Nigeria: High Hopes As Nigeria Invests in Alternative Fuel for Cars
BY MOHAMMED SHOSANYA, 14 APRIL 2013
Lagos — As Nigerians' daily consumption of Premium Motors Spirit (PMS) otherwise called fuel, is on the increase and capacities of the country's refineries falling short of the demand, attention is now shifted to Compressed Natural Gas.
Over 80 percent of fuel is being imported outside the shores of the country with severe economic implications to Nigeria. Last year, the country spent trillions of naira on importation of fuel for the consumption of the citizens.
Compressed Natural Gas is a fossil fuel substitute for gasoline (petrol), diesel fuel or propane/LPG. Its combustion does produce greenhouse gases. It is a more environmentally clean alternative to petrol and diesel fuel, and much safer than other fuels in the event of a spill.
It is said that Compressed Natural Gas can earn the federal government over N200 billion from every one million cars converted into CNG from petrol engine.
Pakistan, whose population is not half of Nigeria's had 50,000 natural gas vehicles but grew to 2.2million last year. Argentina which introduced CNG vehicle programme in 1984, now controls six percent of the country's total gas demand. Compressed Natural Gas for vehicles was launched in Nigeria in 1989 with two small compressors and dispensers installed in Warri and Lagos. Twenty-five vehicles were converted to run on natural gas. But this was not enough to meet the demand.
In 2007, the Nigerian Independent Company Plc got licence to operate Compressed Natural Gas business in the country. Thus the company diversified into Compressed Natural Gas refilling facilities in partnership with Nigeria Gas Company for the deployment of CNG in the country, which resulted in the establishment of Green Gas Limited.
Today, eight CNG stations and three conversion workshops in the city of Benin, Edo State have been inaugurated under the scheme. The company said over 1,500 vehicles are currently running on CNG in Benin.
The company said tricycles popularly referred to as Keke Napep and mass transit buses in the fleet of the Edo State Government popularly known as Comrade Bus are being converted into CNG.
More funds, high hopes
The company said more outlets are currently under construction in other parts of the country while it has injected well over N17billion in the provision of CNG infrastructure in a joint venture scheme with the Nigeria Gas Company (NGC), a subsidiary of Nigerian National Petroleum Corporation (NNPC).
Managing Director, Nigerian Independent Petroleum Company (NIPCO) Plc, Mr Venkataraman Venkatatapathy advised motorists to embrace the use of CNG as alternative to petrol.
He said the company has also completed the laying of over 40 kilometres of gas pipeline to supply natural gas to the commercial and industrial companies along Benin-Warri highway.
According to him, the CNG scheme offers dual fuel option to users by providing flexibility of running a vehicle, either on CNG or on petrol by simply flicking a switch installed on the dashboard.
Venkatapathy disclosed that the company had participated in many exhibitions to promote the use of CNG, adding that, it would continue to harness all avenues to ensure that Nigeria joins the comity of nations using CNG.
Dangote's involvement
The recent involvement of one of the subsidiary companies of one of Nigeria's billionaires, Alhaji Aliko Dangote in the CNG business in the country is said to be a game changer.
Sagas, a division of Borkir Energy Company Limited, a subsidiary of Dangote Group recently signed a 20-year sales and purchase agreement with the Nigeria Gas Company Limited (NGC) to supply and distribute the CNG to all its filling stations nationwide.
The company also announced investment of $100 million (about N15 billion) in CNG as alternative fuel for use by automotive and industry in the country.
Chairman of Borkir, Alhaji Sani Dangote said his company's interest in CNG started two years ago having noticed the quantum of fuel bornt by vehicles in the country and the need to device alternative means to power vehicles in such a way that it would be cost-friendly to Nigerians. "We're investing over a $100 million in the next two years to ensure that CNG is available at every major highway in the country and some of the major cities. It's going to take a while for this project to go around everywhere but at least we're starting from somewhere and we believe when Nigeria starts seeing the benefits it would encourage everyone that is mindful of economic aspect of energy to convert their petrol vehicles to CNG," he said.
He explained that vehicles would be converted to be able to use the gas and that conversion centers would be established at various points across the federation even as he disclosed that such centers have been opened at Ikeja, Lagos already in joint partnership with a foreign firm.
According to him, a pilot conversion for gas usage has commenced with the enlistment of Dangote Group's 5,000 trucks which are being converted for dual fuel usage (gas and diesel), with the hope of converting 20,000 vehicles within the next one year of take-off.
Dangote said with the initiative, many transport owners and vehicle owners that are into transport business would save up to 25 to 30 percent in their fuel cost.
Constraints
Observers are of the opinion that investments in the CNG project in the country is still not enough given its staggering population size and the quantum of gas deposit therein.
Mr Obiyan Samuel, a gas expert said one of the factors responsible for inadequate investment in CNG is the nation's regulatory requirement. According to him, the harsh regulatory environment in the country also means that investors don't see the country as haven of investment in CNG.
He identified affordability, safety of vehicles stock, size of the market as well pipeline distribution network as obstacles to the development of CNG in the market.
He recommended that Nigeria should consider liberalizing the process of licensing of CNG in Nigeria. He explained that the development would earn more revenue for the government as well as create job opportunities for more Nigerians thereby narrowing the poverty in the country in the country.
Adeola Fagbuyi, an economist told our correspondent that government should consider reducing if not removing custom duty on importation of CNG equipment in the country. He advised the federal government to show commitment towards the development of CNG in the country.
Government up to the task
But Managing Director of Nigerian Gas Company Engr Saidu Mohammed said the federal government is ready to domesticate gas for commercial use for private sector in the country as part of its gas revolution policy.
Saidu, who also doubles as the president of Nigerian Gas Association said the federal government is keen on encouraging the use of CNG as the country has abundant supply of gas.
Group Executive Director, Gas and Power, Dr David Ige, said the federal government has shown sufficient commitment in the development of CNG, which is manifested in the zeal its projects are being executed.
Only time will tell the magnitude of such commitment would have on the project. It is argued that it has potential to save Nigeria mountainous fuel subsidy. Source: Daily Trust |
