MegaProject 1074: Nigeria approves US$2.8 billion gas pipeline PPP
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The Federal Executive Council (FEC) of Nigeria has approved the US$2.8 billion Ajaokuta–Kaduna–Kano (AKK) gas pipeline project. The 40-inch pipeline will span 614km. It will transport gas north from Ajaokuta, through Abuja and Kaduna, before terminating at a terminal gas station in Kano.
The project will be delivered through a Build and Transfer (BT) PPP model with financing provided entirely by the contractor.
The Infrastructure Concession Regulatory Commission (ICRC) issued the PPP Compliance Certificate for the project in July this year. However it has been in development since the government approved the Nigerian Gas Master Plan (NGMP) in 2008.
The NGMP was devised to accelerate the development of gas pipeline infrastructure for domestic and export markets with the intent of maximizing the effect of gas in the domestic economy, ensuring long-term energy security and optimizing the country’s export gas capability.
Implementation of the AKK project did not go according to plan, with development progressing much slower than the government intended. In September 2014, the project was revitalised with the establishment of a Project Steering Committee. The pipeline was named a National Priority Project.
It now constitutes Phase 1 of the Trans-Nigeria Gas Pipeline (TNGP) Project. Other phases concern a network of pipelines in the east of Nigeria, which in total will span over 800km.
The scale and ambition of TNGP reflects the major expansion of the Nigerian gas sector, which will have grown from less than 500mmcf/d a few years ago to over 5,000mmcf/d by 2018. This expansion has necessitated a major revamp and growth of gas infrastructure.
The proposed pipeline network will serve existing customers in cement, power and other industrial sectors. More importantly, the expanded network will serve new customers in the north and east as well as bridge the shortfall in the Escravos Lagos Pipeline System (ELPS) network in the west. It will also augment supplies to the West African Gas Pipeline. Customers in the network will include power plants, industrial customers and CNG off-takers.