Page 7 - AfrOil Week 10 2020
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PIPELINES & TRANSPORT
AfrOil
NIGERIA
NIGERIA’S federal government has pledged to provide a sovereign guarantee covering most of the costs of building the Ajaokuta-Kadu- na-Kano (AKK) natural gas pipeline.
Last week, Finance Minister Zainab Ahmed reported that the government would issue guar- antees worth $2.59bn for a loan from Sinosure, the Chinese government’s export credit agency. This loan will carry an interest rate of LIBOR plus 3.7% and will have to be repaid in 12 years, including a grace period of three years, she said.
According to previous reports, Sinosure, the Chinese government’s export credit agency, is acting as guarantor for the loan on the Chinese side. The funds will come from two Chinese lenders, the Bank of China (BoC) and the Indus- trial and Commercial Bank of China (ICBC).
The Chinese credit will cover 85% of the total cost of building the AKK pipeline, she added. State-owned Nigerian National Petroleum Corp. (NNPC) will pay the remaining 15% of expenses, she stated.
Ahmed said the Nigerian government saw the pipeline project as a worthwhile endeavour. “We have done an extensive review of this pro- ject and we are satisfied that the cash flows from the Ajaokuta-Kaduna-Kano gas pipeline will be sufficient to repay the facility,” she was quoted as saying by Reuters. “This project is one of the cardinal policies of this administration and it is very strategic to national development.”
NNPC has said that most of the volumes pumped through the AKK link will consist of associated gas from Nigerian oilfields – namely, from seven development projects that are already underway. The project aims to help the country reduce emissions by eliminating the perceived need to flare associated gas.
When finished, the AKK link will follow a 614-km route, running northward from the left bank of the Niger River in Kogi State to the cap- ital city of Kano State. It is meant to serve as the
first section of the Trans-Nigeria Gas Pipeline (TNGP) and will deliver gas to domestic ther- mal power plants (TPPs). As a result, it will help bring Nigeria’s total generating capacity above the 10,000-MW mark and make electricity available to a larger share of the population, the company said.
The pipeline has a design capacity of 3.5bn cubic feet (99.11mn cubic metres) per day, or about 36.175bn cubic metres per year. Its initial throughput will amount to 2 bcf per day (56.64 mcm per day, or around 20.67 bcm per year).
NNPC hopes to begin building the AKK line before the end of 2020. It has already chosen a consortium formed by Chinese and local com- panies to act as its contractor for work on the pipe and compressor stations.
The AKK pipeline will be 614 km long (Image: Obor Invest
The link will be able to deliver feedstock to the gas-processing plant, petrochemical complex and fertiliser plant that DIL intends to build in the FTZ, he explained.
The group has put the cost of constructing the pipeline and the onshore facilities at several billion dollars, but has not yet put forward a more specific figure. Instead, it has stressed the environmental and economic benefits of the project, pointing out that the link will greatly reduce associated gas flaring at offshore oilfields.
Edwin referenced this point, noting that the
pipeline system was being built specifically for the purpose of bringing large volumes of associ- ated gas to market. “[This] is all offshore gas that we shall trap and cap,” he remarked.
DIL has also asserted that the project will benefit Nigeria in other ways. It says the con- struction of the pipeline will support domes- tic gasification initiatives in Nigeria, reduce dependence on imported fuels, generate additional budget revenue, increase foreign exchange reserves and create thousands of jobs, both directly and indirectly.
Nigerian government issues sovereign guarantees for Chinese pipeline credit
Week 10 11•March•2020 w w w . N E W S B A S E . c o m P7
