Nigeria has cleared one of the long-standing obstacles blocking Ajaokuta Steel Company from full production. NNPC Limited signed a 20-year gas agreement with the complex on July 7, giving it access to as much as 50 million standard cubic feet of gas a day to power the plant’s infrastructure, with three million guaranteed as firm supply and the remaining 47 million available on an interruptible basis.
Gas has mattered to Ajaokuta for years, partly because the complex runs a 110-megawatt captive thermal power plant and partly because steel production itself depends on consistent energy. Investors evaluating the plant have repeatedly asked the same question: how would it secure enough gas to operate. The new agreement finally gives that question a clear answer.
It does not answer the harder questions still hanging over Ajaokuta. How much will rehabilitation actually cost. What condition is the equipment really in after decades of limited use. Who provides the capital. And can the plant eventually produce steel at a price that competes with imports.
The billions already tied up in Ajaokuta
Ajaokuta has moved from one revival promise to the next since construction began in 1979 with Soviet technical support. The plant was meant to anchor Nigeria’s industrial base, supplying steel for construction, manufacturing, railways and engineering. That ambition never fully arrived.
The commonly cited figure that more than $8 billion has already gone into Ajaokuta deserves some caution. It traces largely to an estimate from the Manufacturers Association of Nigeria rather than an audited federal account covering every expenditure at the complex. What is clearer is that Nigeria will likely need to spend billions more before the plant produces steel at scale. Steel Development Minister Shuaibu Audu said in 2024 that reviving Ajaokuta could cost at least $2 billion, and potentially more than $5 billion once supporting infrastructure is included.
That figure reframes the entire debate. The fact that Nigeria has already committed enormous sums to Ajaokuta is not, by itself, a reason to keep spending. The real question is whether fresh investment can turn the complex into a functioning business, rather than simply preserving an expensive asset that mostly sits idle.
The Plant Capacity
Ajaokuta is often described as capable of producing more than five million tonnes of steel a year. Its current first-stage installed capacity sits at about 1.3 million tonnes, with the original design allowing expansion to 2.6 million tonnes and eventually 5.2 million tonnes.
The complex includes a blast furnace, steelmaking facilities, continuous casters, billet and wire rod mills, and light and medium section mills. Parts of the site have operated before. Ajaokuta says rolling activities began in 2004, and its engineering facilities have handled fabrication and component work over the years.
The core problem is not that Ajaokuta has never produced anything. It is that Nigeria has never operated the complex as the fully integrated steel plant it was designed to become, with raw materials moving continuously through iron-making, steelmaking and rolling into sustained commercial output. That distinction matters to any serious investor, because restarting isolated sections of a plant is a very different proposition from making an entire integrated complex commercially viable.
Gas solves one problem, not the whole plant
Reliable gas takes a major operational concern off the table, but it does not solve the plant. Ajaokuta still needs iron ore, coal, limestone, logistics, working capital, skilled labour and equipment capable of functioning after decades without full commercial production.
The Federal Government is running another technical and financial audit of the complex to determine what can be rehabilitated, what needs outright replacement, and what the full exercise will cost. An earlier assessment in 2018 reportedly found much of the plant in relatively good physical condition, aside from expected deterioration and the need to modernise some control systems.
That earlier finding will not be enough to satisfy investors weighing a new commitment today. The commercial question was never simply whether old machinery could be repaired. It is whether repairing and modernising that machinery produces steel at a cost that can compete with imports and newer private plants. Gas answers one due-diligence question. Several others remain open.
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The policy gap behind Ajaokuta’s revival
Ajaokuta has never lacked government promises. Successive administrations have announced concessions, foreign partnerships, rehabilitation programmes and technical reviews, and the plant remains unfinished.
Nigeria wants to produce 10 million tonnes of liquid steel annually by 2030 as part of a broader industrial push. Ajaokuta can contribute to that target, but its initial 1.3-million-tonne capacity would cover only a fraction of it. That means the country needs a steel strategy that extends well beyond a single complex. Private steel producers need room to expand, raw materials need to move efficiently from mines to factories, railways and roads need to function reliably, energy needs consistency, and investors need predictable rules.
Government still has to decide what role it wants to play at Ajaokuta itself. Funding the plant indefinitely from the federal budget keeps exposing taxpayers to further losses. Selling it outright raises political and strategic sensitivities. A long-term concession or operating partnership offers a middle path, but any investor taking that route will demand clarity on ownership, rehabilitation obligations, liabilities, pricing and expected returns. That clarity is the real policy gap. No recent administration has lacked the will to say Ajaokuta should be revived. What has been missing is a commercial structure durable enough to survive political transitions and actually reach sustained production
Why Ajaokuta still matters
The gas agreement moves Ajaokuta closer to production, but it is not the revival itself. Nigeria spends billions of dollars every year importing steel products used in construction, energy, transport and manufacturing, and producing more domestically could ease pressure on foreign exchange while creating opportunities across the industrial supply chain. But strategic importance should not override commercial discipline. Nigeria does not need Ajaokuta running simply so government can say it finished a project conceived nearly five decades ago. It needs a plant that produces reliably, competes on price, attracts real investment and eventually operates without permanent public support. The breakthrough will come when Ajaokuta sells steel at commercial scale, not when it signs another agreement.