July 23, 2024

Conversion backlog, limited CNG conversion centres, paucity of retail outlets, frustrate Nigeria’s adoption of CNG as alternative transport fuel- Report

 

Oredola Adeola

Massive conversion backlog, slow pace of investment in retrofitting facilities, insufficient manpower and uneven spread of  CNG-retail stations in different parts of the country are some of the major issues threatening the adoption rate of CNG or LPG-powered vehicles, thus, frustrating the huge interest shown by millions of Nigerians towards conversion of their petrol/ diesel-powered vehicles into autogas, investigation by EnergyDay has shown.

 

EnergyDay’s check showed that CNG- which is also known as methane (CH4)- costs between N150 and N200 per standard cubic meter, which is equivalent to a litre of PMS.

 

 

Findings showed that the surge in conversion rate on the sideline of recent removal of the petrol subsidy and its attendant pump price hike have exposed the fundamental flops that usually characterised Nigeria’s government policies.

 

The government had since 2019, formulated policies and has demonstrated a level of commitment towards developing infrastructure across value gas chains to support its Nigeria Gas Flare Commercialisation Programme (NGFCP), National Gas Expansion Programme (NGEP) and the Decade of Gas Initiatives.

 

The policy focus of the government had been to distribute autogas (CNG) and liquefied petroleum gas (LPG) across gas stations operated by Nigerian National Petroleum Company Limited (NNPCL) while also encouraging other independent markets to participate in the development of the sector.

 

 

The FG believed that its commitment to the adoption of CNG as an alternative automobile fuel amidst the removal of subsidy on petrol will ensure affordable, cheaper, cleaner and environmentally friendly fuel for the country while also backing the country’s energy transition plans designed to align with the Paris agreement.

 

EnergyDay therefore gathered that despite these laudable initiatives and programmes, the right incentive and fiscal policies have not been put in place to support the policy direction.

The investigation by EnergyDay showed that none of the mega stations operated by NNPCL across the country, have a fully installed CNG cascade, while most independent petroleum products marketers have not seen sufficient incentives to prompt investment in CNG facilities.

 

 

Experts however revealed that there is no evidence to measure the success rate of the government’s one million vehicles that it promised to deliver between 2020 and 2023 due to several bottlenecks and policy inconsistencies.

Checks by EnergyDay showed that so far, that there are only less than 20 CNG conversion centres across the country, NIPCO Gas Ltd is a fully owned subsidiary of NIPCO Plc, Nigeria.

NIPCO Gas started operations in 2009 in Benin City through the deployment of CNG to automobiles by way of AutoGas (AutoCNG).which made it the pioneer company of promoting AutoCNG distribution in Nigeria.

 

The company operates 12 CNG stations in Edo, Kogi, Delta, Ogun state, and Abuja FCT., while most of the stations are under various stages of construction and approval in Oyo, Lagos, Akwa Ibom state and Abuja FCT.

 

Other notable conversion centres are ANNAMCO Enugu, R.T Briscoe, Pan Nigeria Kaduna, Autoclinic Abuja , Automedics Limited.

 

EnergyDay gathered that the cost of converting a petrol vehicle to CNG has never been an issue, as it costs between N200,000 and N300,000 to get the conversion kit needed, based on the model and age of the car.

 

Mr. Peter Oyemade, a banker who lives in Lagos said he has submitted his car for conversation at NIPCO’s facility in  Ibafo , Ogun State, but was told that the closest available appointment for the conversion of his car September 2023, due to backlogs of other vehicles on the waiting list.

 

He confirmed that while NIPCO has tried in its private capacity the government should also support the investors with right incentives and policies.

 

The Banker, who resides in Ogudu, GRA, Lagos also noted that there are no CNG stations around Ikeja where he could refill vehicles if he runs out of gas. He said, “The only option available for me is to return to Sagamu to refill from Lagos.”

This, according to him, is a form of disincentive to the concept of converting petrol vehicles to CNG. He therefore charged the government to encourage NNPCL to establish CNG cascade in most filling stations across the country especially in major cities including Lagos, Port Harcourt, Enugu and FCT, Abuja.

 

Mr. Taofeek Lawal, AGM Corporate Affairs, NIPCO Group in a chat with EnergyDay on the sideline of the findings told our correspondent that the CNG conversion has proven to be a good way of offering alternatives to motorists. He however noted that the project needs extensive government support by way of improved infrastructure to boost access to gas by motorists.

 

 

According to him based on there is pressure on NIPCO gas in all its facility to meet the recent surge in conversion of CNG cars. He noted that each of the workshops have the capacity to convert more than 10 cars per day per, adding that NIPCO is working on increasing the manpower.

 

 

He also confirmed that investment in gas pipeline Infrastructure is a fundamental the unlocking the CNG market potential, adding that this is a very expensive burden that NIPCO has been taking without corresponding fiscal and good monetary incentives by the Federal Government.

 

 

Lawal said, “For us as a company, well over 100 million dollars has been expended on gas Infrastructure – pipelines, station construction, provision of dispensers etc.

 

“Today, well over 7,000 vehicles are running on gas with about 11 CNG stations across Nigeria which definitely falls short of station requirements for a country as big as Nigeria with millions of motorists,” he said.

 

The NIPCO’s spokesperson identified that the efforts to improve Nigeria’s gas infrastructure remains one of the most potent palliatives that President Bola Tinubu can offer to millions of motorists across the country to cushion the impact of the recently introduced fuel subsidy removal.

 

He said, “Key players in the gas industry that have played prominent roles in promoting the use of gas as vehicular fuel could be further encouraged through the massive construction of pipelines to facilitate links with gas stations across the country. Unlike fossil fuels that can be transported by trucks, gas always requires cascades which are not too economical for gas distribution.

 

“Although FG is presently constructing the AKK gas pipeline, which is a commendable feat, but more still needed to be done to expand the coverage and the domestic gas demand.

 

For instance, the Nigeria Gas Marketing Company Limited, a subsidiary of NNPC limited is also trying in this area but more efforts are still needed when we compare present access to gas by motorists with the several millions of motorists across the country.

 

“The government needs to hasten work on needed Infrastructure to boost gas usage which primarily lies 8n getting conversion kits at affordable rates through fiscal policies that favour zero import duty on gas accessories, improved access through ore pipelines across the nation,” Lawal said.

 

Asked about some of the most important interventions that the government must put in place to support the private sector’s participation, Lawal said that the local investors playing within the gas market require the fiscal support to enhance massive investment in the manufacturing of conversion kits.

 

He emphasised that no Nigerian Government is manufacturing the conversion kits, at the moment as most of the things required are imported and manufactured in other countries. He revealed that this is one of the areas that government and private sector can looked into.

 

 

AGM Corporate Affairs,NIPCO Group also added that NIPCO, for instance, is prepared to inject more funds into the sector to improve infrastructure, build more gas stations, improve human capacity for vehicle conversion to use gas etc.

 

“NIPCO is currently laying pipes covering hundreds of kilometers along Lagos- Ibadan expressway, even towards Ijebu Ode as part of measures to encourage access to gas by motorists to power their vehicles.
Importation can be reduced drastically by encouraging investment in conversion kits, cylinders etc,” AGM Corporate Affairs,NIPCO Group said.

 

PricewaterhouseCoopers(PwC) in a recent report said that CNG is a promising alternative to PMS in Nigeria due to the country’s significant natural gas reserves.

 

The report stated that the price of CNG is more stable than the volatile price fluctuations experienced by petrol and that the use of CNG could reduce vehicle maintenance cost due to its cleaner burning properties, which produces fewer engine deposits that clog up the engine over time.

 

PwC however noted that some of the medium-term challenges facing the conversion surge is the initial investment required to retrofit existing vehicles with CNG engines.

 

The report also emphasised that the Government needs to establish a robust distribution infrastructure for CNG and initiate policies and incentives to promote the use of CNG.

 

Olusegun Olajuwan, Group Managing Director at THLD Group, an International Logistics Ltd with a special focus on LPG / CNG trucks, in a statement obtained by EnergyDay urged the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) offer licences to over 10,000 LPG skid tanks nationwide in Nigeria to enable massive investment in the retail of CNG.

 

 

He said, ” We need to start engaging Skid owners on how to licence them and give them automatic licenses for AUTOGAS to sell to cars powered by LPG.

 

“Current price of LPG/CNG it’s about N200 cheaper than petrol and with a minimum requirement of 1.1 kg to 1 litre of petrol, vehicles powered by LPG will be saving around N175 per litre once it is running on LPG compared to running on petrol.

 

“With an initial investment of converting your car to run on LPG which can be recovered in less than six months while car owners would be having a significant savings running on LPG in Nigeria and with a cleaner fuel,” Olajuwan said.

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