much larger figures sometimes quoted in political commentary.
Older Nigerian estimates have been dramatically higher. In 2016, for example, Ajaokuta officials told a Senate committee that Nigeria had imported about N23 trillion worth of steel products over the preceding nine years—an average of roughly N2.5 trillion annually at the exchange rates and prices of that period.
Those numbers illustrate the opportunity cost of industrial dependence, but they do not, by themselves, prove that steel importers deliberately sabotaged Ajaokuta.
That distinction matters.
There is currently no credible public evidence establishing a coordinated conspiracy of importers, politicians and officials whose central purpose has been to prevent Ajaokuta from producing steel.
It is reasonable to investigate whether vested interests have influenced policy.
It is not reasonable journalism to convert suspicion into fact.
The same caution should apply to the parallel argument that powerful generator importers deliberately sabotage Nigeria’s electricity supply to protect their businesses.
Nigeria’s power crisis has many documented structural causes. The existence of businesses that profit from an unreliable system does not automatically establish that those businesses caused the system’s unreliability.
Ajaokuta deserves the same evidentiary discipline.
What the gas agreement actually changes
This is where the 2026 agreement becomes genuinely significant.
Steel-making is intensely energy-dependent. Without dependable energy, a steel plant is little more than an enormous collection of expensive equipment.
The new agreement provides a long-term contractual framework for gas supply, including firm and interruptible volumes. NNPC says the gas will provide feedstock for the power plant serving the complex.
That matters because investors are unlikely to commit billions to rehabilitating an industrial complex if they cannot reasonably predict whether it will have the energy required to operate.
The agreement therefore addresses one of the problems that has historically made Ajaokuta difficult to finance. But it does not remove every obstacle.
That distinction should be central to any serious assessment of the announcement.
Gas is an input. It is not steel.
The plant still needs a commercially credible operating model, modernisation where required, reliable power-generation infrastructure, raw materials, skilled personnel, maintenance systems, transportation, financing and an assured market.
And there is the question of iron ore.
A recent examination of the project noted concerns about the relationship between the capacity of the Itakpe mine and the ore requirements of Ajaokuta’s first phase, as well as questions about ore quality and beneficiation.
That is precisely why declaring the “last obstacle” removed would be premature.
The infrastructure around Ajaokuta matters almost as much as the plant itself
One of the enduring mistakes in the Ajaokuta debate has been to talk about the steel complex as if it were an isolated factory.
It isn’t. it is an industrial ecosystem. Iron ore must reach the plant. Finished steel must leave it. Energy must arrive reliably. Water, roads, rail, ports and logistics must function.
The history of the Itakpe-Ajaokuta-Warri corridor illustrates the problem.
The railway was conceived partly to connect the iron ore mine, the steel plant and the coast. Passenger services on the Warri-Itakpe corridor have themselves suffered technical and operational interruptions in recent years, demonstrating how much more work remains before the broader logistics chain can be considered beyond question.
The revival of Ajaokuta therefore cannot sensibly be measured only by whether the blast furnace is lit.
The real test will be whether an integrated industrial supply chain can operate profitably and reliably.
What Nigeria could gain
If Ajaokuta eventually achieves sustained commercial production, the economic implications could extend far beyond Kogi State.
Steel is a foundational industrial commodity.
A competitive domestic steel industry could supply construction, engineering, transport equipment, manufacturing, energy infrastructure and potentially defence industries.
The government has already linked Ajaokuta to plans for producing materials for oil and gas pipelines, including infrastructure associated with the African-Atlantic Gas Pipeline and the Escravos-Lagos Pipeline System.
The Ministry of Steel Development has also projected hundreds of thousands of direct and indirect jobs from a wider expansion of Nigeria’s steel industry, although such projections should be treated as targets rather than guaranteed outcomes.
There is another potential dividend: technology.
A functioning steel industry creates demand for metallurgists, engineers, welders, fabricators, technicians, machinists, automation specialists, transport operators and industrial managers.
That human-capital effect may ultimately be more valuable than the steel itself.
South Korea’s industrial rise, for example, demonstrates how steel can become a platform for downstream manufacturing rather than merely a commodity industry.
Nigeria has long aspired to replicate that logic.
Ajaokuta was supposed to be the starting point.
But Nigeria must resist the temptation to romanticise the plant
There is an uncomfortable question that must now be confronted.
Should Nigeria revive Ajaokuta because it has already spent so much money on it?
The answer should be no. That would be the classic sunk-cost fallacy.
The correct question is: What is the most economically rational way to maximise the value of the assets Nigeria owns today?
If an independent technical and financial audit concludes that rehabilitation is commercially viable, then government should pursue it aggressively.
If the conclusion is that the complex must be modernised, restructured, unbundled, privately operated or partially concessioned, government should be willing to do that too.
The objective should not be to preserve Ajaokuta as a monument. It should be to make it productive. That distinction is crucial.
Indeed, Nigeria’s own recent policy trajectory appears to recognise the need for private capital and technical expertise. The federal government signed a 2024 MoU with the original Russian builders and their partners concerning rehabilitation, completion and operation of Ajaokuta and NIOMCO. It has also discussed Chinese participation and other strategic partnerships.
The challenge is ensuring that whatever arrangement emerges is transparent, competitive and commercially defensible.
Nigeria has already learned the hard way what poorly structured concessions can cost. The real test begins after the signing ceremony
The symbolism of the gas agreement is powerful.
But the real story will not be written in an Abuja conference room. It will be written at Ajaokuta. It will be written when machinery begins turning. When ore arrives. When molten iron flows. When steel billets become rods, beams, sheets and pipes. When Nigerian manufacturers begin buying domestically produced steel at competitive prices. When young Nigerians are hired not to guard an idle industrial complex but to operate it. When Nigeria can point to production figures rather than percentages of “completion.” And when government budgets stop treating Ajaokuta primarily as an inherited obligation and begin treating it as a productive national asset.
That is the standard by which the Tinubu administration should ultimately be judged. Not by the signing of a 20-year gas agreement. Not by another claim that the plant is 90 or 98 per cent complete. Not by another promise that production will begin “soon.” But by tonnes of commercially produced steel, operating revenues, jobs created, downstream industries established, imports displaced where economically sensible, and returns generated on decades of public investment.
A giant can wake up—but waking is not the same as running
There is reason for cautious hope.
The gas agreement is more substantive than another political declaration. It creates a long-term contractual framework for an energy input that an integrated steel complex cannot do without. NNPC’s own description makes clear that the agreement is part of a broader strategy to expand domestic gas utilisation and industrial activity.
But history counsels against declaring victory prematurely.
Ajaokuta has survived military governments, civilian governments, privatisation drives, failed concessions, arbitration, technical audits, political promises and billions of dollars in expenditure.
It has even survived the repeated announcement of its imminent revival. The most important thing Nigeria can do now is therefore to replace rhetoric with measurable milestones.
Publish the technical audit. Publish the financing plan. Publish the rehabilitation timetable. Publish the concession or operating structure. Publish the gas terms where commercially appropriate. Publish the projected cost per tonne. Publish the source and quality of iron ore. Publish the infrastructure plan. Publish the performance benchmarks. And, above all, publish the production figures when the furnace finally begins to work.
If those things happen, the July 2026 gas agreement could eventually be remembered as the moment Ajaokuta’s long paralysis genuinely began to end. If they do not, history will have another announcement to add to a very long list.
For 47 years, Nigeria has had an industrial dream made of steel. The country now needs to prove that it can make the dream produce steel.
