NNPC to Fund New Gas Pipeline Projects with Transportation Tariff

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NNPC Tower

Chineme Okafor in Abuja

The Nigerian National Petroleum Corporation (NNPC) has indicated that up to 1000 kilometres (km) of new gas lines that would be added to Nigeria’s gas line network would be funded through a new framework of contractor financing and then their construction costs paid off through agreed transportation tariff.

It also stated that all the available gas powered electricity generation plants in Nigeria are currently connected to permanent gas supply pipeline, adding that its drive for more power plants to be connected to gas lines would eventually put up to 2,700 megawatts (MW) of electricity to the national grid soon.

Speaking at the recent 2017 conference and annual general meeting of the Nigerian Society of Engineers (NSE) in Abuja, the Group Managing Director of the NNPC, Dr. Maikanti Baru, also explained that the corporation has completed and commissioned about 500km of gas pipelines between 2010 and 2017.

His remarks at the NSE conference were contained in a statement by NNPC’s Group General Manager Public Affairs, Mr. Ndu Ughamadu.

Baru said the exercise was part of its aggressive plan to expand Nigeria’s gas pipeline infrastructure, and bring more industries to connect to gas as fuel for their various productions.

He noted that the accelerated expansion of the gas pipeline system took off from the directive of the then President Olusegun Obasanjo, to the oil companies in the country to support the government’s power generation effort, and continued until gas-based power generation plants began to contribute up to 70 per cent of Nigeria’s daily power generation.

Providing details of the planned expansion of the country’s gas infrastructure, he said the network would be bolstered with the completion of the 127km East-West OB3 gas pipeline which would join Oben to Obiafu-Obrikom by the fourth quarter of 2018, and the 363km looping expansion of Escravos-Lagos Gas Pipeline System expected for delivery by the first quarter of 2018.

He said the Engineering, Procurement and Construction (EPC) tender evaluation process for 683km Ajaokuta-Abuja-Kaduna-Kano gas pipeline contract, and that of the Qua Iboe Terminal to Obiafu/Obrikom (QIT-Ob/Ob gas pipeline) were on-going.

“Upon completion the remaining projects are expected to add over 1000 kilometers to the nation’s gas pipeline network,” said Baru.

On funding, he said the NNPC would adopt Public Private Partnership (PPP) models in building and expanding the gas infrastructures, starting with the Ajaokuta–Abuja-Kaduna–Kano (AKK) gas lines which would be built through contractor financing model, with the selected contractors providing the funds for its construction and then recover it through transportation tariff.

“This model will be extended to other major backbone pipelines in the Nigerian Gas Master Plan,” Baru added.
Baru, equally listed the gas pipelines so far delivered by the NNPC to include the 196km Oben gas plant to Geregu power plant pipeline, 110km Escravos-Warri-Oben gas pipeline, 128km Ukanafun-Calabar pipeline, 50km Emuren-Itoki pipeline, 31km Itoki- Olorunshogo pipeline and 24km Imo River-Alaoji gas pipeline.