The AKK Gas Pipeline Project

A multi-billion dollar gas project aimed at revolutionizing the nation’s economy on completion, is underway


It promises to be one of the largest projects of its kind in the world. To show the importance the present Federal government attaches to it, using a virtual platform, President Muhammadu Buhari on Tuesday June 30 launched the construction of the 40-inch x 614km Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline project which on completion will redefine industrialization in Africa’s most populous nation.

The contract was awarded at the cost of $2.592 billion, an equivalent of N1 trillion. The Engineering Procurement Construction, EPC for the project was awarded to Messrs Oilserv Plc and China First Highway Engineering Company. Oilserv/CFHEC Consortium, will handle the first segment, covering 303 km. The AKK project is a section of the trans-Nigeria gas pipeline with a capacity to transport 2.2 billion cubit feet of gas per day, and will be fed from the existing infrastructure with a capacity for over 1.5 billion cubit feet a day to be expanded to by ELPs and OB3 which would double to over 3.5 cubit metre per day. The pipeline project, with a 24-month completion period, would originate from Ajaokuta, transverse Kogi, Abuja, Kaduna, and terminate in Kano.

Inaugurating the project, President Buhari called on the state governments on the path of the pipeline route to create the enabling environment for the success of the project. President Buhari affirmed the commitment of his administration to ensuring timely delivery of the landmark project with budgetary allocations and specifications. The President therefore directed the NNPC and partners to remain focused, noting that the AAP project was part of the present administration’s “next level agenda for sustainable, enhancement of economic prosperity, and increase in the nation’s infrastructure assets.” Enumerating the benefit of the project which will be completed in two years, President Buhari said: “These projects are fundamental to our desire to industrialize and energize our entrepreneurial spirit that is ever present in our spirit”. He said the project will also ensure the revival of moribund industries along trans-towns in Kogi, the FCT, Niger, Kaduna and Kano state, stressing that the cascading effect and impact of AKK, when operational will be immeasurable.

According to President Buhari: “It has significant job creation potential, both direct and indirect, while fostering the development and utilization of the local skills and manpower technology transfer and promotion of local manufacturing”. The President added that Nigeria has learnt invaluable lessons from COVID-19 pandemic, and that some oil rich nations that had their crude oil as pathway to economic development even faced excruciating time. He said the pandemic had further underscored the drive of the administration for export substitution of local manufacturing. He also used the occasion to challenge the nation’s private sector to lead the way to maximize the nation’s gas resources as pathway to economic and industrial diversification. He urged the private sector to create petrochemical hub that will resurrect the nation’s work towards export drive.

The President also noted that the Nigerian National Petroleum Corporation (NNPC), on completion of the project will provide gas for generation of power and feedstock for gas-based industries, and also facilitate the revival of declining industries and the development of new ones along transit towns in Kogi State, Abuja (FCT), Niger State, Kaduna State and Kano State. He noted that harnessing and commercializing the nation’s vast gas reserves was an enabler for rapid economic development and diversification of the economy, adding that this remained as a cardinal objective of his administration’s drive towards ensuring a stable, sustainable and more prosperous future for the citizenry.

“Today marks an important chapter in the history of our great nation. It marks the day when our domestic natural gas pipeline networks from Obiafu in Rivers State, Escravos in Delta State and Lekki in Lagos State, are being connected through Kaduna to Kano states, thereby further enhancing national energy security,” he said. President Buhari further stated that the project will create numerous direct and indirect employment opportunities while fostering the development and utilization of local skills and manpower, technology transfer and promotion of local manufacturing.

“We promised the nation that we will expand the key critical gas infrastructure in the country to promote the use of gas in the domestic market. These include the Escravos to Lagos Pipeline System – 2 (ELPS-2), Obiafu – Obrikom – Oben (OB3) pipeline and the AKK. I, therefore, directed NNPC to ensure that these critical projects are completed on time, within budget and specification,” he said. President Buhari commended the NNPC and other stakeholders for bracing the odds of the prevailing COVID-19 pandemic to kick-start the construction phase of the project. He remarked that the lessons learnt from the COVID-19 pandemic further underscored the drive of his administration for export substitution initiatives and projects that will promote local manufacturing. He thanked the government of the Peoples’ Republic of China, the Bank of China and SINOSURE, the two Engineering Procurement Construction (EPC) Contractors – Brentex/China Petroleum Pipeline Bureau-CPP Consortium and Oilserve/China First Highway Engineering Company-CFHEC Consortium – for their support and commitment to deliver the project.

The President called on the Governors of Kogi, Niger, Kaduna and Kano States, as well as the Minister of the Federal Capital Territory, to provide the enabling environment and support for the project. Earlier in his welcome address, the Group Managing Director of the NNPC, Mallam Mele Kyari, remarked that the event would not have been possible without the full and unflinching support of President Muhammadu Buhari, who has made it a priority to ensure that revenues from oil and gas resources are used to support the emergence and growth of other non-oil sectors of the economy. Kyari said NNPC was transitioning towards becoming an integrated energy company to support the President’s economic diversification efforts.

One of such efforts is the expansion of the corporation’s domestic gas footprint with the delivery of the Trans-Nigeria Pipeline Project which includes the Escravos to Lagos Pipeline System (ELPS) 2, the Obiafu-Obrikom-Oben (OB3) gas pipeline and the Ajaokuta-Kaduna-Kano (AKK) gas pipeline.

He explained that the EPC contract for the 614km AKK gas pipeline project was awarded at a total contract sum of $2.592 billion to Messrs. Oilserv Plc/China First Highway Engineering Company (Oilserv/CFHEC Consortium) for the first segment covering 303km and Messrs Brentex Petroleum Services/China Petroleum Pipeline Bureau (Brentex/CPP Consortium) for the second segment covering 311km under a debt-equity financing model with a loan from Bank of China and SINOSURE, to be repaid through the pipeline transmission tariff and supported by a sovereign guarantee.

Kyari informed that all the required conditions precedent for closing the debt financing have been provided and the process of obtaining internal approvals by the lenders is in progress to enable financing close by August 2020. He disclosed that as part of the agreement, NNPC is using the equity contribution to commence execution of the project to recover lost time and put the project back on track.

Kyari expressed confidence in the ability of the EPC contractors to deliver the project on time, within budget and to specifications, noting that upon completion, the project would enable the injection of 2.2bscf/d of gas into the domestic market and facilitate additional power generation capacity of 3,600MW. Governors of Kogi and Kaduna states, Alhaji Yahaya Bello and Nasir el-Rufai respectively flagged off the commencements of works at Ajaokuta and Rigachukwun sites, while the President watched remotely from the Council Chamber of Abuja.