There are strong indications that the federal government may seek an alternative funding of AKK pipeline project as Chinese lenders are showing reluctance to further fund the project
The $2.8 billion AKK gas pipeline is said to have hit financing bottlenecks this month as reports revealed expected financing from China has been delayed.
The FG seeks $1 billion to continue work on the pipeline, which it hopes to link with the Trans-Saharan pipeline from Kano connecting Ajaokuta-Kaduna-Kano (AKK) when completed.
This was disclosed in a report by Reuters on Friday, citing insider sources within the NNPC who said Nigeria is still in the process of negotiating with Chinese lenders for the pipeline. The sources revealed that the NNPC was still negotiating with the Chinese lenders – Bank of China and Sinosure – to cover $1.8 billion of the project cost, adding that “There’s no cause for alarm.”
Reuters confirmed that the NNPC is actively looking for other financing sources after Chinese lenders had originally been lined up to fund majority of the $2.8 billion project.
“Chinese lenders would not agree to disburse the cash NNPC had expected by the end of the summer, prompting it to turn to others,” they said.
“They are looking at Nigeria as one loan, and right now, they feel they are too exposed,” a source told Reuters.
This comes during a time of reduced Chinese funding into Africa as China’s debt default fears grow. Chinese lending to African governments dropped by nearly a third in 2019 and continued to fall in 2020.
It is said that the FG disclosed it was looking at covering the Trans-Saharan and European markets with the ongoing construction of the Ajaokuta, Kaduna, Kano Gas Pipeline, popularly known as AKK Gas Pipeline.
“The plan is if we can get it to Kano, then it can continue all the way to Algeria at the Trans-Saharan gas pipeline and then link up with the Algerian pipeline and then we move it to Europe. So, our gas can move all the way from the South to the European market. So, it is a very important piece of infrastructure and the president is very committed to it and it is very much on track,” Minister of State for Petroleum, Timipre Sylva said.