Energy initiative delay kills firms

By Philip Clement, Abuja

Textile, manufacturing and agricultural enterprises in the country have collapsed under costly, unstable and inefficient industrial fuel as the Federal Government drags its feet on a critical energy sector initiative, according to our reports.

Hardest hit are companies in northern Nigeria. It has, therefore, been argued that gas is central to the revival of the companies, while governors in the north are expected to adopt measures used by Lagos State in attracting investments that create jobs and grow the economy.

For example, this was the position canvassed recently by stakeholders in the Nigerian economy who called on the federal government to ensure the realization of the Ajaokuta-KadunaKano (AKK) pipeline project The early actualization of this project they say, will serve as a potent strategy for rapid industrial development and economic diversification agenda.

The panelists drawn from the petroleum industry, academia, organized private sector and regulatory agencies made this known while participating at a business webinar hosted by Valuechain Magazine.

The rector of Kaduna Polytechnic, Prof. Idris Bugaje, who sounded a note of urgency on realization of the project declared that “AKK should be completed in 18 months” in order to pave way for activation of the second phase of the Trans-Nigeria gas pipeline which would run from Eastern Niger Delta through South-East and Middle Belt to North-East. He pointed out that speedy delivery of the project would compensate for its late conceptualization.

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Bugaje explained that the AKK pipeline was coming 25 years late after many companies in the northern part of the country have folded up. He also linked the collapse and relocation of industries from northern Nigeria to Lagos with the rising spate of banditry and insurgency in the region. He added that the social crisis in the northern part of the country was a result of worsening business environment and consequent surge in the number of unemployed youths.

He lamented that withering of industries, Boko Haram insurgency and growing banditry could be efficiently addressed by restoring industrial vibrancy in the region which, according to him, hosted the largest textile industries in the past. He also noted that the military campaigns against insurgency have remained costly and ineffective because of the failure to adopt economic measures in the prevailing counter-insurgency efforts. He stressed the role of gas in economic growth and development.

Bugaje compared the poverty level and low industrial activity to the economic boom and industrial vibrancy in Lagos State which, according to him, has become the preferred regional investment hub due to abundance of gas flowing through robust distribution infrastructure to industrial clusters.

He listed investment opportunities surrounding the AKK pipeline to include businesses in liquefied petroleum gas (LPG), compressed natural gas (CNG), petrochemical and fertilizer plants, and captive and embedded power production. He however warned against regulations that would limit power producers to the national power transmission grid currently managed by the Transmission Company of Nigeria (TCN), which, according to him, has proved inefficient and commercially unviable.

Also, Managing Director of the Nigerian Gas Company (NGC), a unit of the Nigerian National Petroleum Corporation (NNPC), Mr Seyi Omotowa, gave assurances that the project would be realized in good time, adding that a presidential inter-agency project management team is working with other stakeholders to overcome all failure factors. He declared that the AKK pipeline is an NNPC project while the project loan is hedged against the corporation’s revenue, with government providing the required sovereign guarantee.

He said the funding model, quality and pedigree of contractors, structures for transparence and accountability, as well as improved security arrangement would enable the AKK project management team overcome all foreseeable challenges and deliver the project in time. Omotowa who rolled out the economic value of the pipeline stated that it is part of the national gas infrastructure blueprint designed to deepen the domestic, regional, continental market for the Nigerian product.

Technical Adviser to the Minister of State for Petroleum Resources on Regulation, Mr. Umar Gwandu, declared that challenges of cost and security which could encumber early delivery of the project have been addressed by the commercial nature of the pipeline operations when completed. He made it clear that the target was to ensure that domestic utilization of gas would ride on the overall infrastructure blueprint that involve the Escravos-Lagos Pipeline System (ELPS), West African Gas Pipeline (WAGP), the AKK pipeline and eventual Trans-Saharan Gas Pipeline.

He pointed at the role AKK pipeline would play in rehabilitating moribund industries in northern Nigeria. Managing Director of Oilserv Limited, the lead contractor in the project, Engr. Adegbite Falade, stated that the project could create 5000 direct jobs during its entire execution time frame, adding that it would also revive the Nigerian construction industry by involving credible subcontractors across the full project scope.

According to him, AKK pipeline project would provide the platform for building the manufacturing sector of the economy, grow the national gross domestic product, boost power generation by 3600 megawatts and ultimately commercialize Nigeria’s vast natural gas resources to generate revenue for government. He reiterated the need for all stakeholders to seize full opportunity presented in the AKK pipeline project, arguing that benefits of the project would erase the incentives for banditry and insurgency through economic revival of the country.

The 614 kilometre AKK pipeline, according to the Publisher of Valuechain Magazine, Malam Musa Bashir Usman, holds immense potential for industrialization of the country, creation of employment for Nigerian youths and reversion of deforestation through displacement of firewood as cooking fuel. Meanwhile, Department of Petroleum Resources (DPR) has reiterated its commitment to fast tracking full integration of the domestic gas market hubs into the Nigeria Gas Transportation Network Code (NGTNC) to ensure optimal impact in the country’s domestic market.

A statement signed by Mr Paul Osu, Head, Public Affairs, DPR on Wednesday in Lagos said the agency’s Director, Mr Auwalu Sarki, made the commitment at the kick-off of the NGTNC recently. Sarki explained that leveraging on the potential of Nigeria’s current gas reserve base of 203.16 trillion cubic feet, it was pertinent to use the instrumentality of the network code transparent open access to activate critical gas market performance enablers.

According to him, this is to ensure gas availability and delivery across the country. He said that as part of the operationalisation process of the NGTNC, DPR had established a Network Code Electronic Licencing and Administration System (NCELAS) portal on its website. Sarki said the portal would process all licences required for operating gas transportation arrangements and administration of all regulatory roles required for the optimal performance of the network code.

He further stated that DPR had issued licences to network code transporters, shippers and agents, and that migration of existing gas transportation agreements into the network code regime had begun. The director said the regulatory agency would continue to engage all stakeholders to achieve the aspirations of government to deepen the Nigerian domestic gas market.