Feasibility of a Trans Central and East African Pipeline (An Economic Perspective)
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Date
2021-09-10
Journal Title
Journal ISSN
Volume Title
Publisher
International Journal of Engineering Science Invention (IJESI)
Abstract
Inadequate infrastructure has been the major hindrance preventing the projected growth of the
Nigeria gas industry. Gas infrastructures are capital intensive, and has long pay-back time, hence the
involvement of international financial backbone or strong government participation is essential when planning
for infrastructural development in the industry. However, the Nigerian government has shown to lack the
political will and economic knowledge needed to achieve sustainable and profitable infrastructural
development. This paper therefore performed an economic analysis of a Trans Central and East Africa gas
Pipeline infrastructure proposal. It outlines the benefit of the pipeline to Nigeria and Africa at large and also
perform an economic analysis forecast using a cash flow state to determine the pipeline profitability. The
Economic analysis forecasted at $35 billion capital investment gave a net cash flow of $17.2108 billion/year at
peak performance, and a 7 years payback period. With a 20-year cash flow forecasted, the project was
discounted at 10%, and 15%, and the NPV derived was $62,804.48 million and $55,482.42 respectively with an
IRR of 28%. Furthermore, a sensitivity analysis was carried out to ascertain the project performance under
certain conditions of 50%, 75% and 100% production rate to emulate worst, medium and best-case scenarios,
the project still showed profitable at worst case scenario of 50%, with an NPV of 10% and 15% the cash flow
calculated was $63,804.48 million and $55,482.42 million respectively and an IRR of 28%.
Description
Keywords
Natural Gas, Gas Economics, Economic analysis,, Gas infrastructure, Pipeline infrastructure
Citation
DOI: 10.35629/6734-1009013034