The Nigerian National Petroleum Company Limited (NNPCL) has said that it has so far released $1.1 billion from its cash flows to finance the Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline project which is considered a critical component of the federal government gas master plan initiative.
NNPCL chief executive officer, Mele Kyari, who disclosed this yesterday, also said the project is at nearly 70 per cent completion and has not been stopped, contrary to reports citing funding constraints.
Speaking during a site inspection of the AKK gas pipeline project in Ahoko Gbagyi, Kogi State, yesterday, Kyari said the $2.5 billon gas pipeline project had been scheduled to start producing gas along that corridor within the third quarter of this year.
The AKK 614 kilometres gas project has been in the plan for decades with tenders issued by NNPC in July 2013 and approval granted by the Federal Executive Council in December 2017. The construction only commenced in July 2020.
A national newspaper had reported that financiers of the AKK pipeline project had pulled out of the project, citing alleged 570 per cent inflated contract sum, far above the global threshold.
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The paper had also claimed in the report that the project had been stalled, as there was no funding to cover the cost of the second and third legs from Abuja to Kaduna and Kaduna to Kano due to funding constraints.
But speaking shortly after inspecting the project, the NNPC boss said that work had not stopped as a result of funding constraints since the project commenced, and that NNPC had been meeting all its funding obligations to the contractors.
He said the project was a critical infrastructure project for the Nigerian energy sector.
“For the benefit of the Nigerian public, this is one of the most massive projects that we’ll run in the company; it is of immense proportion of value to our country and to the socio-economic growth of our country.
“We know that this is a must-deliver project. This project has not stopped for one day. We have continued to fund it despite the fact that we do not have third-party financing for the project.
“We have so far spent over $1.1 billion on this project from our cash flow. We are a very different company today. We are a commercial company. We have inter-company laws within our company now. This company can fund this project, so we do not need any support on this project to deliver this project now.
“As we speak now, we don’t owe a dollar to our contractors today. We paid all their invoices; there are over 30 sites that are active today in this project, and we are very hopeful that we will deliver this project,” Kyari said.
He commiserated with the families of workers that have died as a result of the security challenges at the project site and added that the government is committed to ensuring that it does all it can to provide more security personnel at the project site to guarantee the timely delivery of the gas project.
Details from the NNPCL indicate that overall engineering design for the linear section of the two segments of the project stands at 93.48 per cent; while the overall procurement for the linear section for the two segments is at 88 per cent.
Also, 94 per cent of the total line pipes had been manufactured and 90 per cent are already in-country, while construction activities on both segments are ongoing.
“We have completed 400km of the linear section/mainline welding, representing 68 per cent of ROW from Ajaokuta in Kogi state to Kano.”
He went on: “This is a very massive project. We are delivering them in phases. First of all, the line welding has been completed by 70 per cent. There are many other components of this project and once you are able to complete the welding and put certain basic selection, you can actually flow casting to these lines and as another part of the project is continuous to be delivered.”
On the implications of the gas project for Nigeria’s gas supplies, the NNPC Boss added that it would boost electricity generation to the power sector and increase power to industries.
“What this means for Nigeria’s gas supply is that these lines will flow two billion scf of gas. What this means is that you are delivering 2 billion scf of gas every day to these lines, power industry, powering gas plants, creating gas-based industries; this is the ultimate objective.
“By the third quarter of this year, we will complete the entire welding of this work and what it means is that we can actually energise these lines by the end of the third quarter of this year,” he explained.
On how many megawatts of electricity will the gas project deliver, he said, “It depends on the capacity of the power plants that will be installed on the pipeline. Our plan is to have 1300 megawatts power plants in Abuja, Kaduna, and in Kano.
“As we speak now, we are facing that so that we deliver them as quickly as possible and, by God’s grace, very soon, we are going to face the construction of the Kaduna-Abuja power plant in earnest and, of course, it is a speculative thing but gradually we will build up to that capacity. There is a financing partnership with core investors on this.”
When asked what his response will be to those who do not believe in the NNPC’s ability to deliver the project in a timely manner, Kyari replied, “What I will say is that we will shame them. This project will be delivered; we are not scared of their comments.”
Also speaking at the inspection site, the project manager, Steve Nnorom said that just a week ago, through the NNPC’s intervention, over 40 military personnel were deployed to beef up security at the project site.
