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THE IMPENDING AKK GAS PIPELINE AND NIGERIA’S ECONOMY

Admin
Saturday, 01 August 2020

The last time I checked, Nigerians in their entirety couldn’t wait to embrace the commencement of yet another gas pipeline within the country’s Northern region. The curiosity isn’t unconnected with the recent avowal tendered by the Presidency. Few weeks back, precisely 30th June 2020, President Muhammadu Buhari virtually conducted the flag-off ceremony of the proposed Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline project. It’s worth noting that the overall cost of the historic landmark project is estimated at 2.6 billion dollars. This is coming at a time the country is battling with the Coronavirus disease (COVID-19) pandemic. While speaking at the occasion, President Buhari disclosed that the project, whose impending construction is based on budgetary allocation and specifications, was very dear to the people of Nigeria, hence must succeed.

He, therefore, mandated the Nigerian National Petroleum Corporation (NNPC) and its partners to remain resolute, noting the AKK project was part of the delivery of the current administration’s Next Level Agenda for sustainable development, enhancement of economic prosperity and increase of the country’s infrastructure assets. The president stated thus “We promised the nation that we will expand the critical gas infrastructure in the country to promote the use of gas in the domestic market. These include the Scarves to Lagos Pipeline System, Obiafu to Obrikor Pipeline and the AKK.”

The Nigeria’s number one citizen equally informed that the project, which is scheduled to be completed in two years time, was fundamental to the government’s desire to industrialize the country and energize the entrepreneurial spirit that remained present among our teeming population. He further highlighted that the project, when duly completed, would provide gas for generation of power and for gas-based industries, which would facilitate the emergence and development of new industries.

Aside its significant job creation potential – both direct and indirect – as well as fostering the development and utilization of local skills, manpower, technology transfer cum promotion of domestic manufacturing, Mr. President opined that it would ensure the revival of moribund industries along transit towns in Kogi, Niger, Kaduna, and Kano States coupled with Abuja, the precise areas where the pipeline will cut across. Still at the virtual ceremony, the president acknowledged that the COVID-19 pandemic had further underscored his administration’s drive for export substitution initiatives and projects that promote local manufacturing, hence the emergence of the 614km AKK gas pipeline.

It’s noteworthy that the key financiers of the epoch-making project are reportedly the Bank of China and SINOSURE, China’s Export and Credit Insurance Corporation. Similarly, the contractors are Brentex Plc., China’s Petroleum Pipeline Bureau and Oilserve Plc., China’s First Highway Engineering Company. In his speech, the Group Managing Director (GMD) of the NNPC, Mr. Mele Kyari explained that the project involved the establishment of a connecting gas pipeline network that would link the Northern region to the Niger Delta, Eastern and Western regions of the country. The project, which had been awarded at a total contract sum of US$2.592bn, was awarded to Oilserv Plc for the first segment covering 303km whilst the second segment covering 311km was awarded to Brentex Petroleum Services.

The second segment, according to reliable report, indicates that it would be financed under a debt-equity financing model with loan from the Bank of China and SINOSURE meant to be repaid via the pipeline transmission tariff and supported by a sovereign guarantee. This is undoubtedly a capital-intensive project to assert the least. Hence, must not be handled with a kid glove towards ensuring its timely and apt construction cum completion. This is one of the prime reasons borrowing is necessary. Every individual, entity or corporate body is only required to borrow when capital projects are involved. It’s highly inconsequential and preposterous to seek for loan to service recurrent expenditure or what have you.

However, it’s injurious if the project being borrowed for isn’t realized in the long run. For such a remarkable project to yield the expected fruit, various parameters need to be considered by the relevant authorities. The implementation of the proposed AKK project, which is meant to be directly under the watch of the NNPC Management, deserves nothing but the very best if it’s really targeted to positively turnaround the Nigeria’s economy – particularly in the oil and gas sector. This is the reason some factors mustn’t be overlooked as it progresses. The direct beneficiaries of the project – including Niger, Kaduna, Kano and Kogi States as well as the Federal Capital Territory (FCT) – must therefore be on the lookout with a view to ensure that the needful is deployed as long as the construction works last. In view of the above, the governments of the aforementioned states and the authority in charge of the FCT need to guarantee adequate monitoring of the project by invariably bringing themselves closer to the construction sites.

Hence, the concerned governors and the FCT Minister shouldn’t be reminded of their respective Corporate Social Responsibilities (CSR) as regards the progress of the impending project, especially in the area of security and allied matters. In the same vein, the National Assembly (NASS) – in their oversight function as enshrined in the Nigerian Constitution – needs to equally extend their tentacles toward the overall activities arising thereof. In this regard, an ad-hoc monitoring committee ought to henceforth be set up by the lawmakers. On the other hand, it’s imperative to remind the Buhari-led government the compelling need to revisit the Ajaokuta Steel project. It could be recalled that the bill for the onward completion of the abandoned capital-intensive project was graciously passed by the eight assemblies but was unfortunately declined assent by the Presidency, reason best known to it.

So, as we consider the post COVID-19 era in advance, it’s pertinent for the president to make a u-turn in a bid to reexamine the said bill to make amends where need be and resubmit same to the ninth assembly. This time, it can be tendered as an Executive Bill. This mustn’t be jettisoned if we are truly sincere about touch-lighting the epileptic economy. I cannot possibly conclude this analysis without mentioning the country’s downstream sector in the petroleum industry.

It’s also high time the Federal Government (FG) became strongly determined to revamp our moribund refineries. It’s appalling that after years of promising to fix the said anomaly, Nigerians are yet to embrace a new era in that regard. Similarly, we need to step up actions to ensure that the country could boast of various modular refineries as earlier announced. We can’t continue to dwell in the past at such a time like this. So, as we get prepared to squarely face the challenges to be occasioned by the dreaded COVID-19 pandemic, governments at all levels must take into cognizance that tech-driven measures and policies are the only way out. It suffices to say that technology is the most reliable remedy to our current plight as a people. Think about it!

About IWIN

The Independent Energy Watch Initiative (I-WIN), an enterprise of Energy ConServ and the Roundtable for the Growth and Development of Power (RODEP), is an online/web based power sector portal that strives to engage stakeholders and the Nigerian public on topical issues in the power sector.

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