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AKK Gas Pipeline: Game-changer for North’s Industrialisation?

-By Gideon Osaka

Aside from being a critical midstream infrastructure, the Ajaokuta-Kaduna-Kano (AKK) gas pipeline commissioned recently by President Muhammadu is set to be a key enabler to the development of industries in the north.

The gas pipeline which is an integral part of the Nigerian Gas Master Plan (NGMC), to harness the country’s huge gas resources, is also expected to spur developmental activities in the northern region and kickstart some sort of revival in the construction industry that has been slowed by COVID-19.

The delivery of the project which will make gas molecules available either as feedstock or as supply for power plant when completed could become a platform to reflate the region’s economy.

These were some of the submissions of stakeholders drawn from the petroleum industry, academia, organized private sector and regulatory agencies who participated in a recent webinar hosted by Valuechain Magazine.

President Buhari on June 30, performed the virtual Flag-off of the construction of the 40-inch x 614km AKK gas pipeline project.
Expected to be completed within a 24-month timeline, the AKK pipeline is a section of the Trans-Nigeria Gas Pipeline (TNGP) with the capacity to transport about 2.2billion cubic feet of gas per day.

Prof. Idris Bugaje

According to the Nigerian National Petroleum Corporation (NNPC), the pipeline which would originate from Ajaokuta, in Kogi State and traverse Abuja (FCT), Niger, Kaduna, and terminate at Kano, would boost domestic utilization of natural gas for Nigeria’s social-economic development, when completed.

It would also unlock 2.2billion cubic feet of gas to the domestic market, support the addition of 3,600 megawatts (MW) of power to the national grid and revitalize textile industries which alone boasts of over 3 million jobs in parts of the country.

The AKK project would support the development of petrochemicals, fertilizer, methanol, and other gas-based industries thereby generating employment opportunities and facilitating balanced economic growth.

The right of way for the proposed AKK gas pipeline would run parallel to the existing Nigerian Pipelines and Storage Company’s 16 inch-crude oil and 12 inch- product pipelines wherever possible.

The AKK, according to the NNPC, is ultimately designed to complement other major domestic gas transmission systems namely: the Western System, that is, the existing 36-inch Escravos-Lagos Pipeline I and II with 2.2billion cubic feet per day capacity and the On-going East-West connection via the OB3 pipeline featuring 2.4billion cubic feet per day capacity.

Speaking when he featured as a panelist in the maiden Valuechain webinar, the Rector of the Kaduna Polytechnic, Prof. Idris Bugaje, said the speedy delivery of the project would compensate for its late conceptualization, adding that the AKK pipeline was coming 25 years late after numerous textiles, manufacturing, and agricultural enterprises in the northern parts of the country collapsed under costly, unstable and inefficient industrial fuel.

He said, “This project should have happened 25 years ago. If we had had the AKK 25 years ago, delivering gas to Kaduna and Kano and all those industries that collapsed would not have collapsed and probably Boko Haram and banditry would not have arisen. The problem of insecurity is the consequence of high level of poverty, unemployment therefore the insurgents are using that to recruit followers.”

He linked the collapse and relocation of industries from northern Nigeria to Lagos with the rising spate of banditry and insurgency in the region adding that the social crisis in the northern part of the country was a result of worsening business environment and consequent surge in the number of unemployed youths.

Speaking further, Prof. Bugaje lamented the withering of industries, Boko Haram insurgency and growing banditry which could be efficiently addressed by restoring industrial vibrancy in the region which, according to him, hosted the largest textile industries in the past.

Stressing the role of gas in economic growth and development, Prof. Bugaje compared the poverty level and low industrial activity to the economic boom and industrial vibrancy in Lagos State which, he said, has become the preferred regional investment hub due to abundance of gas flowing through robust distribution infrastructure to industrial clusters.

“Most of the industries within the Kaduna and Kano were made moribund because of electricity and process heat and some of them migrated to Lagos. Lagos has become the greatest beneficiary of the problem of power supply in the North. Today Lagos consumes 60 per cent of the electricity generated in Nigeria, Lagos can run its own affairs because of the industries,” Prof. Bugaje asserted.

Heavy fuel cost killed most of the textile industries in the north, he argued, adding that gas has become critical to their revival.
He listed investment opportunities surrounding the AKK pipeline to include businesses in liquefied petroleum gas (LPG), compressed natural gas (CNG), petrochemical and fertilizer plants, and captive and embedded power production.

He however warned against regulations that would limit power producers to the national power transmission grid currently managed by the Transmission Company of Nigeria (TCN), which, according to him, has proved inefficient and commercially unviable.

Responding to a succession of questions around the timely completion of the project, the Managing Director of the Nigerian Gas Company (NGC), a unit of the NNPC, Engr. Seyi Omotowa, gave assurances that the project would be realized in good time, adding that a presidential inter-agency project management team is working with other stakeholders to overcome all failure factors.

He explained that the funding model, quality and pedigree of contractors, structures for transparency and accountability, as well as improved security arrangement would enable the AKK project management team overcome all foreseeable challenges and deliver the project in time.
Responding to questions on how funding and security could encumber early delivery of the project, the Technical Adviser to the Minister of State for Petroleum Resources on Regulation, Engr. Umar Gwandu, said these challenges would be addressed by the commercial nature of the pipeline operations when completed.

He made it clear that the target was to ensure that domestic utilization of gas would ride on the overall infrastructure blueprint that involve the Escravos-Lagos Pipeline System (ELPS), West African Gas Pipeline (WAGP), the AKK pipeline and eventual Trans-Saharan Gas Pipeline.
Gwandu pointed out the role the AKK pipeline would play in rehabilitating moribund industries in northern Nigeria.
“The AKK is part of the Gas Masterplan to harness the country’s huge gas resources, create a gas hub and spur developmental activities in the northern region,” Gwandu said.

Also responding to questions from participants on the investment opportunities and challenges with the project, the Managing Director of Oilserv Limited, the lead contractor in the project, Engr. Adegbite Falade, stated that the project could create 5000 direct jobs during its entire execution time frame, adding that it would also revive the Nigerian construction industry by involving credible subcontractors across the full project scope.

According to him, AKK pipeline project would provide the platform for building the manufacturing sector of the economy, grow the national Gross Domestic Product, boost power generation by 3600 megawatts and ultimately commercialize Nigeria’s vast natural gas resources to generate revenue for government.

He said, beyond achieving the gas aspiration of the country, the AKK presents the opportunity for direct employment for so many at such a time within the pipeline corridor.

Prior to now, he said: “Oilserve has executed not less than 25 different EPC projects that are mainly pipeline and facility-based projects. Oilserve is currently commissioning the lot B of the OB3 pipeline which is one of the critical pipeline systems within the gas architecture blueprint.
AKK is not just an infrastructure it is a platform to reflate our economy, achieve economic growth, get our aspirations of domestic gas. it is a platform that would ensure that we increase the amount of power generation and also ensure that the GDP of the country is increased.”

He reiterated the need for all stakeholders to seize the full opportunity presented in the AKK pipeline project, arguing that benefits of the project would erase the incentives for banditry and insurgency through economic revival of the North.

Answering a question on the source of the gas that will be transported via the pipeline, Engr. Falade said: “There already is a connected grid all the way to Ajaokuta. As we speak today, taking off from the Oben supply node, there is an existing pipeline transport system that will take gas all the way to Ajaokuta. This system will in part feed in gas gathered along the corridor of the South-South and South East.”

Speaking further on potential opportunities for small scale enterprises and local communities, he stated that in terms of execution of the project, Oilserve which is the EPC contractor has lined up opportunities for people in specialised service offerings.

“There is scope for inspection, catering, and many other sectors. Those who would benefit would have been pre-certified and preregistered with the appropriate agencies including DPR, NCDMB, etc.”