Stakeholders in the gas value-chain are bracing up for Compressed Natural Gas (CNG) as indigenous players in Nigeria’s downstream industry are expanding investment in gas.
This follows the plans of the federal government to encourage the use of Compressed Natural Gas (CNG) as an alternative to Premium Motor Spirit (PMS), also called petrol.
After the removal of the fuel subsidy on May 29, 2023, President Bola Ahmed Tinubu had launched the Presidential CNG Initiative (PCNGI) in October last year to deliver cheaper, safer and more climate friendly energy.
The special adviser information and strategy, Bayo Onanuga said the CNG Initiative was designed to deliver compressed natural gas especially for mass transit.
According to him, the federal government, as part of the many intervention programmes to reduce the burden of increase in pump price on the masses, provided N100 billion (part of the N500 billion palliative budget) to purchase 5500 CNG vehicles (buses and tricycles), 100 electric buses and over 20,000 CNG conversion kits, alongside spurring the development of CNG refilling stations and electric charging stations.
He said after months of detailed planning and background work, the committee driving the initiative is set to deliver on President Tinubu’s vision and promise.
Already, Onanuga said, the committee led by Michael Oluwagbemi, an oil and gas expert, has delivered some major foundational reforms to enable the new CNG and Electric Vehicles future the President promised.
He said all is now ready for delivery of the first set of critical assets for deployment and launch of the CNG initiative ahead of the first anniversary of the Tinubu administration on May 29.
He stated, “With necessary tax and duty waivers approved by President Tinubu in December 2023, the PCNGI committee is partnering with the private sector to deliver the promise on the initiative. The private sector has responded with over $50 million in actual investments in refuelling stations, conversion centres, and mother stations.
Aligning itself to the initiative, NIPCOGAS said it had completed four CNG stations in Lagos. The facilities would be opened for commercial operations by the end of April to become the first of its kind in the state, which is now contending with long queues at filling stations.
Managing director, NIPCO Gas Ltd, Nagendra Verma, confirmed that the firm has been involved in AutoCNG development and expansion since 2009.
Verma, who assured sustainability of supply after commissioning, said presently, for cars, taxis and kekes, AutoCNG is being sold at NGN200/standard cubic feet scm against the petrol price of NGN610 per litre in Lagos and NGN230/scm against the PMS price of NGN670/ltr in Abuja.
“NIPCO Gas is sure that with the continuous focus and push by the current government, AutoCNG will become the fuel of choice fuel for Nigeria which has the potential to reduce the pressure on importation as well as on Forex,” he added.
PETROAN has also entered into partnership with THLD Group for the use of its retail outlets as vehicle conversion (petrol to gas) centres. The initiative was to boost the National Gas Expansion Programme (NGEP), as the autogas initiative of the federal government came at the right time, especially in the light of global crude oil fluctuations coupled with the deregulation of the local petrol market.
An indigenous oil and gas company, Hyde Energy Limited, is equally making fresh investments in the midstream sub-sector of the industry specifically targeting expansion in the Liquified Natural Gas chain.
The company revealed it had made significant achievements in the LPG market and is keying into the federal government’s decade of gas initiative. The chief executive of Hyde Energy, Olademeji Edwards, while providing information on the intended investment, said the firm had made reasonable contributions to the country by assisting local businesses to convert to LPG and CNG.
Speaking with LEADERSHIP, former national president of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Okoronkwo, said the projected mass rollout of CNG refilling outlets across all states of Nigeria is becoming a reality with seven banks ready to manage revolving fund facility from the African Development Bank (AfDB).
Okoronkwo, who is now the Association’s Board of Trustees (BoT) Treasurer, said IPMAN had sealed the deal with the banks following removal of petrol subsidy by President Bola Tinubu.
Our correspondent reports that the association made the approach after it conducted a market survey on the cost of converting existing petrol stations to CNG outlets.
LEADERSHIP gathered that IPMAN had already commenced identification of members interested in co-locating CNG dispensers and infrastructure on their existing petrol retail outlets .
The exercise is to identify qualified potential members for loans to support its target of establishing 10-20 colocated CNG stations in each state of the federation during the first phase of its planned nationwide rollout.
According to a document cited by our correspondent, the minimum investment required for a CNG station with two dispensers and four hoses co-located in an existing or inactive station capable of dispensing 250,000 standard cubic feet daily SCFD or 500,000 SCFD of natural gas equivalent to 7,480-15,000 litres of petrol a day is approximately N300 million.
Under the loan arrangements, interested marketers would make 15 per cent down payment with the rest of the fund repaid over 10 years.
Also, a dedicated CNG station serving trucks with daily dispensing capacity of 500,000 SCFD to 1,000,000 SCFD of natural gas, equivalent to 14,280 to 28,000 litres of diesel a day, requires investment of approximately N1.4 billion.
However, retrofitting a typical auto workshop under the deal which is found in a filling station requires an investment of approximately N8 million.
Meanwhile, building a new CNG station with 4-10 dispensers requires an investment of about N500 million.
IPMAN had said it was ready to roll out cheap fuel for Nigerians at N100 per litre to cushion the effect of subsidy removal.
Okoronkwo, had in the wake of the subsidy removal, announced that the association was 90 per cent ready to roll out CNG as an alternative fuel, which would sell between N100 to N110 per litre before the end of June. He said IPMAN requested access to the N250 billion intervention fund for the National Gas Expansion Programme.
According to an anonymous member of a layout group, “The CNG project remains an organised labour initiative. It was hijacked and distorted by operatives of the federal government. That’s why no progress has been seen thus far and that’s why we are worried that our original objectives for the project may be scuttled entirely by the political jobbers in the administration.”
With necessary tax and duty waivers approved by President Tinubu in December 2023, the PCNGI committee is partnering with the private sector to deliver the promise on the initiative. The private sector has responded with over $50 million in actual investments in refuelling stations, conversion centres, and mother stations.
Also, a safety policy document on 80 standards and regulations that must be strictly adhered to by operators has been developed and approved to ensure CNG conversions are done safely and reliably.
The deployment of CNG buses and tricycles and the vision to get at least one million natural gas propelled vehicles on our roads by 2027 will mark a major energy transition in the country’s transportation industry. The use of more expensive diesel and PMS will gradually be phased out, when many vehicles, including trucks, run on natural gas, which Nigeria has in abundance in at least 30 out of the 36 states of the federation.
Also, as studies have shown, one of the main causes of air pollution is primarily the amount of gases emitted by gasoline and diesel engines. To reduce the pollution, some countries of the world, such as India, China, Iran, Pakistan, Brazil , Argentina, Italy have built fleets of natural gas powered vehicles, instead of going the route of relying on liquid petroleum products propelled vehicles. Natural gas vehicles reduce tailpipe emission by up to 40 percent, and Nigeria’s commitment to this course will enable her to meet her nationally determined commitments (NDCs) under the Paris Climate Accord to which we are signatory.
From the end of May, Nigeria will take some steps to join such nations that already have large fleets of CNG vehicles.
Remarkably, the Tinubu administration, in driving the nation to the desired destination, has flagged open a new industry, along with thousands of new jobs.
Four plants owned by JET, Mikano, Mojo, and Brilliant EV located in various parts of the country are involved in the assembly of the Semi Knocked Down (SKD) components of the CNG buses. JET, which has received the SKD parts, is coupling the buses in Lagos and is working towards delivering 200 units before the first anniversary of the Tinubu administration.
Brilliant EV will assemble electric vehicles. It is awaiting the SKD parts which will arrive in due course. The electric vehicles it will produce are meant for states such as Kano and Borno, which do not have access to CNG for now. They will also be available in key Nigerian cities and university campuses. It must be noted that soon to be completed gas pipeline projects initiated by the Buhari administration and being completed by NNPCL (the AKK Pipeline) will take gas into the hinterlands of North East and North West where there is current paucity.
In all, over 600 buses are targeted for production in the first phase that will be accomplished this year.
A new plant on the Lagos-Ibadan Expressway will assemble thousands of tricycles. The SKD parts manufactured by the Chinese company LUOJIA in partnership with its local partner to support the consortium of local suppliers of CNG tricycles are set for shipment to Nigeria and are expected to arrive early in May. About 2,500 of the tricycles will be ready before May 29, 2024.
Also, it was gathered that thousands of conversion kits for petrol powered buses and taxis that want to migrate to CNG are also ready with CNG cylinders, with the federal government ready to provide them at subsidized rates, especially to commercial vehicle drivers to bring down the cost of public transportation.
It was learned that as part of private sector collaboration, NIPCO and BOVAS are involved in offering refilling services for the CNG vehicles and also serving as conversion centres, with NIPCO setting up 32 stations nationwide to offer the services. The company has completed the setting up of four of the CNG stations. Likewise, BOVAS is setting up eight stations in Ibadan, two each in Ekiti, Abuja and four in Ilorin. MRS is also involved. It is making efforts to announce where its refilling stations and conversion centres will be.
The NNPC Limited, which had launched an on-and-off CNG initiative in the past, is joining the new initiative. It is expected soon to announce the locations for CNG refilling and CNG conversion centres nationwide.
In addition, the Presidential CNG Initiative (PCNGI) is said to be working with 22 other agency partners, including the Standards Organisation of Nigeria (SON) and Nigeria Automotive Design and Development Council, to deliver 80 Natural Gas Vehicle Conversion and Associated Appliances Standards for the country.
For proper monitoring, PCNGI will also launch the MYCNG.NG App. The app will embed the Nigeria Gas Vehicle Monitoring Systems, which will show CNG conversion and refuelling sites in the country.
