THE Federal Government’s much-touted policy of converting vehicles to run on natural gas has disappointingly failed to gain momentum, more than a year after the commencement of its implementation. The initiative is laudable and long overdue, but in implementation, it has been uninspiring. Ahead of the launch of the National Autogas Rollout Initiative in December 2020, the government had said that one million vehicles would be converted to run on gas before the end of 2021. But that, unsurprisingly, turned out to be a mirage. It is a worthwhile venture with potential benefits for the economy and the environment; therefore, the government should fine-tune its plans and work closely with the private sector to ensure its success.
Late in January, the government unveiled the 2022 framework for the deployment of Compressed Natural Gas at a meeting with stakeholders in the downstream oil sector. It reeled out plans for the deployment of autogas in petrol filling stations and the conversion of 200,000 commercial vehicles to run on gas this year. This represents barely 3.0 percent of the 6.79 million commercial vehicles estimated to be in the country by the National Bureau of Statistics. According to the framework, CNG was selected as the fuel of choice because it holds comparative advantages, namely, its ease of deployment, its comparatively lower capital requirements, the commodity’s supply stability, existing in-country values, and local market commercial structure, which relies predominantly on the naira. Large-scale adoption of CNG as a transportation fuel is expected to help to reduce greenhouse gas emissions in the country because it is cleaner than petrol and diesel.
The National Gas Policy 2017 says vehicles using CNG may be appropriate for some large Nigerian cities under a single regulatory authority, such as Lagos, Port Harcourt, Abuja, Kano, and Kaduna, or where there are large vehicle fleets such as large corporate fleets or buses and/or taxis in large urban areas. Stressing the need for a determined government push behind the initiative, the policy declares, “When there is a push which generates a demand, then the market starts to provide NGV (Natural Gas Vehicles) filling stations. NGVs started to take off in London, for example, when the mayor announced that taxis that were not converted to at least dual fuel would not have their licences renewed. NGVs also have a wide use in the West African region outside Nigeria, specifically in Ghana.”
It is egregious that Nigeria still lags behind in the utilisation of its natural gas for economic development. This is a country that is home to the largest proven natural gas reserves in Africa and ninth largest worldwide, with 206.53 trillion cubic feet as of January 1, 2021. Natural gas powers more than 175,000 vehicles in the United States. By 2019, there were roughly 28 million Natural Gas Vehicles worldwide, according to the International Association for Natural Gas Vehicles. China leads with 5.0 million NGVs, followed by Iran with 4.0 million NGVs, and India with 3.04 NGVs. The failure of successive Nigerian governments to maximise the country’s abundant gas resources has caused huge economic losses and environmental degradation. The continued flaring of gas by oil companies in the country and the importation of dirty fuels (petrol, diesel, and kerosene with high sulphur content) into the country are most disconcerting.
Unquestionably, CNG and Liquefied Petroleum Gas are better alternative fuels compared to petrol and diesel. But considering the current state of the downstream sector, getting marketers and other operators to invest massively in the required infrastructure is a tall order. In June 2016, a former President, Olusegun Obasanjo, explained that his intention during his administration was to develop the nation’s natural gas for vehicles to use and reduce dependence on imported petrol. “When I gave the licence in my time, the idea was to use what we had and by now, we could have put half of all the vehicles on gas,” he recalled. Three companies were given licences in 2006 for the development of CNG for vehicles but only one, NIPCO Plc, made significant investment in CNG facilities, in collaboration with the Nigeria Gas Company.
Success will depend on getting enthusiastic private sector buy-in and investment. The government must move away from rhetoric and take concrete measures to facilitate the private sector being at the forefront of developing the autogas market. Private investors must be allowed to drive the initiative.
It will be dead on arrival if the state-owned Nigerian National Petroleum Company takes the lead. Waste, inefficiency, graft, and political interference are etched into its corporate DNA. The government should just regulate, liberalise the operating environment and provide the necessary support. It is counter-productive for the government to be both an operator and a regulator in the same market. It is crucial to have a well-thought-out plan and sufficient time for the implementation of the policy. Incentives should be provided for operators to attract foreign and domestic investment in gas dispensers, conversion centres and distribution systems, among others. Since the initial cost of converting vehicles to run on gas is eye-watering for many Nigerians, incentives should also be provided to fast-track the adoption of autogas. Such incentives are mapped out in South Africa’s National Development Plan: Vision 2030 that envisages massive transition away from fossil fuels to energy-efficient and low-carbon transport modes.
The Central Bank of Nigeria in 2020 pledged a N250 billion intervention facility. This is designed to help improve access to finance for private sector investments in the domestic gas value chain, and to stimulate investments in the roll-out of infrastructure to optimise the gas resources for economic development. This fund should be effectively deployed, followed through with vigour and consistency, and channelled only to genuine investors and operators.
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