National Assembly committee has flagged budget infractions in steel sector, demanded forensic audit, and raised concerns over misallocated funds.
The Joint National Assembly Committee on Steel Development decried some infractions identified in the 2024 budget appraisal submitted to it by the Ministry of Steel Development.
Co-chairman of the committee, Hon. Zainab Gimba, stated this on Friday, when the Minister of Steel Development, Prince Shuaibu Audu, appeared before the panel to defend his 2025 budget.
Gimba said, “A first-hand appraisal of the 2024 submissions shows some budget infractions as funds allocated for unspecified ‘capacity-building programmes’ and ‘skills training initiatives’ in the steel sector show no evidence of execution or impact.
“These projects risk being classified as ghost projects designed to divert public funds.
“Administrative and recurrent costs significantly increased in 2024 without proportional increases in ministry activities or outputs, a possible indicator of mismanagement or misallocation of funds.
“Also, we identified some legal infractions, such as violations of the Fiscal Responsibility Act.
“The act mandates efficient use of public resources and accountability for project outcomes.
“Several projects, especially related to Ajaokuta Steel, failed to meet these criteria.”
Citing non-adherence to the Public Procurement Act, Gimba said there were instances of non-competitive bidding and inflated contract costs, which suggested violations of procurement guidelines.
She also identified breach of financial regulations and stressed that there were unaccounted funds.
Gimba said, “There are ghost projects, which are direct violations of Nigeria’s Financial Regulations, which require all expenditures to be backed by documentation and outcomes.
“We advise you to make all necessary submissions on these to the committee secretariat.
“On this note, we recommend conducting a forensic audit. There should be engagement of independent auditors to scrutinize expenditures and contracts for 2024.
“We will strengthen oversight in 2025 because, looking at the Ministry of Steel Development’s 2025 Executive Budget, we see a high proportion of personnel costs put at 57.2 per cent.
“This suggests that most of the funding is spent on salaries rather than developmental projects, which raises concerns about operational efficiency.
“Capital expenditure, which is 34.6 per cent, is inadequate for a sector like steel development, which requires heavy infrastructure, technology, and modernisation investments to drive industrial growth.”
Gimba also said, “There is no detailed breakdown to show the strategic focus of these expenditures (e.g. feasibility studies, stakeholder engagement, and modernisation).
“In summary, the Ministry of Steel Development’s 2025 Budget, reflects a commitment to maintaining operations but falls short of delivering the necessary capital investments to transform the steel industry into a viable driver of Nigeria’s industrialisation.
“Significant reforms in funding priorities, operational efficiency, and revenue generation are required to align with the ministry’s strategic objectives.
“l will not fail to express the displeasure of our committee in the way the ministry has continued to ensure a complete breakdown of communication between us within the period under review.”
Gimba added, “It is equally disappointing and unfortunate to recollect how the agencies under the Ministry failed to provide enough information to the committee during their budget defence.
“We will not leave any stone unturned in the discharge of our legislative duties.
“It is a fact that if the legislature does not rigorously examine and debate the law, its powers will be seen as not being effectively exercised and undermine government’s accountability to the electorate for its fiscal strategy and strategic budget allocation.
“We want to state unequivocally that we will never allow such affronts or practices to happen again because we would not hesitate to apply the hammer according to the powers statutorily vested on our committee.”
In his contribution, the chairman of the joint panel, Senator Patrick Ndubueze, said, “Our concern is to take Nigeria where it rightfully should be in steel development
“Nigeria can’t make much progress without a solid steel industry. We have to place emphasis on capital projects, not payment of salaries.
“For us to do well, we can’t be repeating the same mistakes every time. We expected that the ministry would have improved by now.”
Members of the panel raised concerns over the move by the federal government to conduct a fresh technical audit on the Ajaokuta Steel Company when the government had yet to act on three previous audit reports on the plant.
However, Audu said the government was still trying to source over $2 billion to revamp the firm.
He said the federal government had in October last year signed a Memorandum of Understanding (MoU) with Russia for the completion of the plant and the National Iron Ore Mining Company (NIOMCO), both located in Kogi State.
Audu said the tripartite MoU was signed in Moscow with Messrs, Tyazhpromexport (TPE), the Russian firm that originally built the Ajaokuta steel plant, and partners of the consortium, Novostal M and Proforce Manufacturing Limited.
According to Audu, the consortium, in company with Nigerian engineers, will conduct the fresh technical audit, a report of which will be submitted to the Federal Executive Council (FEC) for approval before work on the plant will begin fully.
The minister told the lawmakers, “$2 billion, about N3.7 trillion, is required to revamp Ajaokuta steel.
The ministry does not have the money. Our budget for 2024 was just N24 billion, a far cry from that amount. So, we are sourcing for partners.
“We are in the process of conducting an (technical) audit of the entire firm for submission to FEC for approval.”
His submission elicited questions from lawmakers, who particularly doubted the relevance of a fresh technical audit when the government could simply dust up any of three existing previous audit reports and act on it.
A member of the committee, Senator Natasha Akpoti-Uduaghan, asked,
“You haven’t conducted the technical audit, yet you have already arrived at a cost of $2 billion.
How did you get the figure before completing the audit?
“We have three existing reports on previous audits carried out on Ajaokuta steel. Why can’t we implement the existing reports?
“Why do we always sign new ones?”
Responding, the minister said the existing audits dated back 10 years ago and were done by other companies, not the Russians.
He said, “The reports will have to be bankable; we are involved with new partners, separate from those who worked on the existing reports.
“The previous audits are about 10 years old. But we will build on them to come up with what is tenable with present realities.”
He reassured the members that the government had faith in the Russians to be equipped enough to play a pivotal role in the efforts to complete the plant.
He also promised that the ministry would address all the concerns raised by the panel on the performance of its 2024 budget and the projections for 2025.