BY ONYEGBADUE AMAMDI with Agency Report

Nigerian National Petroleum Company, NNPC, is close to launching a multi-sourced financing for the roughly US$2.5 billion Trans-Nigeria Gas Pipeline, TNGP project.
NNPC subsidiary,the Nigeria Gas Company, NGC, which is developing the project, picked Standard Chartered as its financial adviser in 2013, and is now finalising negotiations with the adviser ahead of launching the financing to lenders.

The Nigerian government has raised about $450 million in Eurobonds to part-fund pipeline developments, and the proceeds will support planned expansions to the country’s generating capacity.
Government has committed a further $250 million in direct equity investment. The TNGP development will also benefit from access to existing cash flows from NGC’s operational pipeline network.

The debt financing will feature a mix of local and international banks, export credit agencies and Development Finance Institutions, DFIs. Financial close is expected to take around 18 months, but could happen sooner, depending on whether NGC can line up guarantees from either Multilateral Investment Guarantee Agency, MIGA or other DFIs.

Lenders will gain comfort from rising local demand for gas. Several gas-fired power developments are underway as part of Nigeria’s power privatisationprogramme, and many more greenfield developments and brownfield expansions are in planning.

The existing national pipeline network is insufficient to meet this increased demand, making the TNGP project a government priority.
The TNGP entails the expansion of NGC’s gas transmission system to service the northern states of Borno and Sokoto and the central industrial state of Kano, as well as the creation of additional branches to the network in states that it already services. Competition of the project is scheduled for 2018.

The government is also planning a larger Trans-Saharan pipeline that will run from the Warri region through Niger to Algeria, in order to deliver gas to mainland Europe. The $20 billion project will have a capacity of 30 billion cubic metres per year of natural gas.