On July 6, the Nigerian National Petroleum Company Limited (NNPC Ltd) signed a landmark 20-year gas supply agreement with the Ajaokuta Steel Company Limited (ASCL), marking a renewed effort to revive Nigeria’s long-dormant steel industry. The agreement is expected to provide long-term natural gas supply for the steel complex while expanding domestic gas utilisation through the Nigerian Gas Transportation Network Code.

The announcement has been widely welcomed as a significant step towards unlocking the economic potential of Ajaokuta Steel, a project that has remained largely inactive for nearly five decades despite billions of dollars in public investment. While the agreement addresses one of the plant’s long-standing operational constraints, it also raises a broader policy question: can reliable gas supply finally transform Ajaokuta into the industrial catalyst it was originally intended to become, or do deeper structural challenges still stand in the way?

Conceived in the 1970s and built with Soviet technical support, Ajaokuta was designed to become the largest integrated steel plant in sub-Saharan Africa. Planned to reach an annual production capacity of 5.2 million tonnes of steel, it was intended to serve as the backbone of Nigeria’s industrialisation strategy. As historian Maxim Matusevich of Seton Hall University observed, the project’s ultimate ambition was to make Ajaokuta “Nigeria’s main platform towards becoming an economic and industrialised global power.”

Yet, nearly five decades later, Ajaokuta remains Nigeria’s most prominent unfinished industrial project. Despite investments exceeding US$8 billion and an estimated 500,000 potential direct and indirect jobs, the plant has never produced steel commercially. Its blast furnace remains idle, symbolising decades of missed industrial ambitions.

The new gas agreement removes one of the most frequently cited constraints to restarting the steel complex. However, history suggests that reliable gas supply alone will not determine whether Ajaokuta finally succeeds. Several long-standing structural challenges remain unresolved.

Governance and Institutional Reform

It was the late novelist, Chinua Achebe, who once described the Ajaokuta Steel Mill as the ‘’poster child of corruption and white elephant projects in Africa.’’ More than any other factor, corruption has been primarily responsible for the non-completion and take-off of Ajaokuta. As such, the mass of Nigerians believe that when you hear officials of Ajaokuta talking loudly about reviving the Ajaokuta steel company or asking the government for money to do so, it simply means that they just want to steal the money. Ajaokuta’s history is also littered with conflicting concession agreements and allegations of asset stripping.

Similarly, the project has been grossly mismanaged and remains non-operational more than four decades later. The Ajaokuta Steel Mill has not produced a single sheet of steel as of December 2017, even though 40 of the 43 plants at the facility had been completed. Going forward, the Ministry of Steel Development must ensure transparent procurement and operations. A 20-year contract is only as good as the governance around it.

Infrastructure Beyond Gas

Gas is necessary but not sufficient. Ajaokuta also needs water, power, logistics and Iron Ore supply from the National Iron Ore Mining Company (NAICOM). For instance, a steel plant needs 25-30 million litres of water daily for cooling and this is not readily available. NNPC-L will supply gas, but what about grid backup? Further, how do you move 1.3 million tonnes of steel out without adequate logistics? And as if these are not enough, NAICOM mine designed to supply the steel mill with iron ore has been comatose for years and needs to be revived. All these need to be fixed. Presently, with the current level of infrastructure deficiency, sustainable steel production will continue to be a mirage.

Technical Capacity and Operations

For operational efficiency, the Ajaokuta Steel needs engineers, a maintenance culture, and supply chain management. Ajaokuta has failed 3 times because we kept handing it to politicians and briefcase concessionaires. Dangote Refinery for instance operates efficiently because one company, with technical capacity and expertise, is in charge end-to-end. Compare that to the four refineries under NNPC that have gulped billions but produce nothing because of joint management and bureaucracy. In this regard, the Federal Ministry of Steel Development must promptly conclude a concession with a real steel company within six months. Not as a political ally, but as a company that already runs a blast furnace.

Looking Beyond the Gas Agreement

The NNPC–ASCL 20-year gas agreement represents an important milestone in Nigeria’s long-standing ambition to revive its steel industry. By addressing one of the project’s most significant operational constraints, it sends a strong signal of renewed policy commitment to industrial development.

However, the agreement should be viewed as a starting point rather than a complete solution. Transparent governance, credible technical management, supporting infrastructure, reliable raw material supply and a sustainable domestic market will ultimately determine whether Ajaokuta can return to commercial steel production.

Ultimately, the success of this agreement will not be judged by the signing ceremony or the duration of the contract, but by whether Ajaokuta finally delivers what it was originally built to achieve: a competitive steel industry capable of supporting Nigeria’s broader industrial and economic transformation.