Uche Usim, Abuja
A new chapter into Nigeria’s economic prosperity journey opened on June 30 when President Muhammadu Buhari laid the foundation for the Ajaokuta-Kaduna-Kano (AKK) pipeline project valued at $2.8 billion.
The virtual flag-off, held at the Presidential Villa, put to bed long-held doubts about government’s sincerity to execute the huge project expected to generate thousands of jobs and significantly address Nigeria’s gas energy nightmare.
The President, who spoke after he inaugurated construction work on the AKK project via a virtual link from the State House in Abuja to two locations in Ajaokuta in Kogi State and Rigachukun, Kaduna State, said the project, when completed, would provide gas for generation of power and feedstock for gas-based industries, and also facilitate the revival of moribund industries and the development of new ones along transit towns in Kogi State, Abuja (FCT), Niger State, Kaduna State and Kano State.
At the inauguration, President Buhari directed the Minister of State Petroleum Resources and Group Managing Director (GMD) of the NNPC to authorise the Engineering, Procurement and Construction (EPC) consortiums involving indigenous pipeline giant, Oilserv Limited, to commence construction operations at the project campsites without further delay.
He said: “We promised the nation that we will expand the key critical gas infrastructure in the country to promote the use of gas in the domestic market. These include the Escravos to Lagos Pipeline System – 2 (ELPS-2), Obiafu to Obrikom (OB3) pipeline and the AKK. I, therefore, directed NNPC to ensure that these critical projects are completed on time, within budget and specification.
“This will ultimately create numerous direct and indirect employment opportunities while fostering the development and utilization of local skills and manpower, technology transfer and promotion of local manufacturing.”
The AKK pipeline was conceived as part of the Nigerian Gas Master Plan (NGMP) by former administrations of the Federal Government. Experts have hailed the Federal Government for transforming the vision into reality, having been on the policy shelf for nearly a decade.
The AKK project is designed to enlarge the domestic gas market by using the energy demand from the northern parts of the country to enhance the commerciality of domestic market play and confer viability on investments in government’s gas commercialisation agenda.
According to the NNPC, the gas commercialisation programme is meant to leverage on the nation’s huge natural gas reserve base to stimulate growth and enable Nigeria’s migration from the current mono-economy into a diversified economy.
The AKK project would enable the injection of 2.2 billion standard cubic feet of gas per day (bscf/d) into the domestic market upon completion, and facilitate additional power generation capacity of 3,600 megawatts (MW), the corporation said.
The 614-kilometre pipeline is expected to spark off economic activities that would ultimately deliver on a bundle of broad national economic aspirations in the petroleum industry through which the government targets to position the country’s abundant natural reserves as the key enabler for economic diversification from oil dependence.
Processes in realising the policy targets include clearly mapped out strategies to deepen the domestic gas market, arrest gas flaring at oil production sites, enhance national revenue through natural gas commercialization, boost the Nigerian Content of the huge budget petroleum industry, and build sustainable energy infrastructure for the domestic economy.
According to the project profile from the NNPC, the $2.592 billion AKK pipeline project will provide a channel for the upstream and midstream petroleum industry operators to deliver their natural gas output into the grid and spur industrial evolution along the new pipeline corridors in northern Nigeria.
Industry watchers see the project as a game changer as it is designed to solve energy challenges that have stunted the growth of the country.
Before now, members of the organised private sector (OPS) of the Nigerian economy, especially the Manufacturers Association of Nigeria (MAN), had consistently called on government to provide critical factors of production to make investment in the Nigerian business environment attractive, and economically rewarding.
Leaders in the country’s OPS agree that the best response government has given to the agitation from the business community is to provide hope for production infrastructure that would make the domestic environment more attractive to investment. So, AKK pipeline, when realised, will be a sustainable factor of production that would enhance the local operating environment for business in the country.
The facility will also remain central to all aspects of Nigeria’s industrial development: boosting power generation, stimulating manufacturing activities and de-constraining new field development in the oil industry.
In the upstream sector of the petroleum industry, the AKK pipeline will enable more oil production by helping operators to meet the condition of zero flare development plans. So, operators who have been held down by market limited destination for associated gas are now provided space in the AKK pipeline.
Again, expanding the domestic gas market with the AKK pipeline will boost investor confidence in the government’s flare gas commercialization programme by providing ready offtake channel for harnessed gas. This strongly propels Nigeria’s drive to attain zero emission at oil production sites and probably enable the country exit the inglorious global greenhouse emission chart.
Again, the AKK pipeline promises double-barrel economic advantage for the country by earning direct income for government and also helping develop indigenous industrial capacity by providing cheaper, cleaner and more sustainable energy. It will become a consistent revenue earner for all stakeholders, including the government by operating a tariff-based gas transmission services to assist producers wheel gas to market. It will also entitle government to tax income, equity dividend and direct market returns on volume gas sales.
Also, the AKK pipeline flaunts all the attributes of industrial stimulus.
Manufacturing capacity in Nigeria today is highly constrained by energy issues. Running manufacturing by liquid fuel is far too expensive and unprofitable; power supply for industrial activity is grossly inadequate. The AKK pipeline holds potential to feed power plants with adequate fuel energy to generate adequate electricity for homes and businesses.
The pipeline can also directly feed industry and commerce with cleaner, cheaper gas energy. In both ways, the AKK pipeline is going to enable the industrial sector of the economy optimise its potential for growth, job creation and contribution to gross domestic product (GDP).
Analysts say the biggest value that the AKK pipeline holds is the testament to government’s commitment to the Nigerian content policy. Save the funding arrangement, which necessarily entails Chinese content in the project, the full project scope would have been delivered by the indigenous Oilserv consortium, which also delivered the even more challenging Obiafu-Obriko-Oben (OB3) pipeline on which the AKK pipeline is anchored.
More importantly, the involvement of Oilserv makes the project more realistic. The reliance on local expertise also makes the infrastructure more sustainable and cheaper in terms of long term maintenance plan. With the Oilserv consortium government would not suffer maintenance hitches similar to the impasse that plague the local refineries following the refusal of original builders to honour maintenance commitments.
Chairman of the Oilserv Group, Engr. Emeka Okwuosa, says that the consortium, led by his company, is working in concert to provide best in class EPC services for NNPC and Nigeria in consonance with the company’s track record of delivering world-class pipeline construction even in most challenging terrains.
“Oilserv is a 100 per cent indigenous company currently employing more than 600 staff. With this new AKK development, it probably will go to between 1,500 and 2,000 at the peak of the personnel matrix. But the fact remains that we are ready. This is not the first project. We are commissioning the OB3 gas project, which is slightly larger than this in terms of diameter. The OB3 is 48 inches in diameter. So, we have the experience, we have the personnel, we have the equipment and we are capable and we would deliver this project.”
On the project’s potential for job creation, Okwuosa declared that the company would significantly increase its workforce during the project’s time frame, adding that additional staff would be recruited from communities that host the project.
“Like I said, we will crank up our employment by more than 1,000 and major part of this 1,000 will be indigenes of the areas where we are. We have a clear programme to develop the areas where we build pipelines.”
In advancing Oilserv’s performance profile in petroleum industry pipeline delivery, Okwuosa declared that the consortium is conversant with driving through tough and challenging terrains.
“Every project comes with its challenges. There are challenges in driving a project like this in virgin forests, to go through rivers, rocks, to deal with security issues. These are challenges but I don’t have fears because we have the knowledge and the experience to deal with it all. We are very ready to deliver the project and deliver the project on time.”
Group Managing Director of the NNPC, Mr. Mele Kyari, vouched for the contractors selected for the project.
“We are confident that the EPC contractors will deliver the project on time, within budget and to quality specifications,” he declared.
The project also has roles for governors of the states that host the pipeline right of way. They are to provide the contractors the enabling social and security environment to deliver the projects within the specified time frame.