Birla-managed firm appointed project coordinators for steel plant in Nigeria

A Birla engineer explains machinery to locals at Nigerian plant: aiding industrialisationIndian business is fast making Nigeria one of its most successful showcases for investment overseas. Last month, the Birla-managed Pan African Consultants was appointed project coordinators for the $5.3 billion (Rs 4,240 crore) Ajaokuta steel plant in Kwara state, Nigeria, adding another feather in the Birla cap.With about 40 projects overseas - in Africa ranging, from such giants as a $300 million (Rs 240 crore) jute mill to more modest investments like a $6 million (Rs 4.8 crore) earth-moving plant, both in Kenya - the Birlas won the steel plant consultancy over stiff competition from US Steel, the British company Atkins, Tractionel-Mecan Arbed, a Belgian consortium, and Acres Davie Mckee of Canada. Unlike its rivals, Pan African had no experience with large steel plants, but it won on the strength of its vast experience in Nigeria, its record of success and its matchless network of contacts. For a six-year-old consultancy company the prestigious contract was a spectacular triumph.The Ajaokuta steel plant is one of the show-pieces of Nigeria's 64 billion (Rs 115,200 crore) fourth national development plan. Technological assistance, design and equipment are the responsibility of Tiazprom Export of the Soviet Union. The civil engineering works have been contracted to three European companies: Julius Berger of Germany, and Fougerolle and Dumez of France. Pan African is responsible for overall plant management, on-site coordination of the over 100 contractors, and for all drawings and translations. It also has the power to scrutinise - and recommend or refuse - all price escalation claims. Its fee, at present-day costs, will be over $70 million (Rs 56 crore), worked out on a tripartite basis taking into account the basic costs of man-days, total project cost and certain agreed reimbursable expenses.Big Job: Pan African was helped to get the contract by its chairman Alhajji Shehu Mallami, who owns 40 per cent of the equity and is a scion of the important Sokoto ruling family of northern Nigeria. The remaining 30 per cent is owned by Alhajji Maisango, another influential northerner. Mallami has direct access to Nigerian President Alhajji Shehu Shagari, and this finally tipped the scales in Pan African's favour.The Ajaokuta project is Pan African's biggest to date. As Mohinder Singh, 54, the Nigeria-based managing director claims proudly: "This is considered to be the biggest steel consultancy job - in fact the biggest consultancy job - won by anyone anywhere in the world." On completion of the first phase in 1986, the plant is targeted to produce 1.3 million tonnes of steel billets by means of Nigeria's first blast furnace steel production process. The plant will eventually have a 5.2 million tonne capacity and be the biggest in Africa.To assist it in the operation, Pan African has turned to the Metallurgical and Engineering Consultants (MECON) who will be joint coordinating partner, MECON is already consultant for the direct reduction steel plant nearing completion with German assistance in Warri, Bendel state. Pan African and MECON will have to recruit 140 engineers, specialists, designers, managers and supervisors, and maintain offices in Calcutta, Lagos, Moscow and Warri - or whichever Nigerian port is used to receive the Russian equipment.In accordance with its policy in other fields, Pan African will be bringing all its personnel from India. Several employees have been taken on from the Indian Government owned Steel Authority of India, and many more private sector engineers, technicians and consultants are likely to be employed on five-year contracts. At the competitive salaries Pan African is offering - from $ 1,000 (Rs 8,000) a month to nearly $4,500 (Rs 36,000) a month in the case of the project director - and with free accommodation, transport and allowances thrown in, the project will have a not inconsiderable impact on the Indian employment market as well.Major Presence: The Ajaokuta contract will top Pan African's already considerable role in Nigeria's oil-fuelled development. Among the industries entirely conceived, set up and managed by the firm are Nigerian Pipes Ltd in Kano, Nigerian Asbestos Ltd in Bauchi, Zaki Bottling Co in Sokoto, Steel Fab Nigeria Ltd in Illorin, Odun Biscuits Ltd in Behin, and Osunda Bottling Co in Imo. The firm has also won the management contract for the 750,000-tonne capacity Calabar cement factory (total investment $234 million (Rs 187.20 crore)), and the Nigerian Industrial Complex Amalgamation Ltd, producing metal doors and windows in Maiduguri. Projects in the pipeline include a major new pharmaceutical company in Kano, two flour mills in Bauchi and Sokoto, and a soap and detergent plant in Kaduna. Apart from Nigeria, the Birlas are engaged in a joint venture with Uganda for a jute mill. In addition there are paper mills in Kenya and negotiations are on for providing consultancy to a paper plant in Zimbabwe. The Birlas have their reasons for going into Africa in such a big way. As H.P. Singhvi, a Birla spokeman told India Today: "The opportunities are good. The laws generally protect the industries, there are tax holidays, facilities for repatriation of dividends (in the case of joint ventures) and ultimately the capital." In joint collaborations profit can also be made through the export of machinery, spares and servicing. "Air-India also makes a fair amount through our ventures," said Singhvi. Yet, the company has deliberately maintained a low profile. Says Singh: "We are a low profile people; anonymity is our principle. Effectiveness is our goal."Although Pan African is the Birlas' star concern in Nigeria, it is not their only operation in the country. Birla Brothers Ltd have a strong presence there: they have come a long way since their first project in Nigeria in 1965 when they set up the Nigerian Engineering Works at Port Harcourt, the largest air-conditioner manufacturers in Nigeria. Today, they are chief consultants for the first central defence workshop being built in Kaduna, and as a result of their success in this venture, Pan African has been asked to tender proposals for 13 more military workshops to be built in the country: total worth $ 156 million (Rs 124.80 crore). Birla Brothers Ltd have also won the management contract for two of Nigeria's biggest paper mills: the Nigerian Paper Mills at Jebba and the National Paper Manufacturing Co at Iwopin; each is worth over $500 million (Rs 400 crore).Birla Brothers are earning a management fee of $2 million (Rs 1.6 crore) a year for the Jebba plant and nearly $5.5 million (Rs 4.4 crore) a year for the Iwopin plant. The Jebba mill, which is currently undergoing an expansion programme, will on completion in 1983 have a total production capacity of 200 tonnes a day, nearly five times its present output. All in all, however, it is not smooth sailing always. One difficulty faced in Africa is that projects take longer to start than, for instance, in south-east Asian countries - mainly because of the constraints inherent in developing economies. Said Singhvi: "Very often we have to organise loans for them, as for instance the $250 million we organised for the two paper mills in Nigeria." All told, however. the Birlas are doing very well for themselves in a continent rich with opportunity.Published By: AtMigration Published On: Nov 13, 2013 10:13 IST--- ENDS ---

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Birla-managed firm appointed project coordinators for steel plant in Nigeria

Indian business is fast making Nigeria one of its most successful showcases for investment overseas.

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