The Federal Government of Nigeria has announced that China has approved and will disburse its 85% loan required to fund the $2.6 billion Ajaokuta-Kaduna-Kano gas pipeline project.

The news was made known by the Nigerian Minister of Finance, Budget and National Planning, Zainab Ahmed, and the Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, Mele Kyari, during an inspection visit to the site of the project in Ajaokuta, Kogi State.

The pipeline project is to be funded by the Bank of China and Sinosure with an eighty-five per cent (85%) commitment and the Federal Government of Nigeria, through the Nigerian National Petroleum Corporation, with a fifteen (15%) commitment.

Brentex/China Petroleum Pipeline Bureau-CPP Consortia and Oilserve/China First Highway Engineering Company-CFHEC Consortia were also announced as the Engineering Procurement and Construction (EPC) contractors for the project.

The Minister reassured that the project will be delivered on time despite the slowdown in economic activities. The NNPC GMD said only force majeure or an act of God can stop the project from completion.

Commenting on the loan repayment plan, the GMD said that as soon as gas starts flowing through the line, the revenue from it, including existing revenue streams, would be used to pay the loan.

Excerpts from the Finance Minister:

“We have to give a sovereign guarantee to the lender so that the loan is concluded.”

“I’m glad to say that the loan has been concluded and very soon, the disbursement will start.”

“We are glad that gas is being piped across this line from Ajaokuta to Kaduna to Kano. This will help to revive industries in those parts of the country and create jobs,”

Excerpts from the GMD of the NNPC:

“This project has not stopped for one day since it started. We will complete this project on time, on schedule and on cost. We will deliver this project.”

“We borrowed money, 85% of the total project scope as loan and then we provided 15 per cent as equity from NNPC’s own resources.”

“So, the 85% that will come from our Chinese partners will be available for draw down.”

“More importantly we are using the best of technology so that we will bury the pipes deeper than normal and we don’t think that there is any high level of risk associated with this pipeline.”