Nigeria may be edging closer to unlocking one of its biggest unrealised economic assets as the Federal Government moves to revive the Ajaokuta Steel Company through a landmark 20-year gas supply arrangement, a development industry insiders say could save the country billions of dollars in foreign exchange, create thousands of skilled jobs and reposition the manufacturing sector.
A senior official in the Federal Ministry of Steel Development, who spoke to BusinessDay over the weekend, on condition of anonymity since he was not authorised to comment publicly, described the latest agreement as “the strongest commercial foundation the Ajaokuta project has had in decades.”
According to the source, previous administrations concentrated on ownership disputes, funding challenges and concession arrangements, while paying insufficient attention to the single most critical factor for steel production—guaranteed and affordable energy.
“Without reliable gas, Ajaokuta cannot operate profitably. This agreement changes that equation. Investors require certainty before committing billions of naira to rehabilitation and operations, and the gas supply agreement provides that certainty,” the official said.
The optimism follows the signing of a Memorandum of Understanding and a 20-year Gas Sale and Aggregation Agreement involving the Nigerian National Petroleum Company Limited (NNPC Ltd), Ajaokuta Steel Company Limited (ASCL), NNPC Exploration and Production Limited (NEPL) and the Gas Aggregation Company of Nigeria (GACN) during the 2026 NOG Energy Week in Abuja.
The agreement guarantees the supply of three million standard cubic feet of firm gas daily and an additional 47 million standard cubic feet of interruptible gas to power the steel complex.
Beyond energy supply, the MoU commits the parties to collaborate on manufacturing steel products for Nigeria’s oil and gas industry, particularly pipes required for strategic projects such as the African Atlantic Gas Pipeline and the Escravos-Lagos Pipeline System Phase III.
Industry experts say the significance of the development extends far beyond the revival of a single factory.
Nigeria remains one of Africa’s largest importers of finished and semi-finished steel products despite possessing abundant deposits of iron ore, limestone and dolomite, alongside one of the world’s largest proven natural gas reserves.
Construction companies, railway contractors, power projects, manufacturers, automobile assemblers and oil and gas operators continue to rely heavily on imported reinforcing bars, structural steel, plates, pipes and specialised engineering products.
The consequence has been sustained pressure on Nigeria’s foreign exchange reserves, rising production costs for manufacturers and increased exposure to fluctuations in global steel prices and exchange rates.
According to the ministry source, bringing Ajaokuta into commercial production would significantly reduce the country’s dependence on imported steel, conserve scarce foreign exchange and strengthen domestic industrial capacity.
“Every tonne of steel produced locally represents foreign exchange retained within the economy. That is why Ajaokuta is not merely a steel project; it is a national economic project,” the official said.
The ripple effects could be substantial.
Steel is widely regarded as the backbone of industrialisation because it serves as the primary raw material for roads, bridges, railways, power plants, refineries, pipelines, defence equipment, machinery, shipbuilding and automobile manufacturing.
Countries such as China, India, Japan and South Korea built globally competitive manufacturing industries on the foundation of strong domestic steel production.
For Nigeria, economists argue, the revival of Ajaokuta could stimulate hundreds of downstream industries, including engineering fabrication, machine tools, industrial equipment, agricultural machinery, household appliances and automotive components.
Employment is another major attraction.
The ministry official said rehabilitation and full operation of the steel complex would generate thousands of direct jobs for engineers, metallurgists, welders, technicians and other skilled workers while creating significantly more indirect employment across mining, rail transportation, fabrication, logistics, maintenance and industrial services.
The revival is also expected to breathe new life into the National Iron Ore Mining Company at Itakpe, which was originally established to supply iron ore to Ajaokuta but has operated below its potential because the steel plant never commenced full commercial production.
Another expected benefit is technology transfer.
The Ministry source disclosed that discussions with prospective technical partners include provisions for training Nigerian engineers in modern steel-making processes, plant maintenance, metallurgical engineering, quality assurance and industrial automation.
“This is not just about producing steel. It is about developing Nigerian technical capacity so that the country can sustain the industry independently in the future,” the official said.
The latest initiative also reflects lessons learnt from nearly five decades of failed attempts to revive the project.
Construction of the Ajaokuta Steel Complex began in 1979 under an agreement with the former Soviet Union after geological surveys confirmed commercial iron ore deposits in Kogi State.
Designed to produce 1.3 million tonnes of liquid steel annually in its first phase, the integrated steel plant was conceived as the foundation for Nigeria’s industrial transformation.
The complex included captive power facilities, rail infrastructure, engineering workshops, water treatment plants and residential estates, making it one of Africa’s most ambitious industrial projects.
However, successive governments struggled with inconsistent policies, inadequate funding, changing priorities, corruption allegations and prolonged legal disputes, including the controversial concession to Global Steel Holdings Limited, which delayed the project’s completion for years.
Although billions of dollars have been invested over the decades, the plant has never reached commercial production.
Technical assessments conducted in recent years indicate that a significant proportion of the installed equipment remains usable, while obsolete sections would require replacement with modern technology during rehabilitation.
Energy analysts note that the latest gas agreement addresses one of the principal commercial weaknesses identified in previous revival efforts.
Bayo Ojulari, Group Chief Executive Officer of NNPC Ltd, said the agreements signed during the NOG Energy Week demonstrate the company’s commitment to advancing the Federal Government’s gas-based industrialisation strategy.
According to him, natural gas remains Nigeria’s most strategic resource for driving industrial development, creating jobs and supporting long-term economic growth beyond crude oil exports.
For President Bola Tinubu’s administration, the success or failure of the Ajaokuta revival will likely become a defining measure of its industrial policy.
The anonymous Ministry official cautioned that sustained political commitment, transparent procurement, disciplined project management and timely rehabilitation would determine whether the latest initiative succeeds where previous efforts failed.
“Many governments promised to revive Ajaokuta. What distinguishes this effort is that the commercial framework is beginning to take shape. If implementation matches the commitments already made, Nigeria could finally realise the industrial vision that has remained dormant for almost half a century”, the anonymous official said.
For Africa’s largest economy, the revival of Ajaokuta represents more than the reopening of an abandoned steel plant. It is a test of whether Nigeria can finally convert its vast mineral and energy resources into industrial competitiveness, reduce dependence on imports and build a manufacturing base capable of driving sustainable economic growth for decades to come.
