FG seeks investors for $5bn East-North gas pipeline

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NNPC LogoThe Federal Government is seeking for investors for the $5bn East-North gas pipeline transmission systems.

The Nigerian National Petroleum Corporation, on behalf of the government, invited interested investors through an Expression of Interest to partake in the project.

The NNPC Management, which signed the EOI document published in national dailies on Wednesday, said the project was pursuant to the delivery of the last leg of the Gas Master Plan infrastructure blueprint.

It said, “Nigerian National Petroleum Corporation on behalf of the Federal Government of Nigeria wishes to invite interested parties to express interest in the co-development of the Northern and Eastern pipeline network. The Northern network comprises Ajaokuta-Kaduna- Kano pipeline and the Eastern Network comprises Qua Ibo/Calabar-Ajaokuta pipeline system. The total estimated cost of the entire pipeline network is $5bn.”

The NNPC management said the intention was to fund the pipeline, preferably, through a combination of debt/equity 60/40 ratio, which meant that interested parties would provide equity and debt.

“NNPC, on behalf of the FGN, will co-invest, providing equity and debt from a combination of planned sources including annual appropriation through FGN budget process and other sources such as the ongoing Ministry of Finance Eurobond issue,” NNPC said.

According to NNPC, the pipeline network is intended to operate commercially, with revenues coming in the form of commercially-determined gas transmission tariff embedded in the Gas Transmission Agreements that will underpin the pipeline flows.

“It is anticipated that by the end of 2018, effective throughput across the network will be about 1.5billion cubic feet/ day.  Conceptual engineering has been completed for the network and FEED about to start,” the NNPC said.

It said construction would be implemented in segments leveraging an optimum number of EPC contractors to enable speedy completion of the pipeline. It also added that construction was planned to commence by Q1 2014.

The NNPC said, “If final structure is based on selection of interested   parties that are willing to invest equity, the pipeline will be developed and operated by an SPV comprising NNPC and the selected parties. The SPV will operate on a Built Own and Operate basis.

“In the event that selected investors are all providing debt and EPC only, then the pipeline will be operated by NNPC and the default scheme will be on a Built and Transfer basis,” it added.

The Group Executive Director, Gas, Nigeria National Petroleum Corporation, Dr. David Ige, had hinted at EOB invitation on the East-North pipeline gas pipeline transmission systems during the 14th Annual General Meeting and Business Forum of the Nigerian Gas Association in Lagos, on Tuesday.

He said that the Federal Government’s Gas Master Plan was in progress the adding that the plan had paved the way for an unprecedented gas sector growth potentiality.

He said the capacity of the Escravos–Lagos gas pipeline would have doubled in the next six months

“In the next three years, we are going to have gas pipelines that span all over the country.  In the next few weeks from now, we will kick start the construction of the country’s gas industrial park,” Ige said.

The Federal Nigeria is said to be losing N289.60bn yearly to gas flaring as International Oil Companies operating in the country continue to flare 1.4 billion cubic feet of gas across oil fields every day.

Director, Department of Petroleum Resources, Mr. George Osahon, said the 1.4bcfd flared gas cost the Federal Government $4.9m daily at $3.50/1,000 Standard Cubic Feet.

When put together, the Federal Government loses $1.79bn (N289.60bn) to gas flaring annually, a situation largely attributed to gross under-utilisation of gas in the country.

 

Information from Punch was used in this report.