Hope dashed as $700m East-West gas pipeline suffers setback


The desire of Nigerians to enjoy a significant mark up in electricity supply to their homes and businesses has again suffered a setback, following the failure of cotractors handling the 123 kilometre East-West Obiafo/Obirikom to Oben (OB3) gas pipeline to meet the project completion deadline.

The pipeline was initiated to facilitate the transportation of gas from the eastern Niger Delta, where there are a lot of gas reserves, to the west Niger Delta, where high demand exists because of the high number of power plants and industrial gas consumers.

The project, which is part of a network of gas pipelines under construction around the country, is expected to boost the start-up of hundreds of new businesses, reduce the cost of doing business in the country by as much as 30 percent, and generate several jobs, within a few years.

When the pipeline is completed, power plants such as Egbin, Sapele, Geregu, Omotosho,and Olurunsogo and Ugheli, would have seamless gas supply and generate a significant mark-up in electricity, as it is to be linked to the Escravos-Lagos pipeline.

The project is estimated to cost $700million when completed. The East –West gas pipeline is about 123km x 48inches and is suppose to add addition 1 billion standard cubic feet of gas to the domestic gas system. It was awarded to two indigenous oil servicing companies, Nestoil and Oilserv Limited in 2012 with July 31, 2017 as the deadline for the completion of the project.

The contract, which is split in two halves for both indigenous oil firms, was awarded in the spirit of local content development. This is the first time local companies are handling a strategic project of this magnitude.

Construction of the gas pipeline is expected to last 24 months, the project is also expected to generate over 1,000 jobs.

Ndu Ughamadu, group general manager, Public Affairs division of the Nigerian National Petroleum Corporation (NNPC) when asked why the target date for the completion of the gas pipeline was not met, said some of the contractors did not live up to expectation.

Ughamadu said some of the contractors also met with security and community challenges on the path of the pipeline.

He said the rainny season may have further slowed the pace of work.

Further investigation by BusinessDay revealed that there was misalignment of the engineering work by one of the contractors, which affected the work of the other company, which may throw light on Ughamadu’s explanation of contractor failure to live up to expectation.
When Nestoil was asked to react to this development, the official who spoke to BusinessDay simply said the company and officials of the NNPC are reviewing the project. But when Oilserv was contacted, the person who picked the call promised to link BusinessDay with the manager in charge of the project , who he said was at the project site, but he never did.

Meanwhile, the NNPC says it has linked all the power plants with gas pipelines.

According to Ughamadu, aside from linking the power plants with gas pipelines, the corporations has undertaken and commissioned Ecravos-Warri gas pipeline, Ecravos-Lagos pipeline, Obite to Alaoji gas pipeline, among others.

Commenting also on the development, Dada Thomas, president of the Nigerian Gas Association (NGA) and managing director of Frontier Petroleum, said: “Everything that can be done should be done to avoid further construction schedule slippage, to ensure that the pipeline connection between the east and west Niger Delta is completed and a full transition to free market gas pricing regime can be implemented”

Biodun Adesanya, president of the Nigerian Association of Petroleum Explorationists (NAPE) said the delay in the delivery of the projects has not removed the economic benefit of the project.

Source: BusinessDay

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