On Tuesday (June 30), using a virtual platform, President Muhammadu Buhari launched the construction of the 40-inch x 614km Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline project.
According to a media statement issued by the Nigerian National Petroleum Corporation (NNPC), Buhari noted on completion the project will provide gas for generation of power and feedstock for gas-based industries, and also facilitate the revival of declining 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, adding 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.
President Buhari stated that the project will create numerous direct and indirect employment opportunities while fostering the development and utilisation of local skills and manpower, technology transfer and promotion of local manufacturing.
“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.
AKK Gas Pipeline facing challenges of COVID-19
President Buhari commended the NNPC and other stakeholders for bracing the odds of the prevailing COVID-19 pandemic to kick-start the construction phase of the project.
He remarked that the lessons learnt from the COVID-19 pandemic further 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.
The President called on the Governors of Kogi, Niger, Kaduna and Kano States, as well as the Minister of the Federal Capital Territory, to provide the enabling environment and support for the project.
Expanding domestic gas footprint
Earlier in his welcome address, the Group Managing Director of the NNPC, Mallam Mele Kyari, remarked that the event would not have been possible without the full and unflinching support of President Muhammadu Buhari, who has made it a priority to ensure that revenues from oil and gas resources are used to support the emergence and growth of other non-oil sectors of the economy.
Kyari said NNPC was transitioning towards becoming an integrated energy company to support the President’s economic diversification efforts.
One of such efforts is the expansion of the corporation’s domestic gas footprint with the delivery of the Trans-Nigeria Pipeline Project which includes the Escravos to Lagos Pipeline System (ELPS) 2, the Obiafu-Obrikom-Oben (OB3) gas pipeline and the Ajaokuta-Kaduna-Kano (AKK) gas pipeline.
He explained that the EPC contract for the 614km AKK gas pipeline project was awarded at a total contract sum of $2.592 billion to Messrs. Oilserv Plc/China First Highway Engineering Company (Oilserv/CFHEC Consortium) for the first segment covering 303km and Messrs.
Brentex Petroleum Services/China Petroleum Pipeline Bureau (Brentex/CPP Consortium) for the second segment covering 311km under a debt-equity financing model with a loan from Bank of China and SINOSURE, to be repaid through the pipeline transmission tariff and supported by a sovereign guarantee.
Kyari 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 using 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 2.2bscf/d of gas into the domestic market and facilitate additional power generation capacity of 3,600MW.