Finance, Budget and National Planning Minister, Mrs. Zainab Ahmed, has said issuance of a sovereign guarantee to the tune of 85 per cent of the Engineering Procurement and Construction (EPC) contract for the Ajaokuta-Kaduna-Kano gas project has been approved, yesterday.
Mrs. Ahmed told reporters at the State House that the contract was approved by the Federal Executive Council (FEC) at its weekly meeting.
She said: “This is not a new contract; it was previously approved by council in 2017 in the sum of $2.89 billion. The memo of today (yesterday) is at a revised cost of $2.571 billion, equivalent to a 10 per cent discount of the original sum.
“The previous contract was a contractor financing model, the contract that has been approved today is an EPC lump sum contract with the NNPC required to pay 15 per cent of the contract amount while the 85 per cent will be provided by Cynosure of China in the form of loan facility with a sovereign guarantee.
According to the minister, the facility has an interest of 3.7 per cent with a 12-year repayment period and three years moratorium period.
“We have done an extensive review of this project and we are satisfied that the cash flows from the Ajaokuta-Kaduna-Kano gas pipeline project is sufficient to pay the facility itself.
“This project is one of the cardinal policies of this administration and it is very strategic to national development.”
Ahmed explained that the project has a lot of positive impact on the nation economy, saying it would spur industrialisation and industrial growth as gas-based industries and power generating companies would be the key beneficiaries.