Nigeria has settled a $5.3 billion claim made by two Indian companies over the ownership and control of Ajaokuta Steel Company and other steel plants.

Nigeria’s attorney-general and justice minister Abubakar Malami said the settlement ‘rescued’ the country with about 91 percent reduction of the mediation claim from $5.258 billion to $496 million which takes effect on 19 August 2022.

The Indian companies – Global Steel Holdings and Global Infrastructure Steel with headquarters in the United Arab Emirates (UAE) had an agreement with the Nigerian government in 2004 during President Olusegun Obasanjo administration for five major concessions and share purchase of Nigeria’s steel industry.

Nigeria and the companies had a fallout, leading to the revocation of the contracts in 2008 after the former accused the firm of asset stripping.

In 2016, the current government approved the execution of the modified concession agreement with Global Steel, which allowed the companies to retain the Nigerian Iron Ore Mining Company (NIOMCO) in Itakpe, Kogi State, North central Nigeria.

The completion of the steel plants was meant to reduce Nigeria’s dependence on oil and produce as much as five million tons of steel in a year by government projection but yet to produce any steel since it was built by Tyazhpromexport, a Russian company.

President Muhammadu Buhari made the completion of Ajaokuta Steel, for which construction started in 1979, a top priority when he came to power in 2015.

However, the government reneged on the agreements, leading to a legal battle involving both parties at the International Chamber of Commerce, International Court of Arbitration, Paris.

Malami said the termination of the contracts in 2008 was contrary to legal advice supplied by the federal ministry of justice, which highlighted the termination cost in the form of damages.

The attorney-general explained that had the previous government not terminated the Ajaokuta share purchase agreement on April 1, 2008, and waited for 55 days, it would have terminated lawfully and the government would have collected more than $26 million from Global Steel as a settlement.

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Malami added that the failure of the foreign firm to pay would have given Nigeria a right to over $26 million as liquidated damages, under clause 12 of the Ajaokuta share purchase agreement.

He said the Buhari government took decisive steps to ‘resist’ the claim, rather than pass it on to successive governments.