Adewale Sanyaolu
The story of Nigeria’s economic downturn is set to make a positive turnaround as President Muhammadu Buhari will on June 30, 2020, flag off the $2.8 billion Ajaokuta-Kaduna-Kano (AKK) gas pipeline project construction.
The virtual flag-off of the construction phase will hold simultaneously in Ajaokuta, Kogi State, and Rigachikun, Kaduna State.
The project is a 614km-long natural gas pipeline with a 2.2 BCF/D capacity. It is currently being developed by the Nigerian National Petroleum Corporation (NNPC) through a public-private partnership (PPP) model.
Minister of State, Petroleum Resources, Mr. Timipre Sylva, had last Tuesday, while inaugurating the Committee on Gas Sector-wide Review of the Domestic Gas Pricing Framework, with the responsibility of evaluating and reviewing the price of gas in the country, noted: ‘‘We have to ensure that gas becomes affordable. It is sad to note that we sell gas cheaply to investors while the price is high in the domestic market to the extent that some Nigerians say diesel is cheaper than gas.
“Nigeria has a lot of gas deposit, and once we are able to solve our gas problems, we would have solved a lot of problems in Nigeria.”
Group Managing Director, NNPC, Mallam Melle Kyari, said: “The AKK project is key to resolving the power deficit challenge of the country. Its multiplier effect on the economy and provisions of jobs will be unprecedented’’.
The project
According to the Infrastructure Construction Regulatory Commission (ICRC), an agency of the Federal Government saddled with the responsibility to regulate PPP activities, the AKK pipeline project will include the laying of 614 km AKK 40-inch natural gas pipeline. The states that bestride the pipeline corridor are Kogi, Federal Capital Territory (FCT Abuja), Niger, Kaduna, and Kano, and the pipeline will cross seven major rivers and 10 major roads.
The AKK gas pipeline (Phase I) is the first phase of the Trans-Nigeria Gas Pipeline (TNGP) project that is driven by the availability of additional gas supplies from Assa Gas Plant and the need for gas supply in the northern/eastern states through the Obigbo-Umuahia-Ajaokuta and Ajaokuta-Kaduna-Kano pipelines. This project is taking place against the backdrop of the new gas pricing and domestic supply context in Nigeria. The feed gas into the pipeline system is expected to be 3,500 MMscfd of dehydrated wet gas sourced from various gas gathering projects in the southern region.
Hydrocarbon liquids from this process will be further processed at Ajaokuta to produce liquefied petroleum gas (LPG), while the remaining will be transported through the pipeline to serve as feed stock for power and new petrochemical facilities planned for Abuja, Kaduna, Kano, and Katsina.
The project development will involve the following: Surveying and clearing the right-of-way (ROW) for the NNPC, hauling and stringing of pipe(s), bedding of pipe(s), welding, and digging of trench.
Others are lowering of pipe and backfilling, installation of valves and special fitting and joint coating, pipeline crossings on rivers, roads, streams, and other pipelines. Non-destructive testing, surveying, and ROW preparation.
ICRC explained that removal of vegetation would further expose the soil to excessive weather conditions and soil erosion. Measures to ameliorate the ecological impacts include use of existing routes for surveys, use of existing ROW during construction, and avoidance of excessive land take and bush clearing.
It added that NNPC would enforce a no-hunting ban during the bush cleaning and restriction of clearing within the ROW habitats.
The scope of work includes engineering, procurement, construction, installation, testing, and commissioning of a 40” x 614km class 600# pipeline system from Ajaokuta to Kano, with associated intermediate and terminal facilities to supply natural gas to off-takers at Abuja, Kaduna, and Kano.
Benefit to Nigerians
According to the NNPC AKK project brief, the project will add 3,600MW of power to the national grid, create one million jobs and revitalise over 232 industries.
In Kaduna alone, over three million jobs were lost due to power crisis and closure of textile industries.
The breakdown of the 3,600MW to three independent power plants are as follows: Abuja (1350MW), Kaduna (900MW) and Kano (1350MW)
“Additionally, AKK will support the development of Petrochemicals, Fertilizer, Methanol and other gas-based industries that will generate employment and facilitate Balanced Economic Growth (BEG).”
Additional economic and social benefits of the AKK project, according to NNPC, is the monetization of abundant gas resources locked up due to infrastructure deficit,
Based on current real GDP, this amounts to approximately $1 billion per annum, the NNPC noted.
‘‘Given a conservative pipeline useful life of 30 years, this effect alone on the power sector will therefore produce a conservative cumulative gain to GDP of $30 billion.
Presidential Adviser on Media and Publicity, Mr Femi Adesina, said the AKK project is another humongous signature milestone by Buhari, which will leave his footprints inexorably in the sands of time.
“Buhari is doing great things, which will pedestal him in the pantheon of great Nigerian leaders. And now, he has struck again. He is kicking off the AKK pipeline project, which will carry gas between the southern and northern parts of the country. The project will eventually extend to North Africa.
“The AKK pipeline project will do great and wonderful things for Nigeria. It will create steady and guaranteed gas supply network between the North and South, and will enhance power generation capacity. The industrial sector will be strengthened, local usage of gas will be promoted and increased, and the country’s revenue generation boosted through export of natural gas.’’
Adesina noted that Nigeria is ranked the seventh most endowed natural gas country in the world, sitting on about 180 trillion cubic feet of natural gas deposits, which can be utilised as gas to power, gas to petrochemicals, liquefied natural gas (LNG), liquefied petroleum gas (LPG) and compressed natural gas (CNG), among others.
Over the years, he said, Nigeria has exploited its oil resources more, to the detriment of gas, which, incidentally fetches more revenue, but is also more expensive to prospect. He added that one big advantage the average Nigerian can look forward to is the evolvement of compressed natural gas (CNG), which is still at its pilot stage in the country.
While presenting his performance report to the Federal Executive Council recently, Sylva spoke extensively about CNG, and what it can do for Nigeria as an alternative to petrol. He listed the challenges of the oil and gas sector to include; under-recovery, crude theft, insecurity, high cost of production, very low LPG penetration, refineries shutdown, and long contracting cycle, among others. Sylva stressed that the oil and gas sector remains critical to the Nigerian economy, even as we strive to diversify. He identified CNG and LPG penetration as priority.
Said the Minister: “The switch to CNG will help reduce the burden of petrol subsidy on the finances of the country, and government should encourage Nigerians to use CNG as fuel for transportation.”
The Journey so far
In July 2013, NNPC initially announced tenders for the AKK pipeline project. A project proposal was submitted to the ICRC in June 2017, and the Federal Executive Council (FEC) granted approval in December 2017.
In 2018, a steering committee was inaugurated. In the same year, negotiation with financiers (Bank of China & China EXIM) and Sinosure commenced.
Other activities carried out in 2018 included; Front End Engineering Design (FEED) verification, survey and ROW acquisition, detailed engineering design (currently at 63 per cent, commenced engagement process of Project Mgt. Consultant, negotiated financing term sheet and secured letter of comfort from FMoF and CBN.
In 2019, the NNPC AKK project secured 15 per cent sponsors contribution, opened Escrow Account dedicated for ring fencing the project funding and then commenced the process of funding the Escrow Account.
One of the indigenous companies working on the project – Oilserv was awarded the engineering, procurement, construction, installation, testing, and commissioning of the first segment of the 614 km x 40-Inch Gas pipeline, which is from Ajaokuta to mid-way between Abuja and Kaduna. The second segment has been awarded to another company.
Chairman of Oilserv Limited, Emeka Okwuosa, had pledged that Oilserv would leave no stone unturned to partner with NNPC and make the dreams of 200 million Nigerians come true by delivering the AKK project to global quality and standards.
His words: “The capability of Oilserv has been honed in the course of successful delivery of landmark EPC contracts such as lot B of the 48inch OB3 gas pipeline system that is currently being commissioned.
The optimism and hope that this development represents is a clear elixir that is surely needed by the entire nation at this time. We wish Oilserv, NNPC and everyone else involved in this endeavor, success.”’