$2.8bn Ajaokuta-Kano pipeline suffers setback

  • FG suspends power purchase deals for project

 

 

 

T

he $2.8 billion Ajaokuta-Kaduna-Kano (AKK) pipeline project has suffered a major setback.

 

 

The Federal Government, New Telegraph gathered at the weekend, has suspended power purchase deals for the project, a 614km-long natural gas pipeline currently being developed by the Nigerian National Petroleum Corporation (NNPC).

 

 

It is expected to be extended to Algeria in furtherance of African integration drive just like the West African Gas Pipeline, (WAGP). It may also be outstretched to Morocco.

 

 

In April 2018, government signed contracts for engineering, procurement, construction commissioning and financing of the gas pipeline with investors, and promised to take a final investments decision on the project.

 

 

“The progress made through the engineering, construction and construction agreement, which is 100 per cent contractor-financing model and was signed with a consortium of indigenous and Chinese companies, is now being slowed down by the suspension of the power purchase agreement for the project,” a source close to the deal told this newspaper.

 

 

A document of the NNPC sighted at the weekend also confirmed the suspension of the gas purchasing agreement for the AKK pipeline project.

 

 

Quoting the Chief Operating Officer (COO), Gas and Power, Nigerian National Petroleum Corporation(NNPC), Mr. Yusuf Usman, the document noted that the position of NNPC on the suspension was made known through a presentation by Usman entitled ‘‘Charting The Way Forward for Gas and Energy,” at the just concluded conference in Abuja.

 

 

The AKK project, the document read, was conceived to ensure that economic challenges being witnessed in the northern region due to shortage of gas supply were addressed.

 

 

“The COO disclosed that the inability of the NNPC to come up with a clear revenue collection methodology for power consumed or what he described as the ‘awoof’ mentality of Nigerians led to the suspension of the PPA.

 

 

“He assured that there was no going back on the AKK project because it must have off-takers, adding that when completed, Abuja will have a 1,350MW power plant, Kaduna; 900MW and Kano; 1,350MW,” the document read.

 

 

All these, the COO said, could not be achieved if there is no PPA in place.

 

 

He, however, assured that the NNPC was coming up with a robust solution to address some of these shortcomings because the Nigerian Bulk Electricity Trader (NBET) said it would only do ‘take and pay’ for energy only.

 

 

Usman maintained that the NNPC alongside its stakeholders were working toward achieving a forward-looking PPA that will be a win-win for all participants in the power sector value chain as against one that is lopsided.

 

 

 

He said Nigerians were used to consumption of electricity without paying for it even as one of the biggest challenges confronting the industry was that of collection losses.

 

 

He said government had challenged in ternational oil companies (IOCs) for enabling gas for export without doing much for domestic consumption.

 

 

“And the answer that came out from that was not that of price. At a certain time in this country, we were selling gas at 50 cents and we ended up a huge debt profile. So my message to this audience is that we should be responsible in our consumption. Once we pay for what we consume, the demand for domestic consumption will significantly increase,” he added.

 

 

He said the conversation with the IOCs had revealed that they were ready to produce gas so long as they can determine a long term sustainable payment model.

 

 

Usman admitted that the country had a big problem in the power sector, saying this informed the promise by President Muhammadu Buhari that he would give the country 10,000MW of additional electricity during his stay in office.

 

 

He said out of the 10,000MW promised by President Buhari, his office had the mandate to deliver 5,000MW.

 

He assured that there was no going back on the AKK project because it must have off-takers.

 

Meanwhile, the Nigerian Liquefied Natural Gas Company, NLNG, said that it had completed about 83 per cent of its Nigerianization process with a view to meeting the 100 percent target by 2022.

 

 

In a statement, a subsidiary of the company, NLNG Ship Management Limited, NSML, currently has 661 competent and professional seafarers made up of 297 officers, 329 ratings and 35 shore based personnel.

 

 

Speaking to newsmen last week in Lagos, Mrs Eyono Fatayi-Williams, the communication and external relations manager, said besides the number of Nigerian seafarers in the employment of the company, it had also contributed quite substantially to the growth and development of the Maritime Academy of Nigeria, Oron, in Akwa-Ibom State.

 

 

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