Last modified: June 21 2021
Over the past 10 years, China has made a wide-range of investments in Nigeria, and this has drawn a backlash from Nigerians who worry about the increase in debt-driven infrastructure projects funded by the Chinese. From the period in focus, Nigeria has been able to build a 186km rail between Abuja and Kaduna, with another between Lagos and Kano under construction, this progress has been made possible by financing from China. The new $2.5bn gas pipeline finance agreement is secured for the Ajaokuta-Kaduna-Kano (AKK) pipeline is a 614km-long natural gas pipeline currently being developed by the NNPC and forms phase one of the Trans-Nigeria Gas Pipeline (TNGP) project. It is expected to be a tremendous success and a burgeoning source of economic growth for the nation.
The AKK pipeline project, is planned to be implemented using a build and transfer (BT) public-private partnership (PPP) model. A build and transfer (BT) is a contractual arrangement whereby the Private Party undertakes the financing and construction of an infrastructure project and after its completion hands it over to the Government Agency. The Government Agency will reimburse the total project investment, on the basis of an agreed schedule, the BT option relieves NNPC the immediate burden of the huge initial outlay for the development while still vesting the operation and maintenance of this important infrastructure asset on NNPC.
- As an advocate of gas projects that will enhance utilization & commercialization, I am glad that the project will help to reduce gas flaring in Nigeria - The AG produced in the country have historically been flared because of inadequate gas infrastructure, inappropriate/ unrealistic pricing of gas, low level of industrialization, and inadequate consumption capacity. We have flared 60% of the AG despite only 40% of Nigerians having access to electricity. Which brings me to the second point - It would encourage diversification of energy resources in the country- Projections have shown that when the gas pipeline is completed, new gas-to-power plants will push power generation capacity to more than 10,000 MW -:Three new captive gas-fired plants, to be located in Abuja, Kaduna and Kano, are expected to deliver 3,600MW ), The pipeline will also supply 2bn ftÂ³/d (56mn ftÂ³/d) of gas, in the short term to domestic customers. - Direct and Indirect creation of jobs in the long run- Hydrocarbon liquids from this process will be further processed at Ajaokuta to produce liquefied petroleum gas (LPG), while the remaining will be transported through the pipeline to serve as feed stock for power and new petrochemical facilities planned for Abuja, Kaduna, Kano, and Katsina. This will help jump start Industries, increase domestic use of gas & increase export. Development of gas infrastructure in Nigeria will bring about valuable economic benefits that come with this project, in as much as it will be delivered over a stretch of years.
Olawunmi Olatunji Bsc, Msc FMVA
Olawunmi is a petroleum & energy economist, founder & lead technical advisor at The Business Outliers. She has a Bachelors degree In Geology & Masters in Petroleum Geoscience. Lawunmi is a certified Financial Modelling and Valuation Analysts.