Activities leading to the proper take off of the $2.8bn Ajaokuta-Kano pipeline project are in top gear as a new financial arrangement has been secured for the project.
The project is now to be financed through a forward sale agreement, an arrangement which will ensure that the entire tariff on gas pipelines nationwide would be collected into an escrow account and be used to pay contractors doing the jobs for the project, an industry source said.
The initial plan of getting some financial institutions in China to provide funds for the project failed because the institutions contacted, it was learnt were demanding for a sovereign guaranty from the federal government before they would put money down.
By this arrangement it is no longer going to be contractor financing anymore as the fund is coming from the government. With the new funding arrangement, it means that money being paid as tariff by all those using gas pipelines across the country is going to be used to finance it.