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Bank of China contributes to $2.45 billion syndicated loan for Ajaokuta-Kaduna-Kano Gas Pipeline Project (Linked to Record ID#67051 and #60925)
| Funder | Bank of China (BOC) |
|---|---|
| Recipient Organization | Nigeria National Petroleum Corporation (NNPC) |
| Country | Nigeria |
| Start Date | Aug 01, 2020 |
| End Date | Sep 01, 2030 |
| Duration | 3,683 days |
| Number of Grantees | 1 |
| Roles | Recipient |
| Data Source | AidData Chinese Aid |
| Grant ID | 67052 |
Grant Description
ICBC and Bank of China contributes to $2.45 billion syndicated loan for Ajaokuta-Kaduna-Kano Gas Pipeline Project In June 2017, Nigerian National Petroleum Corporation (NNPC) — a Nigerian state-owned oil company — submitted a proposal for the Ajaokuta–Kaduna–Kano (AKK) natural gas pipeline project to the Government of Nigeria's Infrastructure Concession Regulatory Commission (ICRC).
The project’s feasibility study was approved in the July 2017. A PPP compliance certificate was also issued for the project in July 2017. Then, in December 2017, Nigeria’s Federal Executive Council (FEC) approved the project.
Financing discussions with Bank of China -- a mandated lead arranger (MLA) coordinating a consortium of interested Chinese banks -- commenced in 2018.
After all of these banks secured credit approvals from their various boards to proceed, NNPC and Bank of China finalized a term sheet for the syndicated loan (facility). Sinosure subsequently reviewed and provided in principle approval for the proposed loan.
Then, in 2020, NNPC signed a $2,456,944,166.11 syndicated loan agreement with the Hebei Branch of Bank of China and the Industrial and Commercial Bank of China (ICBC) for the Ajaokuta-Kaduna-Kano Gas Pipeline Project.
Bank of China’s contribution is captured via Record ID#67052 and ICBC’s contribution is captured via Record ID#67051.
The Federal Government of Nigeria issued a sovereign guarantee in support of the loan (in January 2020), which accounts for 85% of the total project cost ($2,890,522,548.36).
The Nigerian Gas Company — a subsidiary of NNPC — agreed to cover the remaining 15% of the project cost ($433,578,382.25) through an equity contribution.
The loan's principal amount outstanding was $2,456,944,166.11 (NGN 931,181,838,955.69) on December 31, 2020, $2,456,944,166.11 (NGN 1,007,347,000,000) on December 31, 2021, and $2,456,944,166.11 (NGN 1,138,613,000,000) on December 31, 2022.
According to the Government of Nigeria's Debt Management Office, '[t]he [Federal Government of Nigeria's] Contingent Liabilities increased in the 2020 due to the inclusion of the Contingent Liabilities arising from the Federal Government of Nigeria guarantee issued in respect of the NNPC-AKK Gas Pipeline Project executed by the Nigerian National Petroleum Corporation (NNPC).' The proceeds of the loan are to be used by the borrower to finance a commercial contract between NNPC and a consortium consisting of Brentex Petroleum Services Ltd and China Petroleum Pipeline Engineering Co Ltd (CPP), which was awarded on April 27, 2017 and signed on April 10, 2018.
The borrower is expected to repay the loan through a pipeline transmission tariff.
The purpose of the project is to build a 614 km pipeline that will carry natural gas between the southern and northern parts of Nigeria.
The pipeline will originate at the Ajaokuta terminal gas station (TGS) in the Kogi state in southern Nigeria and pass through Niger, the Federal Capital Territory (FCT), and Kaduna to terminate at a gas station at Kano. The pipeline will cross seven major rivers and ten major roads along its route. The AKK pipeline project is divided into four segments.
The first segment will run from Ajaokuta to Abuja in the FCT for a total distance of approximately 200 km.
The second segment will extend for 193 km from the Abuja TGS to the Kaduna TGS, while the third segment will stretch for 97 km from Kaduna to Zaria, and the fourth and final section of the pipeline will run for approximately 124km from Zaria to the Kano TGS.
The pipeline will comprise 40 inch-diameter pipe joints and operate at a pressure of 1,000 pounds per square inch (PSIG).
The Ajaokuta–Kaduna–Kano (AKK) pipeline will transport up to 3,500 million cubic feet (mcf) of gas a day from various gas gathering projects in southern Nigeria.
Hydrocarbon liquids will be processed at Ajaokuta to produce liquefied petroleum gas (LPG), while the remaining gas will be transported to supply feedstock for new power plants and petrochemical facilities at Abuja, Kaduna, Kano, and Katsina.
The pipeline will eventually reach North Africa, forming part of the broader 4,400km Trans-Saharan Gas Pipeline which will export natural gas to customers in Europe.
A consortium consisting of Oilserve Ltd., Oando, and China First Highway Engineering Company (CFCHEC) is responsible for the construction of the first segment of the pipeline and another consortium consisting of Brentex Petroleum Services Ltd. and China Petroleum Pipeline Engineering Co Ltd (CPP) is responsible for the construction of the second segment of the pipeline.
An Environmental Impact Assessment was conducted along the project route. Construction began on June 30, 2020.
Approximately one year later, in July 2021, continued external financing for the construction of the pipeline was in question after Bank of China decided to withhold loan disbursements. By November 2023, the project had achieved a 50% completion rate. Construction of the pipeline's main line was completed in June 2024.
The pipeline was originally expected to be put into operation no later than December 31, 2023. The expected completion date was later pushed backed to March 31, 2025.
Staff Comments
- The Chinese project title is 阿焦库塔-卡杜纳-卡诺天然气管道 or 尼日利亚AKK天然气管道项目.
- There are some indications that the borrowing institution is a special purpose vehicle and joint venture between Oilserv and NNPC. This issue warrants further investigation.
- One source suggests that Nigeria Petroleum Development Company (NPDC) — a subsidiary of NNPC — also secured a $635 million loan for the project. This issue warrants further investigation.
- For loan and debt rescheduling records with variable interest rates, AidData calculates the all-in interest rate at T0 based on the reference rate (such as LIBOR or EURIBOR) on the loan start date, plus any known margin. Please see the methodology for additional details.
- The size of Bank and China and ICBC’s contributions to the syndicated loan are unknown. For the time being, AidData assumes equal contributions from Bank of China and ICBC ($1,228,472,083.05).
- The precise date on which the loan agreement was signed is unknown. However, it is known that the Group Managing Director of the NNPC, Mallam Mele Kyari, stated in June 2020 that all the required conditions precedent for closing the debt financing had been provided and the process of obtaining internal approvals by the lenders was in progress to enable financial close by August 2020. For the time being, AidData assumes a financial commitment date of August 1, 2020.
- Some sources indicate that the is being implemented in three phases. These sources claim that Phase 1 involves the construction of a 200 km-long segment between Ajaokuta and Abuja Terminal Gas Station at a cost of $855 million, while Phase 2 involves the construction of a 193 km-long section built between Abuja and Kaduna at a cost of approximately $835 million and Phase 3 involves the construction of 221 km-long section between the Kaduna terminal gas station (TGS) and Kano TGS at a cost of approximately $1.2 billion.
- There is some evidence that suggests the sovereign guarantee may have been removed in 2023 (see https://budgetoffice.gov.ng/index.php/resources/internal-resources/policy-documents/mtef/2024-2026-mtef-fsp/download and https://placng.org/i/wp-content/uploads/2023/11/House-of-Reps-order-paper-Tuesday-21st-November-2023.pdf ). This issue warrants further investigation.
Sources & References
- Ajaokuta– Kaduna–Kano pipeline (614 KM) PPP
- AKK Natural Gas Pipeline Project, ‘Work on Ajaokuta-Kaduna-Kano gas pipeline to begin soon with 15% equity funding’
- Ajaokuta–Kaduna–Kano Natural Gas Pipeline
- Nigeria seeks $1 bln for key gas pipeline as it awaits Chinese lending
- NNPC set to commence construction on $2.8bn AKK gas pipeline project
- Nigeria seeks US$ 1bn for Ajaokuta-Kaduna-Kano (AKK) pipeline project
- Construction to begin on $2.8bn AKK gas pipeline project in Nigeria
- Kyari insists AKK pipeline project on track, despite China concerns
- Chinese banks commit as Nigerian gas pipeline nears FC
- Nigerian government discloses $2.5 billion loan from China to complete AKK gas pipeline project
- THE FEDERAL REPUBLIC OF NIGERIA Global Medium Term Note Programme
- FG’s Contingent Liabilities To Hit N6.1trn By December—Investigation, 8b. @MKKyari : '...Brentex Petroleum Services/China Petroleum Pipeline Bureau for the 2nd segment covering 311km under a debt-equity financing model with loan from Bank of China/SINOSURE, to be repaid through the pipeline transmission tariff & supported by a sovereign guarantee'
- 国际事业部助力尼日利亚AKK天然气管道项目融资谈判
- FG Discloses $2.5bn Loan from China to Complete AKK Gas Pipeline Project
- Benefits Of AKK Gas Pipeline Project, by President Buhari
- BUHARI ADMINISTRATION FIFTH ANNIVERSARY FACTSHEET
- The BIG news from FEC today is the Approval of a Sovereign Guarantee for 85% of the EPC contract for Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline Project
- Ken Etim Profile
- PROPOSED 40’’ X 614KM AJAOKUTA-KADUNA-KANO GAS PIPELINE AND STATIONS
- Trans Nigeria Gas Pipeline
- Work begins on Nigeria’s China-funded US$2.8 billion gas pipeline
- Ajaokuta–Kaduna–Kano (AKK) Gas Pipeline
- Nigeria to back $2.59 bln AKK gas pipeline with sovereign guarantee
- NNPC Upbeat about Timely Delivery of AKK Gas Pipeline
- China
- Sinosure to finance $2.6bn AKK gas pipeline
- OILSERV/NNPC FLAGS OFF AKK GAS PIPELINE PROJECT
- Tracking Progress at AKK Gas Project
- Nigeria's $2.8bn AKK Project Suffers Setback As Chinese Lenders Hold Back Funds
- FG finalises $2.5b loan for gas pipeline project
- FG to disburse $2.5bn to AKK gas pipeline contractors, ‘Don’t rejoice yet over $2.8b AKK Gas pipeline project’
- The impending AKK gas pipeline and Nigeria’s economy
- China lends US$2.5bn to Nigeria to build the AKK gas pipeline
- NNPC
- Chinese banks gearing up to sign financing deal for AKK pipeline
- Bank of China approves FG’s $2.5 billion loan for AKK pipeline project
- Wither The $12.8bn Legacy Ajaokuta-Kaduna-Kano Pipeline Project?
- NNPC Limited on X
- Banwo & Ighodalo Nigeria
- Spotlight shines on future African and Asian export finance
- 管道局尼日利亚AKK项目建设纪实
- Finance Minister
- Heads
- NNPC
- DMO inspect Ajaokuta-Kano gas project
- Reps indict NPA
- NNPC
- NBET, others over N14trn contingent liabilities
- AKK Gas Pipeline Project 2021 Project Leader Series PDF
- Middle East & Africa Awards
- Acquisition financing in an era of energy transition
- 尼日利亚国家石油公司与中国工程与机械进出口总公司签署天然气发电厂项目谅 解备忘录
- 中国石油管道局尼日利亚AKK天然气管道工程线路主体完工
- HOUSE OF REPRESENTATIVES FEDERAL REPUBLIC OF NIGERIA ORDER PAPER Tuesday, 21st November 2023, 2020 Annual Report, 2021-2023 MTEF/FSP, 2022-2024 MTEF/FSP, 2023-2025 MTEF/FSP, 2024-2026 MTEF/FSP
- AJAOKUTA-KADUNA-KANO (AKK) GAS PIPELINE Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.
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Nigeria National Petroleum Corporation (NNPC)
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