Missing link in AKK pipes

If President Muhammadu Buhari’s administration succeeds in delivering the 40-inch, 614km Ajaokuta-Kaduna-Kano [AKK] gas pipeline project within 24 months as promised, it would have created a major legacy project and would have laid a solid foundation for boosting this country’s energy and industrial infrastructure.

AKK kicked off last Tuesday, June 30, when President Buhari launched it virtually from Abuja.

Kaduna State governor Nasiru el-Rufa’i and Minister of State for Petroleum Resources Timipre Sylva turned the sod at the Rigachikun end while Kogi State governor Yahaya Bello and NNPC Group Managing Director Mele Kyari performed the ceremony at the Ajaokuta end.

This $2.592bn project is a section of the Trans-Nigeria Gas Pipeline, TNGP.

It is going to link up the North with Escravos-Lagos Pipeline System II [ELPS II] and Obiafu-Obrikom-Oben [OB3] gas pipeline, which is under construction.

When completed, it will have the capacity to transport 2.2billion cubic feet of gas per day.

This will boost domestic utilisation of Nigeria’s gas resources.

It would unlock 2.2billion cubic feet of gas to the domestic market and support the addition of 3,600 megawatts of power to the national grid through the construction of new gas power plants.

This in turn could turn around the fortunes of the textiles industry as well as support development of gas-based industries such as petrochemicals, fertilizer and methanol.

The first challenge is to deliver this gigantic project in time. It should never go the way of other huge national projects such as Ajaokuta Steel, Mambilla Hydropower, Aluminum Smelter or the many uncompleted power projects dotting the landscape.

Conceived as part of the Nigeria Gas Master Plan [NGMC], the project has already suffered undue delay.

Federal Executive Council [FEC] approved it in 2008 but it is only just now taking off, thanks to concerted efforts by the Kyari-led NNPC management, Minister Sylva and the President.

While launching it, President Buhari said government was commited to ensure the project’s timely delivery “within budgetary allocation and specifications.”

It is very dear to the people of Nigeria and must succeed, he said.

He also said, ‘‘It has significant job creation potential both direct and indirect, while fostering the development and utilization of local skills and manpower, technology transfer and promotion of local manufacturing.’’

That is one area where there appeared to be a serious omission.

The project is being financed by the Bank of China and SINOSURE,to be repaid through pipeline transmission tariff, supported by a sovereign guarantee.

Messrs Oilserv Plc/China First Highway Engineering Company [CFHEC]consortium is handling the 303km Ajaokuta-Abuja-Kaduna segment, while Brentex/China Petroleum Pipeline Bureau [CPP]consortium got the contract for the 311km segment, starting from along the Abuja-Kaduna highway to Kano.

Left out of the project are local companies that manufacture pipelines of all sizes and shapes.

There are several of them but the leading ones are Setraco Construction Company [SCC] and Yulong.

SCC has been in Nigeria since 1976.

It commissioned an ultra-modern pipeline manufacturing plant at Bwari, FCT in 2005, which makes water, gas, steel and all other pipes of high quality.

It has handled many local projects including Lower Usuma Dam pipes.

Yulong Steel Pipes in the Lekki free zone is also a major pipeline manufacturer for the oil industry and other industries.

Omission of these local firms from this project violates the spirit and probably the letter as well of the Nigeria Content Development and Monitoring Act.

The “development and utilization of local skills and manpower, technology transfer and promotion of local manufacturing’’ that Buhari spoke about at AKK’s virtual launching will be best served by involving local firms in it.

It will encourage local production, generate much more local employment and gain more in local taxes.

An NNPC official said the two local firms’ quoted price was higher than the foreign contractors’.

This is understandable because the Chinese firms have cheaper power and the benefit of economy of scale, but cost alone should not exclude local firms because of other likely benefits.

Besides, the quoted price could be renegotiated.

We urge President Buhari and NNPC to urgently address this hiccup while also concentrating attention to ensure that this all-important national project is completed on schedule.