The government had proposed the use of Compressed Natural Gas (CNG) as an automotive fuel back in 1997 as part of the initiatives to harness natural gas (NG) resources but progress has been slow.
The principal impediment to Natural Gas Vehicles (NGV) market development in Nigeria is the uncoordinated implementation approach and that greater government involvement is required in setting strategic goals, developing the legal and regulatory frameworks, setting of clear standards for vehicles and refueling stations as well as assigning responsibilities to specific agencies.
Short-term low cost policy interventions identified by experts in the implementation include widening the existing NG and petrol price gap and offering limited support for refuelling and retrofitting facilities. Challenges and Opportunities in Nigeria’s Adoption of Compressed Natural Gas (CNG)
As Nigeria seeks to transition to compressed natural gas (CNG) as an alternative to premium motor spirit (PMS), also known as petrol, critical stakeholders have highlighted significant challenges that could impede this shift.
The urgency of this transition has grown as petrol prices have surged following the federal government’s removal of the subsidy regime.
The federal government had recently directed marketers to install CNG dispensing pumps to foster the growth of the CNG adoption program.
This initiative has been welcomed by indigenous gas stakeholders who view it as a promising step towards reshaping transportation, stimulating economic growth, and enhancing environmental sustainability. However, some have raised concerns about potential obstacles that need to be addressed.
Despite the government’s belief in the cost-effectiveness of CNG as a key component of Nigeria’s energy strategy, marketers promoting CNG have identified significant challenges. The primary concern is the high conversion cost for vehicles from petrol to CNG, which could hinder the government’s efforts to mitigate the rising cost of petrol.
An industry expert Godwin Okoduwa, has also provided detailed highlights on how Nigeria can benefit immensely adopting CNG and Liquified Natural Gas (LPG) as suitable alternative to petrol in the transportation sector.
Okoduwa said if the country is thinking about how to provide an effective fuel palliative against the backdrop of the recent fuel subsidy removal that has sent prices of petrol sky-bound with the potential for more price increases in consonance with crude oil prices, then this question – CNG or LPG Autogas come to mind.
The Nigerian government has been quite vocal about the use of CNG Autogas and has announced several initiatives; like the NNPC Ltd’s partnership with NIPCO, the procurement of 3000 CNG buses in Nigeria. Whilst these initiatives could serve as a springboard to the proliferation of private-based investment in the sector, it requires so much investment in terms of CNG Autogas station infrastructure and of course – CNG conversion kit.
He notes that in terms of fuel efficiency and cost of fueling, CNG trumps LPG but the big question is, how do we make it happen, how do we effectively transform Nigerians from the use of petrol as a vehicular fuel to Autogas – we are talking about 200 million plus Nigeria with about 12 million vehicles.
According to the latest data made available by the National Bureau for Statistics (2018) there were a total of 11.8 million vehicles in Nigeria.
In his calculations, he said it would cost about 500,000 USD for a CNG Autogas station against 50,000 USD for an LPG station, this is exclusive of land. This is information gathered from experts in Nigeria and abroad.
Since the intervention of NLNG in 2007, the LPG industry has grown by over 1000 per cent in terms of annual volume consumption ( 70,000MT to over 1 Million MT ), and also grown by several thousand in percentage in terms of infrastructure from just the NPSC 4000 MT LPG storage in Apapa, the 1000MT storage at Calabar and several inland LPG storage built during the Butanisation program of the 90s, to over 70,000MT of storage infrastructures, more than 1000 LPG gas plants and several transportation trucks. All these improvements sole driven by the private sector in a deregulated LPG market.
The LPG autogas station setup is not far from the traditional skid plant set up which we have all over the country, the cost of set up and deployment is not far from the LPG plants we already have, and of course, the financial outlay is something Nigerians can handle.
It is just the need to have a clear policy and good awareness for business people and trust Nigerians the revolution will be achieved in no time.
The NNPC Ltd estimates domestic demand for natural gas rising from current levels of 1.5 Bcf/d to 7.4 Bcf/d by 2027, as a result of CNG Autogas which is very good for gas business .
Nigeria has about 209 trillion cubic feet of confirmed Natural Gas reserve but need to make funding available to harness the CNG opportunity both in upstream, midstream, and downstream.
He said however we may not have enough LPG in the country yet because total local LPG production is currently about 600,000MT and the country needs about 3 million tons of LPG to satisfy the Autogas industry.
Transporters Value For CNG Amidst Cost/Security
But as the federal government and the CNG transition implementing agencies tinkers with seeming glitch in the shift form petrol to CNG as alternative fuels, key stakeholders in the transportation industry have highlighted key challenges facing the initiative.
President Bola Tinubu, recently joined the ongoing campaign by the Presidential Initiative on Compressed Natural Gas (PiCNG) when he charged Nigerians to embrace the CNG because it had come to stay.
However the national President of the National Association of Road Transport Owners (NARTO) Yusuf Lawal Othman, said dearth of infrastructure is causing a major glitch in the implementation.
The NARTO is an amalgamation of-three hitherto regionally based Transport Owners Associations namely; the Northern Association of Licensed Buying Agents and Transporters (NALBAT) for the defunct Northern Region, the Nigerian Transport Owners Association (NTOA) for the defunct Western Region, and Eastern Road Haulage Association (ERHA) for the defunct Eastern Region. This configuration gave NARTO the status of the umbrella organisation for all genuine Road Transport Owners in Nigeria with branches in all the states of the federation and the Federal Capital Territory.
Othman, who spoke to our correspondent on the association’s support towards the project said, the initial intervention promised by government to facilitate members conversion with donated kits is yet to meet up with the promised number.
He said that government had promised to make available 100 free kits per state and from the calculation his association is expecting about 3,000 kits which have not been completely delivered.
Although he praised the initiative, however, the project is not adequately supported by the needed infrastructure and funding.
According to him, refilling outlets are almost non existent and there is no proper sensitisation as well as investment in infrastructure to assure motorists of proper and sustainable supply chain.
The Minister of State for Petroleum Resources (Gas), Mr Ekperikpe Ekpo, however, said President Tinubu has directed that most of the filling stations across the country should be converted to CNG stations with conversion kits to enable people convert their vehicles to CNG.
“It is important to note that when you are using CNG, you save a lot of money, a litre of fuel can go for N1000, but you get CNG at N200 per litre, which saves you N800.
“With the passion of Mr President, the push that he has given to us, we’ll try to drive the CNG programme to reach the nooks and crannies of this country.
“We have to take advantage of the natural resources, gas, that God has endowed us with,” said Ekpo.
The minister assured that gas was available in large quantity, and the only challenge was infrastructure to deliver the product to filling stations.
He, however, said the president directed that adequate infrastructure should be provided to ensure the delivery of gas to filling stations.
“What we produce in our country is more than enough for us to use for CNG; and of course, you know, we are exporting to so many other countries,” he said.
On the high cost of conversion of cars to CNG, the Minister said it was because the conversion kits were imported.
He said with more private investors taking advantage of the CNG project, the price would drastically come down eventually.
Othman, also added his voice to rising safety concern which is causing ripple among the public.
He said the recent explosion involving CNG vehicle in Benin, Edo State calls for caution and sustained enlightenment among the public as to the danger of patronising untrained technicians.
The Presidential CNG Initiative (PCNGI) on its part expressed concern over an incident involving an illegally modified vehicle at a NIPCO CNG Station in Benin City on October 16, 2024.
The agency in a message sympathised with those injured and are relieved that no lives were lost.
An investigation reveals the cylinder was improperly welded and not approved for CNG use. The police and regulatory authorities are conducting a thorough inquiry, and we are collaborating with them.
This incident underscores the importance of the upcoming Nigeria Gas Vehicle Monitoring System, which aims to enhance safety in the CNG ecosystem. We urge all stakeholders to support this regulatory initiative and ensure compliance.
Only accredited conversion centers should be used, and safe handling of CNG, like petrol, is essential for everyone’s safety.
The agency emphasised safety first insisting CNG is safe and urged the use of verified technicians only.
NIPCO Gas Ltd Statement said preliminary findings showed that the explosion occurred when the vehicle arrived at the station for CNG refueling and that
the cylinder installed in the vehicle was later identified as a fake and fabricated, substandard unit not designed for CNG and exploded after filling with just around 4 SCM of gas.
Data obtained by our correspondent, shows that conversion of petrol vehicles of 1.6 litre engine could cost between N300,000 and N400,000 which has risen to close to N1 million due to exchange rate hikes while tricycles with 4 Stroke Engine will cost between N100,000 to N200,000.
Also lorries and vans may cost as high as N1.8 million while 4 Stroke Petrol generator engines will cost about N90,000.
But on the economic scale, a converted petrol vehicle can only consume N40 per kilometre which saves the owner 40 per cent, while a tricycle consumes N10 per kilometre with savings of between 50-75 per cent against petrol while a converted truck consumes N360 per kilometre.
The document suggests a palliative package of N200 billion to support conversion of one million vehicles, N200 billion to convert two million tricycles and about N250 billion for five million power generating sets.
The data from the Nigeria LPG Association (NLPGA), provides cost differentials between a gas engine truck and a diesel engine truck as well as conversion costs for other categories of petrol engines.
However, experts have warned of the consequences of patronising quacks in the conversion process.
On the part of LPG, in terms of infrastructure, marketers have indicated readiness and there are indications that Nigeria have about 100,000MT LPG depot capacity by the end of 2024 and the current is at about 70,000 MT.
For LPG, there is need need to position the LPG Skid plants better to enable easy access for vehicles and also invest in the conversion of vehicles.
Again, the cost of setting up an LPG Autogas Skid plant is about 23,500 USD CIF Apapa for a 5MT with 50 million Naira a significantly higher capacity can be achieved.
Although Autogas is the most widely used alternative to conventional automotive fuels with huge acceptance in countries like Australia, Bulgaria, Canada, China, the Czech Republic, France, Germany, Greece, India, Italy, Japan, South Korea, Lithuania, Mexico, Netherlands, Poland, Portugal, Russia, Serbia, Spain, Thailand, Turkey, Ukraine, UK, US, not much has been achieved in Africa with over about 84 per cent of its LPG consumption for domestic use ( according to WLPGA 2015 report).
In 2014, 16 million tonnes of LPG were produced in Africa, primarily by Algeria (55%), followed by Angola (13%), Egypt (10%), and Nigeria (9%), while total consumption in the region was 13 million tonnes (Norad – Final Report Study on the Potential of Increased Use of LPG for Cooking in Developing Countries).
Algeria has over 490,000 vehicles running on Autogas and plans to have one million vehicles running on Autogas by 2023, according to NAFTAL, the state-owned Energy company. The country has also committed to converting all public-sector cars to LPG.
Public And Private Sector Interventions
The Nigerian National Petroleum Company Limited (NNPCL) has revealed strategic investment plans to expand stake in Compressed Natural Gas (CNG) with aim to provide affordable and sustainable alternative fuels to the motoring public.
The NNPCL sees the investment as more sustainable and efficient means of transiting into widely acceptable energy space.
The spokesperson of the Company, Olufemi Soneye, said the intention further informed the energy firm’s decision to reduce its stake in Dangote refinery.
Soneye revealed that the NNPCL capped its stake at 7.2 per cent instead of 20 per cent to build CNG stations across the nation.
He stated this while featuring on Berekete Family Radio, during which he cleared the air on allegations that the Company was collaborating with the Nigerian Midstream and Downstream Regulatory Commission (NMDPRA) to sabotage the Dangote refinery.
He denied the allegations that the NNPCL would sabotage a company in which it had a 7.2 per cent stake.
He mentioned that the NNPCL realised that CNG was more affordable as a better energy alternative for Nigerians, especially during the period of energy transition.
He added that Nigerians could fuel their vehicles with N10,000 when using CNG, compared to petrol.
“The reason for reducing our stake in Dangote refinery is because we wanted to invest in CNG. We observed that CNG is very cheap and all over the world, people are investing in clean and cheaper alternative energy.
“That is why the NNPC is building different CNG stations everywhere. We understand that with N10,000, Nigerians can fill their cars and use it for two weeks. We realised that gas is cheaper in Nigeria, why don’t we invest in it?” the NNPC official stated.
On the allegation of sabotage, Soneye posited, “We want all Nigerians to know that the NNPCL does not have any issue with the Dangote Refinery. We are part of the owners of the Dangote refinery and we don’t want it to collapse.
“We invested billions of naira into the Dangote refinery. As of today, we have a 7.2 per cent stake in the refinery. So, why would we want to sabotage such a company?”
He maintained that the Nigerian Midstream and Downstream Petroleum Regulatory Authority’s Chief Executive, Farouk Ahmed, was speaking in his capacity as a regulator in charge of all operators in the midstream and downstream, including the NNPC.
“Mr Farouk Ahmed is the head of Nigeria’s mainstream and downstream petroleum regulatory authorities. They have power over all refineries. Anything that has to do with the distribution of petrol, they are in charge. In fact, they are superior to the NNPC in that sector. We don’t have anything to do with them,” Soneye posited.
In 2021, the NNPCL acquired a 7.25 per cent stake in the refinery for $1.0bn, with an option to purchase the remaining 12.75 per cent stake by June 2024. But the national oil firm has since reneged on its decision.
The President of the Dangote Group, Alhaji Aliko Dangote, disclosed in July that the NNPC had only a 7.2 per cent stake in the refinery and not 20 per cent.
“The agreement was actually 20 per cent which we had with NNPCL, and they did not pay the balance of the money up until last year; then we gave them another extension up until June (2024), and they said that they would remain where they had already paid, which is 7.2 per cent. So NNPC owns only 7.2 per cent, not 20 per cent.” Dangote stated.
To buttress Soneye’s position, the NIPCO Plc has reiterated that the strategic partnership between its wholly owned subsidiary ,NIPCO Gas Limited with the Nigerian National Petroleum Company Limited (NNPCL) to address the infrastructural deficit in the effective utilisation of natural gas as auto fuel will be a game changer in the sector .
The partnership which seeks to establish 35 premium Compressed Natural Gas (CNG) stations and three(3) flagship mother stations nationwide , aiming to serve over 200,000 vehicles daily in 2024 .
Managing Director/CEO of NIPCO Gas,Suresh Kumar, made the assertion during the company’s 2023 Annual General Meeting (AGM) in Abuja .
According to him, plans to operationalize these 35 CNG stations by late 2024 as part of the project’s secondary phase, enhancing inter-city transportation is receiving good attention.
He affirmed that the primary goal of the partnership is to expand the existing CNG infrastructure, ensuring greater accessibility and promoting the adoption of this cost-effective and environmentally friendly fuel for buses, cars, and Keke Napeps.
The partnership is expected to facilitate the setup of 21 CNG stations for intra-city transportation, set to be operational in Q1 2024 while the balance of the 35 CNG stations envisaged will be completed by late 2024 as part of the project’s secondary phase.
Speaking about the company’s performance over the last few years, Kumar stated that NIPCO Gas has continued to demonstrate resilience and sustain growth potential despite challenges such as foreign exchange volatility, rising inflation, and fluctuating petroleum prices in the international market.
“The company is focused on quality service delivery across all our business lines to consistently deliver good profits and value for our shareholders,” he said.
In the LPG sector , NIPCO is playing a crucial role in harnessing Nigeria’s abundant gas resources. Kumar highlighted the company’s significant progress since diversifying into the natural gas distribution subsector following the inauguration of its LPG plant in 2009.
“We have expanded our LPG sector reach to several states through massive skid deployment and other infrastructure, enhancing access to the product at market-friendly rates. Our LPG penetration grew to over 70 outlets in 2023, with prospects of reaching 100 in 2024,” Kumar noted.
Additionally, Seplat Energy Plc, is currently considering putting funds down to expand the country’s Compressed Natural gas (CNG) projects drive which the Federal Government is spearheading.
The Nigerian independent energy company, says it is rising to the challenge of energy deficit in Nigeria through its new critical projects, which are capable of taking the company’s gas processing capacity to 850 Million standard cubic feet per day (MMscfd) consolidating the company’s position as a leading gas supplier to the Nigerian market.
The Chief Executive Officer (CEO ) of Seplat Energy, Mr. Roger Brown, said this while delivering a keynote at the Society of Petroleum Engineers (SPE) Nigerian Council’s 47th Nigeria Annual International Conference & Exhibition (NAICE) in Lagos.
Brown, who was represented by the Director New Energy, Seplat Energy, Mr. Okechukwu Mba, spoke on the Conference theme: “Petroleum Industry Value Chain Optimization: The Inevitability of Midstream and Downstream Development”.
He said the company’ new $700m ANOH gas project in Imo State, with a capacity of 300MMscfd of gas in addition to Liquefied Petroleum Ga (LPG) will greatly boost domestic gas supply.
“Also completing a new 85MMscfd gas plant in Sapele Delta state expected to come on stream by Q4 this year. These new projects bring Seplat Energy’s gas processing capacity to 850MMscfd consolidating our position as a leading gas supplier to the domestic market,” Brown noted.
He said Seplat energy is also looking to invest in Compressed Natural gas (CNG) projects in support of the government’s CNG initiative, adding that: “When we receive approval for the MPNU transaction, we intend to promptly develop the significant gas resources in the asset to further enhance Nigeria’s energy security.”
