• No cause for alarm, FG assures stakeholders
• Project to revamp over 232 industries
• Links gas supply to other African countries, Europe
By Teddy Nwanunobi
Despite fears that Nigeria’s aspirations to boost the domestic utilisation of its gas would be frustrated by funding to deliver the $2.8 billion Ajaokuta-Kaduna-Kano (AKK) gas pipeline as scheduled, stakeholders have been reassured of the determination of President Muhammadu Buhari’s administration to deliver the project as promised.
The federal government on June 30, 2020, made an audacious statement, when President Buhari launched the construction of the pipeline. The commissioning was described as the biggest and most important project to be inaugurated in Nigeria that year. The flag-off happened despite the global economic downturn caused by COVID-19 and its attendant fiscal pressure such as low crude oil prices that put Nigeria and the global oil industry under crisis.
The AKK pipeline is a 614km-long natural gas pipeline set to be laid from Ajaokuta, Kogi state up to Kano and forms phase one of the Trans-Nigeria Gas Pipeline (TNGP) project. The line is being implemented via a build and transfer (BT) public-private partnership (PPP) model, which involves the contractor providing 100% of the funding. The pipeline which will cost an estimated $2.8billion, is expected to transport gas from several gas gathering projects located in southern Nigeria. The project will result in the establishment of a connecting pipeline network between the eastern, western and northern regions of Nigeria.
It also aims to create a steady and guaranteed gas supply network between the northern and southern parts of Nigeria by utilising the country’s widely available gas resources.
The project is expected to be financed through an 85 per cent debt and 15 percent equity with a 12-year repayment plan and completion period of 24 months. Specifically, 85 percent of the money is expected to be funded by Industrial and Commercial Bank of China (ICBC), Bank of China, and Infrastructure Bank of China with Sinosure, China’s Export Credit Agency (ECA) providing insurance cover. The remaining 15 percent will be provided by the NNPC.
At the launch of the project last year, stakeholders (all the agencies of government overseeing the project) including the NNPC had assured that the factors responsible for failure of such projects in the past, including funding, poor scope definition, optimistic scheduling, issues around changes that occur during execution and poor contractor selection processes had been resolved.
But one year after, it looked like the huge project would go the way of most projects that had been abandoned in the past. Chinese lenders had originally been lined up to fund the bulk of the estimated $2.8 billion cost of the project. The Chinese lenders who had pledged to offer most of the funds ($1.8 billion), were, however, said to be delaying to come up with the fund. Reports said that this delay may have allegedly forced the Nigerian National Petroleum Corporation (NNPC) to seek for the sum of $1 billion to continue work on the project. It was also alleged that cash was yet to be disbursed as quickly as possible.
Although the Chinese lenders were yet to comment on the issue, the Minister of State for Petroleum Resources, Chief Timipre Sylva; Minister of Finance, Hajiya Zainab Ahmed; Minister of Power, Engr. Saleh Mamman; Group Managing Director (GMD) of NNPC, Mallam Mele Kyari have unanimously declared that there is no cause for alarm. The actors all spoke in one voice at the 2021 Gas Sector Stakeholders Forum in Kano, Kano State.
Organised by the Gas Aggregation Company of Nigeria (GACN) on Thursday, July 29, the event was themed: ‘Optimizing the Economic Development Capacity of Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline Project’.
In his welcome address, the Chairman of the GACN Board, Engr. Mansur Sambo said the event was organised by the company in Kano, being the commercial and industrial hub of the Northern Nigeria in order to sensitise the would-be off-takers of the gas product when completed.
“We’re here to sensitise gas users, as a preview to the completion of the pipeline. Anybody, growing up in this part of the country, would have known how Kano (State) used to be very vibrant, not only as a commercial nerve centre, but also as an industrial centre. To a very great extent, that position has been tampered with the loss of many industries and jobs that went away with the closure of the industries. The AKK Pipeline is meant to rekindle the vibrancy of our industrial sector and commercial activities, especially in Kano, which is actually the nerve centre of commerce and industrial activities in the northern Nigeria,” he said.
In his keynote address, the Minister of State for Petroleum Resources, Chief Timipre Sylva explained that the event was geared towards kick-starting the required activities that would guarantee full usage of the delivered gas through the AKK Pipeline when completed.
“The lens is today focused at facilitating increased gas penetration in the northern part of this great country, especially the AKK (Gas) Pipeline (Project) corridor states of FCT (Federal Capital Territory), Kano, Kaduna, Kogi, Niger, Nasarawa and other neighbouring states.
“Therefore, this gas sector’s opportunity forum is geared towards sensitizing the entire northern part of Nigeria of the upcoming opportunities to bring both new and hitherto moribund companies back to life. Kano State, alone, is dotted with several industrial parts, such as Chalawa Industrial Estate that houses rice mills, beverages, jute bag manufacturing, plastic products manufacturing etc. Sharada Industrial Estate (phases I, II and III), dealing with hides and skin, textile mills, foundry and steel-rolling mills, vegetable oil mills, plastic pipe, afro sacks plants etc. Bompai Industrial Estate, accommodating flower mills, mattress production, animal feed plant etc.
“These parts and others that dot the Kano-Kaduna and other AKK corridor states justify the need to optimize value creation from these industries. Experts estimate that it would take, at least, two to three years to rehabilitate and reposition these industries for optimal performance.
“Thus, today’s collaboration with all stakeholders is geared towards kick-starting the required activities that would guarantee full usage of the delivered gas through the AKK Pipeline when completed. Today’s event reinforces our commitment to realizing the inherent potentials of gas usage as a national catalyst for achieving economic diversification from crude oil and as transition fuel from fossil fuels of today to the renewable energy of tomorrow.
“It is this commitment that informed our support and eventual commissioning of two gas-powered plants, virtual pipeline operated in Kano State in December 2020, achieving an uninterrupted delivery of over 30 megawatts of power supply to the industrial hub. Our successful collaboration and completion of the AKK in 2023 will significantly enhance Mr. President’s vision and current drive for increased domestic gas utilization as the mainstay for the national industrialization for increased foreign investment, government revenue growth and ultimately provide more job opportunity for Nigerians.
“Let me use this medium to announce to this gathering, following the successful negotiation between the Federal Government of Nigeria and the organised labour unions and the detailed review of the gas pricing framework in Nigeria, the price of gas-to-power has been reduced from $2.50 to $2.18, with immediate effect. The outcome of the negotiations and review (has) been communicated to the relevant stakeholders,” he said.
Sylva also underlined Buhari’s determination to see the completion to the end.
“The National Gas Expansion Programme (NGEP), which was launched in January 2020, is a flagship programme that is focused on ensuring that all these objectives are achieved, and the gains emanating therefrom are sustained,” he added.
In his goodwill message, the Minister of Power, Engr. Saleh Mamman thanked the Federal Government for reducing the gas-to-power price.
He noted that the power sector uses more than 60 per cent of the gas currently generated in the country to generate electricity.
Saleh added that the price reduction will assist the Federal Government’s goal of delivering sustainable power for the country.
In a paper titled, ‘The AKK as an Economic Development Game-Changer – NNPC’s Vision, Contributions, & Plan Forward’, the GMD, NNPC, Mallam Mele Kyari, reechoed Federal Government’s determination to deliver the project as scheduled.
Kyari, who added that it would also serve as gas supply link to other African countries and Europe upon completion, stated that the AKK gas project would help revamp about 232 industries creating massive employment opportunities and prosperity for the people.
“This project has been on the drawing board for 30 years, and the dream was to have gas delivered to Europe across the Trans-Sahara route. What we are seeing today would deliver at least 2 billion standard cubic feet of gas to the domestic market at the first instance with the potential to increase it. What this means is that it will debottleneck the gas supply network in the entire country,” Kyari informed the stakeholders.
He said that the AKK gas project would also lead to the development of three Independent Power Plants (IPPs) in Abuja, Kaduna and Kano states.
He added that the IPPs would boost electricity supply and promote the growth of small and medium scale enterprises in the Nigeria.
“I want to state clearly that this gathering would not have been possible, if we don’t have a line of sight to the completion of the AKK gas pipeline project. This is possible because of the clear direction that Mr. President has shown on the need to deepen domestic gas consumption with a view to creating prosperity out of the enormous gas resources we have as a nation. He has given us all the necessary support and incentives to deliver on this project,” he stated.
Kyari also said the AKK gas project would boost the agricultural, industrial, manufacturing and power sectors for the overall growth of the nation’s economy.
He averred that the AKK gas pipeline project was in line with the aspiration of the Federal Government to reduce the nation’s carbon footprint in line with the global quest to arrest global warming and climate change and in furtherance of the Decade of Gas programme.
According to him, gas is a key driver of prosperity all over the world and it cannot be different in Nigeria, stressing that the extensive industrial layout in the Otta area of Ogun and Lagos states is anchored on the gas supply by the NNPC and its partners which is creating jobs and other opportunities for people.
In his speech, Governor Abdullahi Umar Ganduje, of Kano State, who was the host Governor for the event, noted that bringing gas to Kano will reawaken the industrial consciousness of the state.
Dr. Ganduje, who welcomed the stakeholders, added that Kano is fully prepared and waiting for the completion of the project which will assist greatly in giving life to industries in the state.
Also speaking, the Governor of Nasarawa State, Engr. Abdullahi Sule, noted that access to AKK through FCT Abuja, is one of the best things to happen to Nasarawa state.
He assured the GACN, the organisers of the forum that his state has already strategized to fully tap into the project by developing an industrial cluster which will be located along Abuja – Nasarawa border. He added that already, Dangote Group and Flour Mill of Nigeria have indicated interest to invest in the state.
Other Governors of Niger, Kaduna, Kogi states who spoke during the event, assured the Gas Aggregation Company of Nigeria of their readiness to take the advantage of the gas pipeline in boosting industrial activities in their various states.
Also present at the event were the Emir of Kano, His Royal Highness, Alhaji Aminu Ado Bayero; Emir of Bichi, Alh. Nasir Ado Bayero, Emir of Rano, Amb. Kabiru Muhammad Inuwa, and Alhaji Aliko Dangote.
Highlight of the event was the autogas exhibition by many local and foreign companies, at the venue.
Apart from the participants at the place of the event, over 500 people joined virtually. The governors of the AKK states are: Dr. Umar Ganduje (Kano), Malam Nasir El-Rufai (Kaduna), Alhaji Yahaya Bello (Kogi), Alhaji Abubakar Sani Bello (Niger), Alh. Muhammad Musa Bello (FCT).
