Why the $2.8bn AKK Gas Pipeline is Vital for Industrial Growth

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The Nigerian National Petroleum Corporation (NNPC) has embarked on an ambitious project to expand the country’s domestic gas footprint with the delivery of the $2.8 billion Ajaokuta-Kaduna-Kano (AKK) gas pipeline.

Construction of the pipeline is in line with the NNPC’s plan to implement the National Gas Infrastructure Blueprint which is part of the Nigerian Gas Master Plan.

“The Master Plan is meant to leverage on the Nation’s huge natural gas reserve base to stimulate unprecedented economic growth and enable Nigeria’s migration from the current mono-economy into a diversified economy,” according to the NNPC GMD Mele Kyari.

The AKK gas pipeline which is part of the Trans-Nigeria gas pipeline project, involves the establishment of a connecting gas pipeline network that will integrate the Northern region of the country with the Niger Delta, Eastern and Western regions of the Country.

Contract for the 614km AKK Gas Pipeline Project was awarded at a total contract sum of $2.592 bn to Messrs.

Oilserv Plc/China First Highway Engineering Company (Oilserv/CFHEC Consortium) for the first segment covering 303km and Brentex Petroleum Services/China Petroleum Pipeline Bureau for the 2nd segment covering 311km under a debt-equity financing model with loan from Bank of China/SINOSURE, to be repaid through the pipeline transmission tariff and supported by a sovereign guarantee.

All the required conditions precedent for closing the debt financing have been provided and the process of obtaining internal approvals by the Lenders is in progress to enable financing close by August 2020, according to Kyari.

As part of the agreement, NNPC is utilizing the equity contribution to commence execution of the project to recover lost time and put the project back on track.

Upon completion, the project would enable the injection of 2.2 billion standard cubic feet a day of gas into the domestic market and facilitate additional power generation capacity of 3,600MW.

The project will therefore bring about needed acceleration in power generation and industrial growth for Nigeria.

Oilserv Limited an indigenous EPC firm is playing a major role in this project and is set to lay the first pipe towards the future as the AKK project.

The AKK pipeline also forms the first phase of the proposed 4,401km-long Trans-Saharan gas pipeline (TSGP) that will facilitate the export of natural gas to Europe.

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