By Chineme Okafor in Abuja
The Nigerian National Petroleum Corporation (NNPC), yesterday disclosed that its Ajaokuta-Abuja-Kaduna-Kano gas pipeline project, often called the AKK Pipeline Project, would receive a funding boost worth $250 million from Chinese banks.
The corporation also explained that the gas line which would cost it $2.7 billion to execute had achieved a lot of milestones in its contracting process.
NNPC’s Group Managing Director, Dr. Maikanti Baru, stated these in a statement from the Group General Manager Public Affairs Division of the corporation, Mr. Ndu Ughamadu, in Abuja, though he did not disclose the identity of the Chinese banks that are willing to do this.
The statement however noted that Baru hosted a delegation of the Nigerian Gas Association (NGA) which was led by its President, Dada Thomas, when he made these disclosures.
Baru stated that the corporation got the funding window when it recently signed a $1.78 billion alternative financing agreements with International Oil Companies (IOCS) in London, for oil production, adding that the Chinese banks agreed to contribute $250 million towards the gas line projects.
He equally disclosed that the Chinese banks had made commitments to bring in as much money as might be needed to finance oil and gas investments in Nigeria.
According to him, the NNPC has opted to use the Public Private Partnership (PPP) financing framework to execute the gas line project, and that the corporation’s recent gradual exit from Joint Venture (JV) Cash Call regime would free up a lot of money for the project under this framework.
“We have gone far with the development of the project using the same paradigm shift of Public Private Partnership (PPP) financing. We have also gone far with the contracting process, part of which is to ensure that money meant for the project is raised from the private investors,” Baru, was quoted to have said in the statement.
He explained that the feat recorded in the project would bring to the fore, a new dimension in gas projects execution in the country, noting that it would equally signal a regime of private investors funding for such projects.
“On that occasion, I did challenge the Chinese banks that since they have now come on board, they should move from the back seat to the driver’s seat and they gave me their commitment that they have plans to bring in as much money as we need to execute our projects. And if the Chinese tell you that they are going do it, definitely they will do it and we will give them a run for their money,” he added.
He explained that the corporation would continue to support the federal government’s aspiration to increase Nigeria’s electricity generation to 10,000 megawatts (MW), with improved gas generation and distribution nationwide.
The recent debt settlement for arrears of JV cash call obligations by the corporation, he stated, would have great impact on the gas industry because the initiative was capable of freeing some dedicated funds that could be used to develop the sector.
“We have the aspiration of government to raise power generation to at least 10GW capacity, not just 10GW in terms of installed capacity, but one that will be steady in the grid by 2020. All these will drive our activities to ensure that the gas business is expanded and government’s aspiration to earn as much revenue from gas as oil will definitely be realised,” he stated.
Baru, said the current efforts to connect the eastern part of the country, where there are lots of gas reserves, with the west, where high consumption demand exists, showed that the NNPC is ready help the country’s power sector grow.
He said the NNPC would make inputs into the National Gas Policy recently adopted by the Federal Executive Council (FEC) as well as the fiscal bills on gas being worked out by the legislature, with the view to prioritising gas.
The statement equally noted that Thomas, in his remarks applauded Baru for the numerous initiatives he said NNPC has taken, and which had attracted NGA’s attention.
“We would like to congratulate the NNPC on a number of paradigm shifts, changes and initiatives it had brought to the fore in recent times. I am talking about the new alternative funding which you recently signed with Shell and Chevron to the tune of $1.78 billion; the clearing of $400 million debt in April; the progress being made on the ELPS – 2 loop lines and the OB3 gas project, one of the most critical gas pipelines in the country,” Thomas stated.