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Published On: Wed, Sep 19th, 2018

Why we embraced contractor-financing of pipeline projects – NNPC

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By Etuka Sunday

The Nigerian National Petroleum Corporation (NNPC) said the prevalent funding challenge in the country has pushed it to embrace contractor-financing of its pipeline and other facilities development in recent times in the Industry.
NNPC said its Group Managing Director, Dr. Maikanti Baru made the disclosure at the 2018 Nigerian International Pipeline Technology and Security Conference (NIPITECS) in Abuja.
The GMD was quoted to have said that the contractor-financing has enabled the corporation to aggressively build the pipeline infrastructure within the Gas Master Plan as exemplified in the recent award of the Ajaokuta-Abuja-Kaduna-Kano (AKK) gas pipeline and all ongoing downstream pipeline infrastructure rehabilitation effort.
NNPC spokesman, Ndu Ughamadu ‎in a statement said, the GMD who was represented at the event by Dr. Babatunde Adeniran, Chief Operating Officer, Ventures, affirmed that pipelines remained the cheapest way of moving products across any distance, noting however that pipeline operation and construction in Nigeria had been an expensive undertaking.
The statement said, he challenged members of the Pipeline Professionals Association of Nigeria (PLAN) and other stakeholders to proffer solutions that could lead to a dramatic change and expansion of pipeline business in Nigeria.
According to the statement, Dr. Maikanti Baru said such solution must be able to resolve the challenge which has hindered the growth and viability of pipeline venture in the country.
The statement said, the GMD explained that emphasis should not be on what has been done in the past but to seek quicker, better, cheaper and more effective ways of how things should be done to achieve the feat.
‘’The poser I will like the conference to address is: Is cost really an inhibitor or is it the security challenges or financial models that are not properly structured and above all how do we make the pipeline business a financially viable investment?’’ he said.
Continuing, the statement said, the GMD probed: “How do we build partnership with the required technical expertise to assemble new technology based-industries that are cheap to operate and can deliver products that are both locally and internationally marketable?”
He also wondered if Nigeria had a financially capable environment that could provide funds at rates that would be competitive and low enough to produce adequate returns.
He averred that the answer to these posers would enable NNPC restructure and develop policies that would encourage infrastructure development in the country.
The statement also quoted Engr. Geoff Onuoha, Chairman of PLAN, to have expressed delight at the high level of support accorded the association by the NNPC Management, assuring that the pipeline professionals would not only pick up the gauntlet and tackle the challenge posed to the group by the NNPC GMD, but would continue to work with other stakeholders to ensure the in-country viability of pipeline business.
Engr. Chidi Izuwah, the Acting Director General/Chief Executive Officer, Infrastructure Concession Regulatory Commission, commended the NNPC Management for embracing the contractor-financing model in the AKK project, noting that such an option should be replicated wholesomely in respect of other mega industry projects.

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