Ajaokuta Steel gets gas deal after 50 idle years

Nigeria signed a 20-year gas supply agreement in July 2026 with state-owned NNPC to deliver up to 50 million standard cubic feet of gas daily to the Ajaokuta Steel Company. The deal resolves a key demand investors have made for years, according to managing director Nasir Naeem Abdulsalam.

Ajaokuta has absorbed more than $8 billion in public money over five decades without ever rolling a single coil of steel. Conceived in 1979 with Soviet backing, the complex was designed to produce as much as 5 million tons of steel annually, drawing on Nigeria's iron-ore reserves to reduce dependence on crude-oil exports. Despite being completely constructed in 1994, the plant never came online due to technical, social, political and economic setbacks.

The 2026 federal budget allocated N6.69 billion to Ajaokuta, with N6.04 billion—90.4%—earmarked for personnel costs. The Tinubu administration is pursuing a production-sharing partnership with a Chinese investor in discussions that have reached an advanced stage, with a deal expected before the end of 2026.

The key facts

Why it matters

Nigeria imported between $225 million and $298 million of iron and steel in 2024–2025, draining foreign exchange reserves. A functioning Ajaokuta could cut that import bill and free up forex for other sectors, critical as naira depreciation pressures construction costs nationwide.

For investors watching the industrial and construction value chains, the gas deal removes the single biggest obstacle to revival. If Chinese financing closes and production starts, local steel availability could shift margins for cement (DANGCEM, BUA), infrastructure contractors, and automotive assembly, though the project's half-century track record counsels caution.

What to look out for

Watch for the closure of the Chinese partnership agreement before year-end. Any tangible evidence of blast-furnace commissioning or iron-ore rail shipments from Itakpe would signal this time is different.