Growing insecurity poses risks to Nigeria’s energy projects
The growing insecurity in Nigeria is seen as posing risks to oil and gas projects, including the $2.6 billion Ajaokuta-Kaduna-Kano (AKK) gas pipeline project and the rehabilitation of the Kaduna refinery.
On Monday, gunmen attacked a busy train between Nigeria’s capital, Abuja, and Kaduna, carrying 970 passengers, with many killed and many injured.
Gunmen had last Saturday attacked the Kaduna airport, killing the guard at the site of Very High Frequency Omni-directional Range, a navigational aids equipment belonging to the Nigerian Airspace Management Agency.
“Oil and gas projects, which are often fixed field assets located in remote areas are now prime targets for armed bandits because of the high-profile kidnappings of foreign workers involved in those projects,” said Caleb Adebayo, energy and environmental lawyer at New York University School of Law.
Africa’s biggest economy is struggling with rising kidnapping, killings and social disorder defacing the country’s investment outlook. The country attracted Foreign Direct Investment (FDI) inflow of $698 million in 2021, the lowest since 2005.
“The recent attack on the train station has shown no one is safe. The development has raised security alert on all the ongoing projects with expatriates, especially the Ajaokuta-Kaduna-Kano (AKK) pipeline project and refineries rehabilitation,” Luqman Agboola, head of energy and infrastructure at Sofidam Capital, said.
The AKK pipeline is a 614-kilometre (381.5-miles) pipeline project developed by the Nigerian National Petroleum Company Limited (NNPC) to transport natural gas from southern Nigeria to central Nigeria.
The project represents phase one of the 1,300-km (808-mi) Trans-Nigerian Gas Pipeline project, which is being developed as part of Nigeria’s gas master plan to utilise the country’s surplus gas resources for power generation, as well as for consumption by domestic customers, according to NS Energy.
BusinessDay gathered that the challenge of insecurity, especially kidnapping and banditry, had instilled fears in the project camp, which is located about 5 kilometres away from the Anyigba-Adogo-Okene highway.
“The menace of kidnappers on the prowl in the areas had always instilled fear into workers; however, security personnel have been drafted to keep vigil to ward off the activities of hoodlums,” one of the contractors working on the project told BusinessDay.
Other experts say the continuous cost of insecurity on Nigeria’s energy sector has exposed the sorry state of the industry, the main revenue earner of the country, and worsened the growth prospects of the economy.
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The Lagos Police Command announced this week that it had tightened security around the Dangote Refinery, nearing completion in the Lekki Free Trade Zone area of Lagos State, after it was attacked by armed hoodlums on Monday.
“Armed hoodlums numbering about 20 who gained access to the refinery through the lagoon side were repelled while attempting to cart away already-installed armoured cables in the refinery,” the spokesperson for the command, Benjamin Hundeyin, said in a statement on Monday titled ‘Police foil attack on Dangote Refinery’.
Industry players believe the wave of kidnappings sweeping Nigeria is not isolated to the Niger Delta — as it was 15 years ago, where militant groups target oil and gas sector infrastructure, sometimes in protest over poverty and environmental degradation, at others in order to steal oil.
Although the level of violence fluctuates, workers have been kidnapped and pipelines blown up or illegally tapped to siphon off oil for years, costing billions of dollars in revenues.
The government had hoped that the passage of the long-awaited Petroleum Investment Act (PIA) could help to ease tensions in the Delta.
Yet while campaigners had hoped that the PIA would require oil companies to pay 10 percent of oil revenues to host communities, the new law includes a provision for just 3 percent, a disappointment to many campaigners.
“Civil unrest and insecurities are a disincentive to oil and gas investment because they hamper the future of business operations, while infrastructure decay increases the cost of production, affects competition, and erodes companies’ profitability,” Agboola said.
The Nigeria Security Tracker (NST), a project of the Council on Foreign Relations Africa programme, also paints a gloomy picture.
‘’Different groups in Nigeria resort to violence. The militant Islamist movement, Boko Haram, is active in Northern Nigeria. Violence among ethnic groups, farmers, and herdsmen sometimes acquire religious overtones. A new generation of Niger Delta militants threatens war against the state. Government soldiers kill civilians indiscriminately. Police are notorious for extrajudicial murder,’’ NST experts said in a report.
At present, Nigeria is regarded as one of the most dangerous places to live in. The 2020 Global Terrorism Index described it as the third most affected by terrorism.
Also, the NST documented 2,769 violent deaths recorded between February 2020 and February 2021 in just one Northern state.
Kidnappings carried out by various armed groups have also increased in the past five years. A recent report by SBM Intelligence said over $18 million was paid as ransoms for victims abducted between 2011 and 2020.
