After making a slow start, the Nigerian energy landscape is set for a major change with the award of a $2.8 billion ($2,809,522,548.36) gas pipeline contract approved by the Federal Executive Council as proposed by the Ministry of Petroleum Resources.
The ministry is under the direct supervision of President Muhammadu Buhari.
Ibe Kachikwu, the Minister of State who made the presentation to the cabinet, announced that the project is for the construction of a 40 inches pipeline across 614 kilometres from Ajaokuta to Abuja-Kaduna-Kano. This should mark an important landmark in the implementation of the first phase of the Nigerian Gas Master Plan, NGMP.
A second contract approved under this massive, blockbuster investment is for the engineering, verification, procurement and construction of a 40 inches 30 kilometres Odidi to Warri gas pipeline expansion project. This one is to transport additional gas supply from upstream producers to various demand points at the cost of N7.7 billion and $56 million.
The projects, which can rightly be termed as being among the president’s pet projects is owed, in part to his vision and momentum back in his days as the federal commissioner for petroleum resources. That time, then Colonel Muhammadu Buhari led think-tanks to plan the country’s gas future and initiated the contracts for the laying of a massive network of petroleum pipelines, linking the length and breadth of the country and laid the foundation for the construction of three refineries, Warri, the second Port Harcourt refinery and the one in Kaduna in a bold move to augment the supply and distribution of petroleum products in the country. That was the golden period of the country’s petroleum industry when domestic refining not only met the requirements of home consumption but also produced excess 150,000 barrels of refined products for export.
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.
The All Progressives Congress, APC, which had campaigned on the issue of inclusive growth holds the view that the achievement of a balanced and equitable national development can only come with a balanced growth of the states and the regions. The party manifesto had identified the development of natural gas transportation infrastructure as a key project in this regard.
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 suffers 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, provide efficient fuel for power generation and reduce air pollution leading to improved quality of life.
For 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 enroute 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 to from both existing and the expanding pipeline network, the NNPC and the Federal Government are expected to meet financial gaps and guarantee 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.