Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline has received interest to explore investment opportunities available from Shell Nigeria Gas Ltd. Shell Nigeria gas is a fully owned Shell company incorporated for the downstream distribution of gas to industries in Nigeria.
This was disclosed by Mr. Ed Ubong, the Managing Director of the company in Abuja at a meeting with the Chief Executive Officer of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed.
“SNG currently distributes natural gas for power generation to industrial clusters around Ogun, Abia, Bayelsa, Rivers and Lagos States, and we are currently exploring markets along with the Ajaokuta-Kaduna-Kano Pipeline project for an investment opportunity to take gas to industries up north of Nigeria,” said Ubong who was accompanied at the meeting by the General Manager, Shell Energy Nigeria, Mr. Markus Hector.
Explaining the need the West African country has for an accelerated gas infrastructure to deepen domestic gas distribution across its premises, the CEO of the NMDPRA, hailed Shell Nigeria for its deliberate and active investment in growing the gas supply and distribution market saying that their investments and supply has helped power industries in key locations across the country.
He also urged the company to continue being transparent, responsible and to practice good corporate governance in its business dealings in the country.
Developed by the Nigerian National Petroleum Corporation (NNPC), the Ajaokuta-Kaduna-Kano (AKK) gas pipeline project entails the construction of a 614km-long natural gas pipeline from the Ajaokuta terminal gas station (TGS) in the Kogi state in the southern region of Nigeria, through the Federal Capital Territory (FCT), Niger, and Kaduna, to terminate at a gas station in Kano.
The project, the cost of which is estimated at US$ 2.8bn, is being implemented in three phases, under a build and transfer (BT) public-private partnership (PPP) model, which involves the contractor providing 100% of the financing.
The first phase covers the section between Ajaokuta and Abuja, which is approximately 200 kilometers long and is budgeted to cost US$ 855M.
The second phase is from Abuja Gas Terminal to Kaduna Gas Terminal, a distance of 193 kilometers and its budget is US$ 835M, while the third and the final phase is from Kaduna to Kano, a distance of approximately 221 kilometers, and is estimated to cost US$ 1.2bn.
The natural gas pipeline project requires the laying of approximately 51,200 steel line 40in-diameter pipes featuring a total combined weight of 240,768t. The project will also utilize 24in-diameter steel line pipes for spur lines, as well as 40in-diameter line break valves and future tie-in valves.
Other infrastructures planned for the development include various associated valve stations, as well as intermediate and terminal facilities.
The Objective of the pipeline
The AKK gas pipeline will be supplied with up to 3,500 million cubic feet (mcf) of pipeline quality gas a day sourced from various gas gathering projects in the southern part of Nigeria, at a minimum pressure of 1,000 lb per square inch gauge (psig) at the Ajaokuta tie-in, and deliver it to Kano also at a minimum pressure of 1,000 psig.
The long-term target of the project is to supply gas to Europe through the Trans-Saharan Gas Pipeline (TSGP) project, which it forms phase one of. Upon completion, the TSGP will provide a golden opportunity for the West African country to exploit its gas potentials and utilize its gas resources to enable it to earn as much revenue from gas as it is earning from oil.
This will in turn enable the country to meet its nagging domestic gas utilization and eliminate its gas flaring, as well as meet global greenhouse gases/climate change policy requirements in the long run.
AKK gas pipeline Project timeline
The NNPC announced tenders for Ajaokuta-Kaduna-Kano (AKK) gas pipeline project.
NNPC submitted the proposal for the Ajaokuta–Kaduna–Kano (AKK) natural gas pipeline project to Infrastructure Concession Regulatory Commission (ICRC).
The feasibility study for the project was approved and the PPP compliance certificate was issued.
Nigeria’s Federal Executive Council (FEC) approved the pipeline project.
A consortium of two local companies including Oando Plc and Oilserv was awarded the engineering, procurement, and construction (EPC) contract for the construction of the first phase (Ajaokuta-Abuja) of the pipeline.
Ajaokuta-Kaduna-Kano gas pipeline in Nigeria to extend to Algeria
The NNPC announced plans to extend the Ajaokuta-Kaduna-Kano (AKK) gas pipeline system across the Sahara to Algeria in North Africa. Dr. Maikanti Baru disclosed the reports and said that the AKK gas pipeline is designed to enable gas connectivity between the East, West, and North of the country, which is currently inadequate.
China Export and Credit Insurance Corporation (Sinosure) agreed to provide insurance cover for 85% of the total cost of the Ajaokuta-Kaduna-Kano (AKK) gas pipeline project (US$ 2,890,522,548.37), which will be borrowed from Chinese financial institutions to the sum of US$2,591,849,049.19.
The Nigerian Gas Company (NGC) a subsidiary of the NNPC, would provide equity financing worth US$ 434M, the equivalent of 15% of the total cost.
Construction works on AKK Gas Pipeline project to begin this month
Dr. Kennie Obateru, the Group General Manager for the Group Public Affairs Division of the Nigerian National Petroleum Corporation (NNPC) announced that the construction works on the 40-inch x 614km Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline project, which was conceptualized as an integral part of the Nigerian Gas Master Plan (NGMC) and approved by the Federal Executive Council back in 2008, was set to break grounds following a virtual flag-off by President Muhammadu Buhari on 30th June.
Loan approved for AKK Gas Pipeline project
In December Minister of Finance, Budget and National Planning in Nigeria, Zainab Ahmed, and Mele Kyari the Group Managing Director at the Nigerian National Petroleum Corporation (NNPC) announced that the Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline project was set to receive a shot in the arm following the approval of a loan worth US$ 2.6bn for its implementation.
The funds would be disbursed by the Bank of China and Sinosure, a Chinese export and credit insurance corporation. The two institutions were set to fund 85% of the entire project costs while the Federal Government, represented by NNPC, would provide the remainder, 15%, through equity.
Flagged off in July 2020 by President Muhammadu Buhari, the Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline project according to Mele Kyari was approximately 15% complete and they were sure to deliver it on schedule.
“Despite the slowdown in economic activities, this project has not stopped even for a single day since it started about five months ago. We believe that we shall complete it within the stipulated time frame and within the estimated costs,” emphasized the NNPC Group Managing Director.
Nigeria seeks US$ 1bn for AKK pipeline project
The Nigerian National Petroleum Corporation (NNPC), through the federal government of Nigeria, is seeking US$ 1bn from lending organizations, including export-import institutions, to continue working on the ongoing construction of the Ajaokuta-Kaduna-Kano (AKK) pipeline.
This is after Chinese lenders (the Bank of China and Sinosure, a Chinese export and credit insurance corporation), who had pledged to offer most of the funds (85%) for the implementation of the project, failed to disburse the cash as expected.
Work on the AKK pipeline project started approximately 12 months ago and the NNPC has almost exhausted the envelope corresponding to its commitment to invest the remaining 15% in the project.
The AKK delay is the latest sign of failing financial support for infrastructure projects across the African continent, after years of major Chinese lending for the railway, energy, and other projects. Reportedly, Chinese bank lending to African infrastructure projects has fallen across the continent, from US$ 11bn in 2017 to US$ 3.3bn in 2020.