The removal of fuel subsidy has strengthened the drive to promote the use of gas in vehicles as a means of enhancing the Nigerian economy, writes OKECHUKWU NNODIM
Operators in the oil and gas sector are making efforts to deploy Compressed Natural Gas as an alternative to Premium Motor Spirit, popularly called petrol. They claimed that CNG has the capacity to further grow the Nigerian economy.
Aside from the plethora of merits associated with gas utilisation, its deployment is currently expedient following the recent hike in the pump price of petrol from N198/litre to an average of over N540/litre.
The cost of petrol jumped by over 150 per cent after subsidy on the commodity was removed, in accordance with the pronouncements of President Bola Tinubu during his inaugural speech as Nigeria’s 16th President on May 29, 2023.
Abundant gas reserves
Nigeria has a proven reserve of 206 standard trillion cubic feet of gas, valued at over $800tn, and the country is ranked as having the largest gas reserves in Africa and ninth in the world.
The deployment of gas and its use offer a cleaner fuel compared to coal and oil, making gas an attractive option for addressing environmental concerns and reducing carbon emissions.
Also, the utilisation of gas derivatives such as Liquefied Natural Gas, Liquefied Petroleum Gas and CNG is going to boost Nigeria’s transition from fossil fuels to renewable energy and will help mitigate the current global energy crises. CNG and LPG have been identified as better alternative fuels than petrol and diesel.
“We have trillions of standard cubic feet of gas that have remained unutilised. Exploring our natural gas will help us gain money, clean energy, carbon credit and reduce pressure on forex. Gas is a cleaner form of fossil and it is wasting,” the National President of Independent Petroleum Marketers Association of Nigeria, Chinedu Okonkwo, told our correspondent.
A robust gas industry has the capacity to attract investments, create jobs, stimulate economic growth as well as foster technological advancements, research and development and innovation in the gas sector.
The switch to autogas and the use of gas for power generation will aid energy diversification.
Nigeria currently relies heavily on oil as its primary source of government revenue and energy. But by increasing gas deployments, the country can diversify its energy mix, reduce dependence on crude oil and enhance energy security.
“Embracing gas helps improve air quality, reduce pollution-related health issues and protect the environment. It also plays a vital role in power generation,” the Executive Secretary of Major Oil Marketers Association of Nigeria, Clement Isong, stated.
Nigeria has been grappling with challenges in its electricity sector, including inadequate power supply and frequent blackouts. Gas-fired power plants offer a reliable and efficient source of electricity generation.
Hence, expanding gas infrastructure and promoting gas-powered plants can help address Nigeria’s power deficit and contribute to economic growth.
Oil sector operators acknowledge that gas was being used to a greater extent in generating power, but they stressed the need to bolster the use of autogas in vehicles.
This is why IPMAN has continued to push for the collection of CNG pumps in filling stations operated by independent marketers across the country.
Operators say it is a huge business and job opportunities would arise from increasing the country’s autogas facilities from less than 100 to more than 30,000 in the short and long terms.
Also, the corresponding increase in autogas conversion and cylinder manufacturing centres would boost the needed conversion of more than five million vehicles, and encourage infrastructural development.
This will reduce the percentage of carbon emissions from the transportation sector, and enhance Nigeria’s chances of meeting the net zero targets by 2050/2060.
Marketers ready to deploy
The IPMAN president explained, “We are prepared to deploy CNG at filling stations. However, another area that we are asking the government to come in is to enable citizens to have access to the funds required for the conversion of their vehicles and others. When that is done, there won’t be a hitch in the market.
“The demand is there, because with what has happened with the price of petrol, the government must create that enabling environment. And how do you create it? You put out funds to enable those who want to convert their vehicles to be able to do so.
“Many people do not have N350,000 or N400,000 for conversion. But through NIRSAL, based on our model, the government can provide this fund. And this is based on our presentation recently to the government.”
According to Okonkwo, once the demand for CNG increases, international oil companies that have flare gas, would now see the commodity as a commercial venture and make it available for use.
“We also know that many people can convert their vehicles without necessarily taking the loan, and by doing so, the market would have been created and the demand would spike. This will encourage investors to to deepen their investment in gas utilisation.
“This will create enormous wealth for this country; reduce the pressure on the naira against the dollar, because gas is abundant in Nigeria. We are not going to import it,” he stated.
The push for the conversion to gas usage in vehicles further gained traction about two weeks ago when the Depot and Petroleum Products Marketers Association of Nigeria met with Tinubu at the State House and promised to provide 100 units of CNG/diesel-powered 50-seater buses to ease mobility among the most vulnerable citizens.
The Managing Director of North-West Petroleum & Gas Company Ltd, Winifred Akpani, who spoke for the group, revealed at the meeting that the new locally-manufactured buses would cost N100m each and would run on gas.
The Federal Government has also commenced the enlightenment of operators on the urgent need to obtain the requisite petroleum storage licence and to engender the transition from white products (petrol, kerosene, and diesel) to gas.
It recently announced that no unlicensed petroleum product dealer would be allowed to load products from August 1, 2023, and vowed to shut down such businesses beginning from that day.
The government, through its Nigerian Midstream and Downstream Petroleum Regulatory Authority, also cautioned that anyone who wished to deal with petroleum products must obtain a licence, stressing that “no licence, no loading of any petroleum product.”
The warming was announced at the recently concluded stakeholders’ engagements on gas utilisation in Nigeria across the six geopolitical zones of Lagos (South-West), Enugu (South-East), Rivers (South-South), Bauchi (North-East), Kano (North-West) and Abuja (North-Central).
The Chief Executive of NMDPRA, Farouk Ahmed, explained that the engagements sought to encourage large consumers of petroleum products to not only operate within the regulatory space but to also become aware of the comparative advantages between the different fuels, particularly gas, which has been designated as Nigeria’s transition fuel.
He also stated that the authority was determined to actualise the Federal Government’s autogas policy.
“It is in this regard that the Federal Government has put in place various initiatives and policy frameworks including the National Gas Expansion Programme and the Decade of Gas Programme. The Petroleum Industry Act 2021 has also established the authority of the Midstream and Downstream Gas Infrastructure Fund to catalyse gas investments.
“These efforts are yielding significant results, yet more collaboration and interventions are needed to improve domestic gas utilisation. The authority empowered by the PIA is poised to enable the growth of the industry. The 12 regulations recently gazetted will unlock the golden opportunities and signpost the pathway to energy security,” Ahmed stated.
Meanwhile, figures from the NMDPRA indicate that there would be a downward trend in the consumption of Automotive Gas Oil, also known as diesel. The authority states that while AGO consumption increased from 2015 and peaked in 2020, the trend showed a decline in consumption, as this is predicted to continue until 2030.
“Specifically, its consumption is predicted to decrease by more than 50 per cent in 2030 compared to 2015. On the other hand, the data revealed a wider use of LPG in vehicles, households, power generation and industrial applications in Nigeria.
“Its consumption is predicted to increase by over 500 per cent within the same period. The demand for LPG is predicted to surpass that of diesel around 2025,” the NMDPRA stated.
Data from the regulator further showed that while the number of gas depots across the country rose from 12 to 27 between 2017 and 2022, LNG facilities increased from five to 42, as CNG facilities also grew from 97 to 102 within the same period. It also revealed that LPG filling plants increased from 675 to 1,338 during this period, representing a 98 per cent increase.
Companies switch to gas
More indigenous companies are now increasing their investments in CNG facilities. Recently, Innoson Vehicle Manufacturing announced the mass production of CNG buses.
Also, NIPCO, an indigenous downstream petroleum and gas operator, is leading in the conversion of petrol-powered vehicles to autogas.
Oil marketers also announced recently that about 800 tankers that formerly transported petrol to filling stations had been converted to start moving gas to retail outlets. This is in addition to the existing 4,000 trucks of Dangote’s companies running on gas.
The NMDPRA added that the government had identified over 10,000 stations across the country to dispense autogas to the public.