The $2.8 billion AKK gas pipeline ran into financing difficulties this month, as reports indicated that China’s expected financing had been delayed. The Federal Government is seeking $1 billion to continue work on the pipeline, which it hopes to connect to the Trans-Saharan pipeline from Kano, which connects Ajaokuta-Kaduna-Kano (AKK).
This was revealed in a report by Reuters on Friday, citing unnamed insiders at the NNPC who stated that Nigeria is still negotiating with Chinese lenders for the pipeline. According to the sources, the NNPC was still negotiating with Chinese lenders – Bank of China and Sinosure – to cover the project’s $1.8 billion cost, adding that “there is no reason for alarm.”
According to Reuters, the NNPC is actively seeking alternative financing sources after Chinese lenders initially agreed to fund the majority of the $2.8 billion project.
“Chinese leaders refused to agree to disburse the cash NNPC had anticipated by the end of the summer, forcing the company to seek alternative financing,” they said.
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“They view Nigeria as a single loan, and at the moment, they believe they are overexposed,” a source told Reuters.
This comes at a time when China is reducing its funding to Africa as concerns about China’s debt default grow. Chinese lending to African governments fell by nearly a third in 2019 and is expected to continue to decline in 2020.
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According to Nairametrics, the FG disclosed last month that it was considering expanding into the Trans-Saharan and European markets through the ongoing construction of the Ajaokuta, Kaduna, Kano Gas Pipeline, or AKK Gas Pipeline.
“The plan is that if we can get it to Kano, it can continue all the way to Algeria via the Trans-Saharan gas pipeline, where it will connect to the Algerian pipeline, from which it will be transported to Europe. As a result, our gas can be transported from the South to the European market. Thus, it is a critical piece of infrastructure, and the president is fully committed to it, and it is progressing well,” Timipre Sylva, Minister of State for Petroleum, said.