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$2.8bn AKK Project: FG Offers Hope Despite Lenders’ Failure To Release Funds

The Federal Government through the Nigerian National Petroleum Corporation (NNPC) is offering hope of timely completion and value addition of the ambitious $2.8billion 614-km (384-mile) Ajaokuta-Kaduna-Kano (AKK) gas pipeline project in the country. 

The renewed optimism was at variance with mounting concerns by stakeholders over the refusal of Chinese lenders to release funds for the execution of the project. 

The concern stems from the apparent mum of the lenders over the delayed funds, the country’s shop for another loan elsewhere in the face of the mounting loans the government had incurred recently and the implication the development would have on gas infrastructure in Nigeria.

The Federal Government was earlier said to be seeking $1 billion so that work can continue on the gas pipeline costing up to $2.8 billion after Chinese lenders which had pledged to offer most of the funds did not disburse cash as quickly as expected, according to sources. 

The Nigerian National Petroleum Corporation, NNPC, said it was still negotiating with the Chinese lenders – Bank of China and Sinosure – to cover $1.8 billion of the project cost. 

Sources added that the company was now approaching others, including export-import institutions, to continue work on the pipeline that will run through the middle of the West African country to its northern economic hub Kano. 

Chinese lenders had earlier been lined up to fund the bulk of the estimated $2.5 billion to $2.8 billion cost of the project, which is central to President Muhammadu Buhari’s plan to develop gas resources and boost development in northern Nigeria. 

NNPC, which was funding 15 per cent, said last year it had used its own funds to start construction. The sources said the Chinese lenders would not agree to disburse the cash NNPC had expected by the end of the summer, prompting it to approach other lenders. 

Bank of China and Sinosure did not comment on specific deals, while Nigerian ministries of transport, finance and petroleum had also kept mute on the matter 

Prof Wunmi Iledare , Apetroleum Engineer and Chairman of Ghana National Petroleum Corporation, ,said the development was all about economics and not political expediency or sentiments. 

He said: “The economic question is value addition to capital investment. Of all the available opportunities, demanding China money, which project options add the most value? Is the PI from AKK substantially higher than the PI of project A in Zambia, project B in Mozambique or Project C in Senegal under risk and uncertainty? If it is no, then funding reallocation becomes imminent!” 

Besides, Kunle Olubiyo, electricity consumer advocate, believes that the lenders’ posture may have been accentuated by the general post traumatic impact on global economy occasioned by COVID- 19 pandemic. 

Another petroleum engineer and one-time presidential aspirant, Chief Martin Onovo told Daily Independent that the current administration has recklessly borrowed internally and externally to the extent that heavy debt is currently hanging on the neck of Nigerians. 

According to him, many lenders are now unwilling to lend Nigeria given that the country is over-geared and clearly unable to pay its debts, adding that this may also be the reason for the Chinese delay to release the funds. 

He added: “Another possibility is that the Nigerian National Petroleum Corporation may not have met the conditions precedent to drawn for the loan. 

“We must investigate to determine exactly why the Chinese have delayed the release of the funds as the government has a tendency to conceal factual information .We must also note that the Chinese has been reducing the lending to Africa in the last few months” 

He said that the AKK Project is part of the Trans-Nigeria Gas Pipeline Project that is required to provide gas to different parts of Nigeria for power and other uses and posited that President Buhari made it a priority project in its extreme sectional and parochial agenda. 

He added that it would ordinarily not have got this level of prioritisation. 

“Higher priorities in our views include; security, electric power supply, domestic refining, road infrastructure, education and health. Currently, national gas supply, particularly for power generation, is still constrained. 

“Consequently, the expansion of gas consumption should not be immediate priority when the demands of existing gas consumers have not be met. We must also remember that the AKK project was one of the projects in the $25billion NNPC contracts scam” 

Nigeria began building the AKK pipeline in June 2020, saying it would help generate 3.6 gigawatts of power and support gas-based industries along the route. The project was to be funded under a debt-equity financing model, backed by sovereign guarantee and repaid through the pipeline transmission tariff. 

But, Mallam Mele Kyari, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), has assured that the ongoing 614kilometres Ajaokuta-Kaduna-Kano (AKK) gas pipeline project would be delivered on schedule, create prosperity through massive job opportunities and guarantee peace for the country. 

In a paper titled: “The AKK as an Economic Development Game-Changer – NNPC’s Vision, Contributions, & Plan Forward,” delivered at a forum in Kano last week ,Mallam Kyari, stated that the AKK gas project would help revamp about 232 industries creating massive employment opportunities and prosperity for the people. 

He said it would also serve as gas supply link to other African countries and Europe upon completion. 

“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 2billion 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,” Mallam Kyari informed. 

He said the AKK gas project would also lead to the development of three Independent Power Plants (IPP) in Abuja, Kaduna and Kano, adding 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. 

Mallam Kyari said the AKK gas project would also 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 sync 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.

SOURCE: independent.ng

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