…Set financing closure for August
By Michael Eboh
The Nigerian National Petroleum Corporation (NNPC), Monday, disclosed that financing for the Ajaokuta-Kaduna-Kano (AKK) gas pipeline would be provided by China and Sinosure.
Speaking at the virtual flag-off of construction of the AKK Gas pipeline at the Ajaokuta and Kaduna camp sites simultaneously, Group Managing Director of the NNPC, Mallam Mele Kyari, stated that all the required conditions precedent for closing the debt financing had been provided and the process of obtaining internal approvals by the lenders was in progress to enable financing close by August 2020.
He said, “The EPC contract for the 614 kilometers AKK gas pipeline project was awarded at a total contract sum of US$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 loan from Bank of China and SINOSURE, to be repaid through the pipeline transmission tariff and supported by a sovereign guarantee.”
According to Kyari, as part of the agreement, NNPC was utilizing the equity contribution to commence execution of the project to recover lost time and put the project back on track.
He expressed confidence that the EPC contractors would deliver the project on time, within budget and to quality/specifications.
Upon completion, Kyari noted that the project would enable the injection of 2.2 billion standard cubic feet per day (bscf/d) of gas into the domestic market and facilitate additional power generation capacity of 3,600 megawatts (MW).
Kyari further highlighted that the AKK gas pipeline project, which is part of the Trans-Nigeria gas pipeline project, involved the establishment of a connecting gas pipeline network that would integrate the Northern region of the country with the Niger Delta, Eastern and Western regions of the country.
He said: “The realization of this project will therefore bring about the needed transformation in power generation and industrial growth in the Country.
“I would like to recognize and commend the collaborative efforts of all stakeholders which include the Executive Governors of Kaduna, Kano, Kogi and Niger States, the Ministries of Petroleum Resources, F.C.T, Finance, Budget and National Planning and Foreign Affairs, the Central Bank of Nigeria, the Debt Management Office, the Infrastructure Concession Regulatory Commission, the Department of Petroleum Resources, the Nigerian Content Development and Monitoring Board, the EPC Contractors, the Project Lenders, Host Communities, Security Agencies and others too numerous to be mentioned but never the less are an integral part of the realization of this project.”
Also speaking Minister of State for Petroleum Resources, Chief Timipre Sylva, described the AKK gas pipeline project as a transformational initiative that is capable fast-tracking Nigeria’s industrial development.
He said: “The AKK is a development corridor; a backbone that has been created from the South to the North. It will take gas from the South, to the very end of the north, and hopefully, when we start production in the north, it would also take the gas produced in the north, to the rest of the country.
“We expect that along that corridor, all types of investments will now commence. We are expecting fertiliser projects, gas-based industries, like the petrochemicals and power plants among others. Actually, on the back of this project there is already going to be power plants to be built in Abuja and in Kano. The project would cost about $2.8 billion and is actually funded by China, like the president said.”