peep into history affirms the key role of oil in sustaining Nigeria’s economy, but a new focus on gas is set to revolutionise the sector and prove that Nigeria’s resource is not to be underestimated, writes CHIKA IZUORA.
The Ajaokuta-Kaduna-Kano (AKK) pipeline a 614km- long natural gas pipeline currently being developed by the Nigerian National Petroleum Corporation (NNPC), is a continuation of infrastructure build for the domestic gas market. The pipeline is conceived to originate from Ajaokuta and pass through Abuja and Kaduna before ending at a terminal gas station in Kano.
The AKK pipeline is envisaged as the first part of the Trans Nigeria Gas Pipeline Project (TNGP) development. The AKK pipeline is part of the gas masterplan and is going to move 1.5 billion standard cubic feet of gas, (SCF) a day and provide resources for power generation and other energy requirements.
According to the director-general of the Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf who shared his opinion of the project with SUNDAY LEADERSHIP, this single project can transform the whole of Nigeria in terms of industrial capacity.
Energizing Local Industries
Yusuf, said that energy is a major setback for Nigerian industries, and gas provides cheap and reliable source of energy for the sector, adding that the project is one of the best policy implementation of the present administration because it will help spread industries across the regions in the north, sustain their operations for economic transformation.
The TNGP, which is expected to be 1,300km in total length, forms a piece of the Trans Sahara Gas Pipeline (TSGP) system, which is envisaged to pump Nigerian gas through Algeria or Morocco to Europe.
According to Yusuf, the project would not only energize local industries but will generate enormous revenue for Nigeria when excess gas that is being flared is supplied to neighbouring countries.
The pipeline project is being implemented via a build and transfer public-private partnership model, which harnesses the strength of both the private and public sectors. Not only will this increase gas availability, but the AKK natural gas pipeline will also reduce gas are and environmental impact, said the DG.
Yusuf further observed that government plans to ensure that gas significantly contributes to the power sector, and the AKK natural gas pipeline is aligned with that agenda. The pipeline is intended to boost Nigeria’s electricity generation capacity, as well as strengthen the industrial sector within the country’s eastern and northern regions.
The project is also expected to promote and increase the local usage of domestic gas, which will enable power- starved communities across the country to have greater access to electricity while providing stranded commercial and industrial customers with a cleaner and more efficient source of energy, he noted.
Addressing Local Domestic Gas Needs
The group managing director of the Nigerian National Petroleum Corporation, NNPC, Mele Kyari, said, gas is a transition fuel for the whole world and for Nigeria, the quickest way to prosperity in industrial growth is through investment with gas.
That is why the NNPC is focusing on the development of gas in the domestic market and this cannot be achieved except there is infrastructure in place and the new infrastructure is just going to take off the AKK line. “By the time we are done with these expansions, you will see that the net gas into the domestic market will be in the excess of eight billion scf per day. That will be very significant a turning point for this country.”
The government is doing this through a number of frameworks, which include financing that is considered a critical aspect of the project. To ensure the project did not experience set back government is getting external financing for some of the infrastructural projects said Kyari.
“This is going to bring a robust supply of gas into the domestic market within two to three years. That will scale up to having access to the international markets through the LNG projects and others that will happen. That will give us the cash we need to build the domestic market, allowing the country to prosper.” he explained.
PMB’s Gas Agenda
The eventual flag off of the project last Tuesday by President Muhammadu Buhari, was a major milestone in the country’s quest in dealing with dearth of gas infrastructure across the country. Buhari has said that delivery of the 614km AKK Gas Pipeline project is part of his administration’s Next Level Agenda for sustainable development and economic prosperity of Nigeria.
The President, at the flag off construction works on the AKK project via virtual link from the State House in Abuja to two locations in Ajaokuta in Kogi State and Rigachukun, Kaduna State, said when completed the project would provide gas for generation of power and feedstock for gas-based industries, and also facilitate the revival of moribund industries and the development of new ones along transit towns in Kogi State, Abuja (FCT), Niger State, Kaduna State and Kano State.
He noted that harnessing and commercialising the nation’s vast gas reserves was an enabler for rapid economic development and diversification of the economy, saying that this remained as a cardinal objective of his administration’s drive towards ensuring a stable, sustainable and more prosperous future for the citizenry.
“Today marks an important chapter in the history of our great nation. It marks the day when our domestic natural gas pipeline networks from Obiafu in Rivers State, Escravos in Delta State and Lekki in Lagos State, are being connected through Kaduna to Kano states thereby further enhancing national energy security”, he said.
“We promised the nation that we will expand the key critical gas infrastructure in the Country to promote the use of gas in the domestic market. These include the Escravos to Lagos Pipeline System – 2 (ELPS-2), Obiafu – Obrikom – Oben (OB3) pipeline and the AKK. I therefore directed NNPC to ensure that these critical projects are completed on time, within budget and specification,” he said.
President Buhari underscored the drive of his Administration for export substitution initiatives and projects that will promote local manufacturing. He thanked the Government of the Peoples Republic China, the Bank of China and SINOSURE, the two Engineering Procurement Construction (EPC) Contractors – Brentex/China Petroleum Pipeline Bureau-CPP Consortium and Oilserve/China First Highway Engineering Company-CFHEC Consortium – for their support and commitment to deliver the project.
$2.5bn Gas Project
The EPC contract for the 614km AKK gas pipeline project was awarded at a total contract sum of US$2.592 billion to Messrs. The job focus include Oilserv Plc/China First Highway Engineering Company (Oilserv/CFHEC Consortium) handling the first segment covering 303km and Messrs and Brentex Petroleum Services/China Petroleum Pipeline Bureau (Brentex/CPP Consortium) for the second segment covering 311km under a debt-equity financing model with loan from Bank of China and SINOSURE, to be repaid through the pipeline transmission tariff and supported by a sovereign guarantee.
The NNPC GMD informed that all the required conditions precedent for closing the debt financing have been provided and the process of obtaining internal approvals by the Lenders is in progress to enable financing close by August 2020. He disclosed that as part of the agreement, NNPC is utilising the equity contribution to commence execution of the project to recover lost time and put the project back on track.
Kyari expressed confidence in the ability of the EPC contractors to deliver the project on time, within budget and to specifications, noting that upon completion, the project would enable the injection of 2.2 billion standard cubic feet of gas into the domestic market and facilitate additional power generation capacity of 3,600MW.
In his remarks, Governor of Kogi State, Alhaji Yahaya Bello, who expressed gratitude to God for witnessing the flag-off of the construction phase of the AKK project, said his administration has sponsored many youths in the state to acquire skills in welding and urged the contractors to gainfully engage them.
On his part, Governor of Kaduna State, Mallam Nasir el-Rufai, thanked the NNPC, Ministry of Petroleum Resources, and other stakeholders for ensuring the flag-off of the project, stressing that there was high hope because of the enormous benefits the project would bring to the state.
Creating Jobs for Host Communities
The group chairman of Oilserv Limited, Dr. Emeka Okwuosa, an indigenous oil servicing firm involved in the AKK Gas pipeline project, said his firm would engage about 1,000 locals in communities where the pipeline would pass.
He said the gas pipeline in Ajaokuta, Kogi State, was conceived in 2008-2009 to provide the highly desired stimulus to domestic industrial growth. According to him, the project could not take off since conception until Buhari through his commitment to ensure accelerated economic development of the country took the bull by the horn.
The project will be delivered by a consortium of indigenous and international engineering firms including Oilserv Limited. Okwuosa said the company was honoured to part of the historic AKK project and he welcomed Nigerians to witness the event. The project will also promote the Nigerian Content Policy goals.
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