By Adewale Sanyaolu
Early hopes to revive the industrial sector with the northern corridor may have been dashed as the much touted Ajaokuta-Kaduna-Kano (AKK) gas pipeline project is currently facing funding constraints.
The delay is not unconnected with a setback from Chinese lenders which has failed to release funds for the critical national infrastructure.
As a result the federal government is seeking $1 billion loan 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, three sources close to the matter said.
It is the latest sign of falling Chinese financial support for infrastructure projects across Africa, after years of major Chinese lending for railway, energy and other projects.
A spokesman for Nigerian National Petroleum Corporation, NNPC, which is building the 614-km (384-mile) Ajaokuta-Kaduna-Kano (AKK) pipeline, said it was still negotiating with the Chinese lenders – Bank of China and Sinosure – to cover $1.8 billion of the project cost.
“There’s no cause for alarm,” the spokesman said, without saying whether NNPC was turning to other lenders. But the three other sources said 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 originally 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 turn to others.
“They are looking at Nigeria as one loan, and right now, they feel they are too exposed,” one source said.
Bank of China said it would not comment on specific deals. Sinosure did not respond to a request for comment.
The Nigerian ministries of transport, finance and petroleum also did not reply to requests for comment.
Chinese bank lending to African infrastructure projects has fallen across the continent, from $11 billion in 2017 to $3.3 billion in 2020, a Baker McKenzie report said in April.
With the continent facing an estimated annual $100 billion infrastructure deficit, the loss of Chinese funding leaves a big gap to fill.