NIGERIA is poised to obtain another significant loan from after the Bank of China and Sinosure committed itself to funding 85% of the loan requirements of the proposed Ajaokuta-Kaduna-Kano (AAK) gas pipeline project.
Seen as a means of piping gas to Nigerian consumers, the AKK pipeline is a 614km-long natural gas conduit. Costing an estimated $2.8bn, the project is expected to transport 3,500m metric standard cubic feet of dehydrated wet gas a day from several gathering projects located in southern Nigeria.
Flagged off in July this year, the AAK project is 85% funded by the Bank of China and Sinosure, a Chinese export and credit insurance corporation, while Nigeria’s federal government, represented by the Nigerian National Petroleum Corporation (NNPC), provides 15% equity. Yesterday, finance minister Zainab Ahmed, and the NNPC managing Mele Kyari, inspected the project in Ajaokuta, Kogi State.
During their visit, they announced that Brentex/China Petroleum Pipeline Bureau and Oilserve/China First Highway Engineering Company consortia were the engineering procurement and construction contractors for the project. According to the finance minister, the project was being delivered on time and on course, adding that despite the slowdown in economic activities, it had not stopped for one day.
Ms Ahmed said: “We have to give a sovereign guarantee to the lender so that the loan is concluded. I’m glad to say that the loan has been concluded and very soon, the disbursement will start.
“We are glad that gas is being piped across this line from Ajaokuta to Kaduna to Kano. This will help to revive industries in those parts of the country and create jobs.”
Mr Kyari said nothing would stop the project except force majeure or an act of God. This, he said, was because the Bank of China had approved the loan and the project would continue till its financial close.
He added: “We borrowed money, 85% of the total project scope as loan and then we provided 15% as equity from NNPC’s own resources. So, the 85% that will come from our Chinese partners will be available for draw down.”
Mr Kyari said security was being built around the pipeline, which included the deployment of optic fibre lines that would run parallel to the line, such that at any infraction, the corporation would know about it and respond. On repayment of the Chinese loan, he said that as soon as gas starts flowing through the line, the revenue from it including existing revenue streams would be used for repayment.
“More importantly, we are using the best of technology so that we will bury the pipes deeper than normal and we don’t think that there is any high level of risk associated with this pipeline,” Mr Kyari added.
When functional, the project aims to create a steady and guaranteed gas supply network between the northern and southern parts of Nigeria by utilising the country’s widely available gas resources. In addition, the development is expected to reduce the large volume of gas flared annually in Nigeria.