Gas: $2.8bn Ajaokuta-Kano pipeline project revived 13 yrs after

Plans by the Nigerian National Petroleum Corporation (NNPC) to extend its major gas pipeline infrastructure to connect various parts of the country got a major boost last week following the signing of contracts for the engineering, procurement, construction, commissioning and financing for two lots of the Ajaokuta – Kaduna – Kano (AKK) gas pipeline.

Described as the single biggest gas pipeline project in the history of oil and gas operation in Nigeria, the singing of the contract between the NNPC and a consortium of indigenous and Chinese companies under a 100 per cent contractor financing model, paves way for the historic groundbreaking of the 40 inch by 614km gas pipeline in weeks to come.

The $2.8 billion AKK gas pipeline is among three unique projects – the Egina $15 billion, Bonga $10 billion, expected to generate up to $40bn investments to revive particularly Nigeria’s gas infrastructure.

Contract for the AKK pipeline, according to the Minister of State for Petroleum Resources Dr. Ibe Kachikwu, has lasted over 13 years. The AKK section has suffered setbacks due to scarce resources for government to fully finance the project.

But the uninterrupted progress recorded so far on the project under NNPC’s current GMD, Dr. Maikanti K. Baru, has continued to draw applause from stakeholders for the efforts at moving Nigeria from being a crude nation into a gas environment.

Why AKK gas pipeline?

In 2008, the Federal Government approved the Nigerian Gas Master Plan (NGMP) to accelerate the development of gas pipeline infrastructure for domestic and export markets.

The major intent of the government is to maximize the effect of gas in the domestic economy, ensure long-term energy security while optimizing the country’s export gas capability.

The AKK Gas Pipeline Project thus constituted Phase 1 of the Trans-Nigeria Gas Pipeline (TNGP) Project. The pipeline will originate from Ajaokuta traversing Abuja, Kaduna to terminate at a terminal gas station in Kano. The proposed pipeline will be supplied with quality gas sourced from various gas gathering projects.

The process for the award of the AKK project kicked-off in July 2013 with the advertisement for tenders published by the NNPC in major national newspapers.

Although the AKK contract stirred much controversy in October after a memo by Mr. Kachikwu to President Buhari on August 30, 2017 alleged breach of due process in the award but the controversy was put to rest.

After a painstaking technical and commercial evaluation process, the Federal Executive Council (FEC) at its 46th meeting on 13th December, 2017 approved the contract valued at over $2.8 billion.

Explaining further during the contract signing for lot 1&3 of the pipeline last week, the Group Managing Director of the NNPC, Dr. Baru, said the AKK gas pipeline was a section of TNGP under the gas infrastructure blueprint designed to enable the industrialization of the Eastern and Northern parts of Nigeria.

Upon completion, 24 months from now, the AKK gas pipeline would enable connectivity between the East, West and North, which is currently non-existent.

Also speaking on the importance of the pipeline after the FEC on 13th December, 2017 approved the contract, Dr. Kachikwu said the gas pipeline would enhance movement of gas from the southern corridor to the North, increase power generation and enable utilization of gas up in the hinterlands.

He said: “One of the things we have suffered is the reaping of gas. We presently have trapped power – trapped gas all in the southern corridors that is going nowhere because of lack of infrastructure. So, that has now been awarded. You remember that was partially done, this is a contract that has lasted over 13 years. We got approval for that today and that is going forward very nicely.”

The AKK pipeline has already started yielding early benefits with the commitment by NNPC to build power generating plants in three states.

Specifically, the AKK project will come with other auxiliary projects like the 1350 megawatts (MW), 900 megawatts and 2350 megawatts of power generation plants planned to be built in Abuja, Kaduna and Kano, respectively, in the next three to 10 years.

The power plants would be built by incorporated joint venture (IJV) companies that would involve NNPC, International Power Companies and other Nigerian investors to be structured after the Nigerian Liquefied Natural Gas (NLNG) business model.

The new Abuja, Kaduna and Kano plants when completed, will consume gas from pipeline infrastructure.

Nigerian involvement

The Federal Government and the NNPC are also providing opportunities for indigenous companies to flourish through the AKK project.

Lots for engineering, procurement, construction, commissioning and financing have been contracted to indigenous consortiums.

Under the terms of contract signed last week, Lot 1 with total length of 40inch x 200km stretching from Ajaokuta to Abuja Terminal Gas Station was awarded to local firm, OilServe/Oando Consortium.

Lot 3 which runs from Kaduna Terminal Gas Station (TGS) to Kano TGS with total length of 40inch x 221km was awarded to the Brentex/China Petroleum Pipeline Bureau (CPP) Consortium.

Chairman of OilServe Ltd, Engr. Emeka Okwuosa, said the decision to award Lot 1 of the AKK project to an indigenous consortium speaks volume of government’s resolve to grow and encourage the attainment of the ideals of local content philosophy.

NNPC’s Chief Operating Officer (COO), Gas and Power, Engr. Saidu Mohammed, also said there were other areas of service required for the project that Nigerians would participate in.

“We cannot import pipeline. Those who are coming in to build this pipeline have it in mind that they may have to come with their mills to manufacture the line pipes right here,” he said.