Nigeria Approves $2.7bn Northward Pipe Project
Nigeria's federal executive council (or cabinet) meeting on December 13 approved the the Abuja-Kaduna-Kano gas pipeline, or AKK gas project.
The AKK gas project focuses on three goals – to increase power generation for the national grid, to enhance movement of gas from the southern corridor to the north, and to enable the gas use to extend into the tributary regions of the country.
Ibe Kachikwu, minister of state for petroleum resources, told journalists that the project will be handled by three consortiums and cost about $2.7bn, and said it signifies the part of the National Gas Policy focused on transforming Nigeria from an oil based to a gas-based economy.
The FEC also awarded another contract to a consortium for the Odidi pipeline from Nigeria's southern marshlands which will move 364mn m3/d of gas, produced through the Niger Delta Development Commission (NDDC), to be fed into the Abuja-Kaduna-Kano pipeline. "This is all part of gas gathering mechanism. So the two taken together basically will boost gas delivery into Nigeria. Gas delivery for power has begun for the first time to take very definitive steps towards the movement of Nigeria from being a crude nation into a gas environment," the minister said.
However, it is possible that the government may not be making the smartest economic decision with these investments, as there are still more basic gas infrastructure projects in need of an upgrade, something that experts keep referring to as necessary to reinforce the current gas to power supply chain. There are still projects the government has not yet been able to fully implement. If the money meant for the AKK pipeline - assuming it is fully disbursed - were instead used to develop infrastructure for gas pipelines and gas-fired power plants already in service, it might be more economically viable.
Moreover the government's commitment to gasifying Nigeria seems at odds with its apparent decision to run a power plant in Kaduna on diesel, when an LNG investor devised a way in which it could run on gas. A probe by a Senate committee is investigating into whether the federal power ministry unfairly reneged on a deal with the investor.
A few months earlier Kachikwu, in an argument about governance, pointed to the AKK gas pipe contract as an example of one awarded without his consent as an NNPC board member.