Nigeria seeks $1bn in funding for a key gas pipeline project
NIGERIA is seeking 1 billion so work can continue on a gas pipeline costing up to 2.8 billion, after Chinese lenders which had pledged to offer most of the funds did not disburse cash as quickly as expected, three sources close to the matter said.
A spokesman for state oil company NNPC, which is building the 61 -kilometre (38 -mile) Ajaokuta- adunaano (A ) pipeline, said it was still negotiating with the Chinese lenders Bank of China and Sinosure to cover 1.8 billion of the project cost.
“There’s no cause for alarm,” the spokesman said, without saying whether NNPC was turning to other lenders.
But the three sources told Reuters the company was now approaching others, including export-import institutions, to continue work on the pipeline that will run through the middle of the West African country to its northern economic hub ano.
Chinese lenders had originally been lined up to fund the bulk of the estimated 2. bn to 2.8bn cost of the project, which is central to President Muhammadu Buhari’s plan to develop gas resources and boost development in northern Nigeria.
NNPC, which was funding 1 per cent, said last year it had used its own funds to start construction. The sources said the 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 are looking at Nigeria as one loan, and right now, they feel they are too exposed,” one source said.
Chinese bank lending to African infrastructure projects has fallen across the continent, from 11bn in 2017 to 3.3bn in 2020, a Baker Mc enzie report said in April.
With the continent facing an estimated annual 100bn infrastructure investment deficit, the loss of Chinese funding leaves a big gap to fill.
Nigeria began building the A pipeline in June 2020, saying it would help generate 3.6 gigawatts of power and support gas-based industries along the route. The project was to be funded under a debt-equity financing model, backed by sovereign guarantee and repaid through the pipeline transmission tariff.