Nigerian Gas Master Plan: FG Awards $2.8bn Ajaokuta-Abuja-Kaduna-Kano pipeline contract

Chongqing Construction Engineering Group, Oilserv, Tianjin Energy, and Alpha Group

The implementation of the Nigerian Gas Master Plan (NGMP) got underway at the weekend as the federal government announced the award of $2,809,522,548.36 gas pipeline contract designed to run from Ajaokuta-Abuja-Kaduna-Kano.

Although the Senior Special Assistant to the President on Media and Publicity, Malam Garba Shehu, who made the announcement yesterday, did not give details of the contract, the 614 kilometre 40-inch pipeline was presented by the Minister of State for Petroleum, Dr. Ibe Kachikwu, and approved last week by the Federal Executive Council (FEC).

It marks the beginning of the implementation of the first phase of the gas master plan that was approved in 2016.

Shehu said a second contract was also approved under the scheme and was meant for the engineering, verification, procurement and construction of 40 inch-30 kilometres Odidi to Warri gas pipeline expansion project.

He said the second contract was designed to transport additional gas supply from upstream producers to various demand points at the cost of N7.7 billion and $56 million.

He described the projects as parts of the president’s pet projects, which he said dated back to his days as the Federal Commissioner for Petroleum Resources.

President Muhammadu Buhari is the current Minister of Petroleum.

According to him, when Buhari was federal petroleum commissioner, as a colonel, he led some think-tanks to plan the country’s gas future and consequently initiated the contracts for the laying of a massive network of petroleum pipelines.

He also said the pipelines were meant to link the length and breadth of the country as well as lay the foundation for the construction of three refineries in Warri, the second Port Harcourt refinery and another in Kaduna with the aim of augmenting the supply and distribution of petroleum products in the country.

Shehu described the period Buhari was petroleum minister as the golden era of the country’s petroleum industry when domestic refining not only met the requirements of home consumption but also produced in excess of 150,000 barrels of refined products for export.

He said: “The bold step taken by the President on Wednesday seeks the integration of the Eastern and Northern parts of Nigeria, which had suffered past neglect into the gas economy. Gas pipeline infrastructure had been concentrated in the coastal areas and the North and the East had been left largely untouched by the industrial revolution that has come with the gas pipeline network.

It is therefore not surprising that the western part of the country is having more economic activity.

“These contracts for pipelines and LNG terminals to be set up at various points will, therefore, expand opportunities for balanced national development to counter the backwardness and geographical disadvantages of the North and the East.

“In line with the country’s rapid growth in energy demand, the connection of the south and the north should serve as a boost to the nation’s energy security.

“The increased energy transportation networks will be a shot in the arm for the struggling manufacturing industry which is suffering from the acute crisis in the energy sector. It will cater to the needs of cement and fertilizer plants; power plants, transportation systems and even household consumers thereby increasing gas share in the country’s energy consumption mix.

“Gas which is classified as clean energy will, in addition to the promise of energy security, provides efficient fuel for power generation and reduces air pollution leading to improved quality of life.

“The Trans-Nigeria Gas Pipeline (TNGP), the East-North network starts from Qua Ibeo Terminal, QIT to Cawthorne Channel in Rivers traversing Obigbo-Umuahia-Enugu-Ajaokuta and now Ajaokuta-Abuja-Kaduna-Kano is likely to be completed in 2019.

“The extension of this network to the East and the North is potentially the precursor of the Trans-African pipeline that will cross the Sahara en route Europe. Nigeria’s eyes have for many years been fixed on the European Gas consumer markets.

“The contractor financing arrangement has been adopted and the project sponsor, the Nigerian National Petroleum Corporation (NNPC) and the Federal Government are expected to reach common terms with the contractors on how they will be repaid over a 15-year period.

“Although the loan repayment is expected from revenue accruing from both existing and the expanding pipeline network, the NNPC and the Federal Government are expected to meet financial gaps and guarantee the return on net investment.

“The Buhari administration came into office at a time when Nigeria faced a crisis of inadequate and crumbling infrastructure and has, as a matter of priority embarked on a number of positive interventions to ease the infrastructure crunch.

“The administration has been raising short-term and long-term funding for road projects, railway and power projects.

“The President is strongly optimistic that all these infrastructure projects will increase the scope of economic activities and contribute to the overall economic growth and development of the country. This is the Change.”

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Obineme Ndubuisi Micheal, Technical | Creative and Senior News Writer, covering the entire value chain of the Energy Industry. Our publication covers the entire value chain of Renewable/Energy, Power, Mining, To get in touch, email: oilandgasrepublic@gmail.com