• Saturday, March 02, 2024
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NNPC looks to PPP option for $5bn gas pipeline project

Nigeria’s state oil and gas operator, the Nigerian National Petroleum Corporation (NNPC) is currently putting together a plan to execute the Ajaokuta-Abuja-Kano leg of the $5billion Calabar-Kano gas pipeline project through private-public partnership (PPP) BusinessDay learnt yesterday, from sources close to the deal.

Industry watchers however said yesterday, that the NNPC has the responsibility of packaging the project to make it attractive to investors to ensure that the new experiment would be successful.

Some other oil and gas industry operators also said the implication of this is that the corporation would have to close in on all engineering designs and that the right of way has to be mapped out, as well as environmental impact assessment, all of  which  are critical for accessing international funds.

Even more important they say,  is assurance on income streams of the project because the investors would want  assurance of early recouping  of investments.

These are some of the fears being expressed, as the PPP model takes a lot longer than when the project is funded 100 percent by government.

Reacting to the development, David Ige , group executive director ,Gas and Power, NNPC,  told BusienssDay that over the last year or so,  the  NNPC team has been working diligently on the project. “We have done the right of way survey for the entire pipeline length. We have progressed with the engineering and we hope to cross a major threshold by the end of September”.

Ige added: “We have done our initial bankability assessment and we continue to review this because of the dynamic nature of the gas supply situation. We know that in order to secure bankability, we need to be very firm on the gas supply, so all of these things are being done, or were being done to put the project in place to attract the right investment.”

He said all the work being done was crucial to the project going forward. He observed that the committee which was recently  set up to oversee the completion of the  project would have to ascertain what can be adapted incrementally to get the project going.

“They would be looking at options now and all the work that has been done in the past would now manifest.”

On the relevance of the Abuja –Kaduna –Kano projects to the nation’s gas master plan, officials of the industry who said they were not permitted to speak openly of the issue, observed that the intention of the plan was to grow the economy with natural gas.

Industry watchers say that currently, half of the entire country is not connected to gas infrastructure, and that by the   time the Northern Segment of the country gets accesss to  supply, there would a significant stepping up in the cost-effectiveness of energy resources which impact directly on the industrialisation and job creation in the north.

They observe that the Abuja- Kaduna –Kano gas pipeline project is essentially designed to function as a backbone into the northern heartland, from where the gas infrastructure would begin to expand eastwards and westwards.

With the gas pipeline passing through Abuja,the proposed 1,000 megawatts power plant  for Abuja would then become viable, as  there would gas  to feed the plants.

Recently, a  Gas Pipeline Project Steering Committee” was constituted, with the mandate of ensuring efficient and accelerated actualisation of the task, in line with President Goodluck Jonathan’s “gas revolution agenda”.

According to Ohi  Alegbe,  group  general manger , Public Affairs (NNPC) , the project was approved under the National Gas Master Plan by the Federal Executive Council and was designed to transport gas for power and manufacturing industry usage to the key northern axis.

The corporation described the project as one of the “cardinal programmes” of the transformation agenda of the Jonathan administration.

Alegbe observed in a statement, that  progress was being made in the execution of the “adjoining OB3 gas pipeline project, as well as the looping of the Escravos Lagos Pipeline System (ELPS).”

He however noted that the implementation of the AKK project was slow and out of sync with government’s desire for accelerated implementation. “In order to strengthen this critical project and have it re-focused for accelerated implementation, there is the compelling need for the establishment of a dedicated AKK Project Steering Team, with clear governance structure,” he said.

Olusola Bello