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The Nigerian National Petroleum Corporation (NNPC) has used around $1.1 billion of its own funds so far and has completed work on 70% of a large natural gas pipeline in Nigeria even after a Chinese loan for the project failed to materialize.
Nigeria’s federal government announced in July 2020 that the Bank of China and Sinosure had agreed to finance part of the costs for constructing the Ajaokuta-Kaduna-Kano (AKK) gas pipeline to the economic hub in the north, Kano. In the summer of 2021, reports started swirling that Chinese lenders were reluctant to increase their exposure and finance part of the gas pipeline project estimated to cost $2.8 billion.
Nigeria has started to look for alternative funding for at least US$1 billion of the pipeline’s cost and has started to approach other lenders, including export-import credit institutions, sources told Reuters two years ago.
This week, NNPC Group chief executive, Mele Kyari, said on a site inspection that the AKK Gas Pipeline project was nearly 70% completed, and more than $1.1 billion has been released so far to finance the project. The pipeline is planned to run for 614 kilometers (382 miles) and is currently being financed by NNPC.
The AKK Gas Pipeline line will flow 2 Bscf/d and will power industries and power plants and create gas-based industries, Kyari said. By the third quarter of this year, NNPC will complete the entire welding job on this line, he said while visiting a construction site along the pipeline’s route.
“We have so far spent over $1.1 billion on this project from our cashflow,” NNPC’s Kyari said.
“We are a commercial company today. We have inter-company loans within our company now. This company can fund this project, so we do not need any support to deliver this project now.”
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com