The federal government is invigorating and galvanizing the Compressed Natural Gas (CNG) project to accelerate switch to more sustainable, affordable and clean automotive fuels.
With the latest engagement of some private companies into its CNG conversion project, government hopes to achieve its target of converting one million automobiles by 2027.
To facilitate this ambitious initiative the Presidential Compressed Natural Gas Initiative (P-CNGi) has signed a Memorandum of Understanding (MoU) with Conversion Workshop Owners.
The Conversion Incentive Programme aims to tackle barriers by offering free CNG kits and conversion to targeted one million vehicles in the next three years to tackle barriers.
The P-CNGi embarked on this elaborate programme regarded as the highest quantum of conversions so far in the world.
Speakimg, at the official MoU signing in Abuja, Mr Michael Oluwagbemi, Programme Director/CEO, P-CNGi, said it had identified 123 conversion workshops, aiming to have 2,000, and achieve one million conversions by 2027.
The partners including, NIPCO Gas, Portland Gas Ltd., Fix It 45, ABG Oil and Nigeria Institute of Transport Technology (NITT) are participating in the conversion programme.
The Conversion Incentive Programme is designed to tackle the barriers in Nigeria’s commercial transport entities/operators, to convert vehicles from Premium Motor Spirit (PMS) to CNG engines.
The programme is a government response, borne out of the complaint by Nigerians over the high cost of conversion amounting to about N500,000.
“This partnership is basically to respond to that concern; firstly for commercial operators that are unionised through their unions can benefit 100 per cent discount, that is they will get the kits and installation done for free.
“The unionised commercial operators include the Road Transport Employers Association of Nigeria (RTEAN), Nigerian Association of Transport Owners (NATO) and National Union of Road Transport Workers (NURTW).
“And these will be done through the 123 certified workshops that we have identified while we will work with these five present in the FCT then activate more as we expand across the country.
“Through the partnership the second operators which include Bolt Nigeria and UBER among others will also benefit 50 per cent write-off on the equipment and free installation, while government pays the remaining 50 per cent.
“Arrangement is made too with these companies for them to pay at instalments without upfront.
“Vast Nigerians depend on these Rideshares aside from the public mode of transportation; now Nigerians will be able to benefit from the low cost of transportation occasioned by the implementation of this programme,’’ he said.
He said the P-CNGi had about 20,000 plus potential conversion kits to be distributed to states with CNG capacity under the palliative initiative in the next three months. He added that the National Assembly had made additional funding, to facilitate the procurement of necessary kits and cylinders to be made available in the fourth quarter of 2024.
“Work have started, installation of conversion kits has begun, mass transit vehicles operators that move 90 per cent of Nigerians will benefit and pass on their savings to consumers, based on the agreement,’’ he said.
He said it had a strong monitoring mechanism around conversion and enforcement of reduced pricing, adding that the Nigerian Gas Vehicle Monitoring System would ensure proper conversion and tracking. He further said that within the framework of the agreement, some significant pass-on of the savings would be realised.
According to him, the president upon adoption of CNG for transportation promised that Nigerians can benefit from reduced cost of transportation by ensuring proper implementation.
Mr Mohammed Bawa of ABG Oil and Gas, Zankyang Duniwa, Operations Manager, Bolt Nigeria and Mr Aliyu Isa, Acting President, NURTW, pledged to ensure that Nigerians derived the CNG initiative benefits through 50 per cent transportation fare slash.
Earlier, the government intensified efforts to meet an initial target of installing about 100 Compressed Natural Gas, CNG, vehicles conversion centers across the country.
Government was targeting to complete the roll out of 100 conversion workshops and 60 refuelling sites across 18 states in Nigeria before the end of 2024
The P-CNGi, announced that it has attracted a 50 million dollar deal for converting commercial vehicles to run on CNG.
Oluwagbemi, during a Live programme on television tagged ‘’Compressed Natural Gas Roll Out: Prospects for Economic Growth.” affirmed government’s determination to achieve its objectives.
The P-CNGi is a component of President Bola Tinubu administration’s palliative directed at providing succour to the masses, following the removal of fuel subsidies.
The federal government allocated N100 billion from the N500 billion palliative budget to buy 5,500 CNG vehicles (buses and tricycles), 100 electric buses, and over 20,000 CNG conversion kits.
Oluwagbemi said the deal, which was a private sector initiative, would enable the construction of CNG conversion workshop infrastructure across the country.
He said the first phase of the initiative would roll out 100 conversion workshops and 60 refuelling sites across 18 states in Nigeria before the end of 2024. “We are very well on track to meet all our objectives this year with respect to conversion centres, we are beginning to see the private sector jump in; as at Friday 85, conversion centre bidders were about to be completed.
“We expect 15 more to get started before the end of May; we will hit 100 targets before the end of 2024. The private sector leads and the government supports, it is definitely a good news for Nigeria.
“CNG is much safer in natural condition than PMS and Diesel, with bullet-proof container and high auto ignition temperature, almost one thousand degrees safer in natural condition than petrol,” he said. In terms of reliability, he said it had regulations and standards developed by the Standards Organization of Nigeria (SON).
He said a Nigerian gas vehicle monitoring system was also being established to ensure safety of operation from the point of conversion to the point of refueling. He said the National Automotive Design and Development Council (NADDC) and other agencies were also involved in promoting the initiative.
“Throughout the country, we are rolling out conversion centres, we will be able to provide it at a subsidised cost and a significant discount while allowing them to pay back slowly.
“For us as a government, it is not a subsidy, rather a utilisation fund,” he said. Also speaking, Dr Mohammed Bawa, Group Managing Director, ABG Group, said the Group had a partnership with banks to assist anyone willing to convert his or her vehicle.
He said since the initial investment was on the high side, the group could recommend for the bank to pay on behalf of anyone interested. At the same time, the person would repay over a period of time without interest.
“Nigerians are entrepreneurial by nature and always want an enabling environment and support by the government. This government has taken the bull by the horns by putting in place the P-CNGi, which is doing a great job; automatically, the private sector is already keying in.
“Not less than 20 private sector players have keyed into the CNG space and value chain, from conversion to refuelling. Now that the atmosphere is inviting, you will see many Nigerians investing in it,” he said.
He further said that before the end of May 2024, based on reliable information from the private sector, there would be at least six CNG refuelling centres in Abuja, as against only two stations currently.
Fuel subsidy removal caused an increase in transport fare, but the deployment of CNG vehicles is expected to reduce reliance on petrol and diesel, thereby making transportation affordable and mitigating air pollution, which aligns with the Paris Climate Accord.
Conversion of vehicles costs between N700,000 and N800,000, and vehicles can also operate on the energy mix of petrol and CNG after conversion safely.
Dearth Of Infrastructure As Key Challenge
There are two key factors which have been highlighted by critical stakeholders as capable of impinging gains of the country’s drive towards adoption of CNG, as alternative to Premium Motor Spirit, PMS, also called petrol which cost has risen arbitrarily after federal government exited the subsidy regime.
The federal government though had directed marketers to install CNG dispensing pumps as a measure to achieve a spiral growth pattern of the programme.
This directive has been endorsed by Indigenous Gas Stakeholders seen as promising to reshape transportation, stimulate economic growth, and enhance environmental sustainability, others have taken a critical assessment where they have identified a drawback tendencies along the path.
Much as government sees this transformation as a central component in Nigeria’s energy strategy given its cost-effectiveness, the marketers whose responsibility to promote it have shared experiences that could hinder the progress.
Following growing concerns over efforts by Nigerians to adopt alternative automotive fuel, our Correspondent reports that the current conversion statistics for various categories of vehicles from petrol to CNG, have has been described as outrageous and likely to complicate government’s efforts in addressing the rising cost of petrol.
Despite announcement of free conversion to a select few millions of vehicle owners have faulted the conversion costs.
Data obtained by our correspondent, shows that conversion of petrol vehicles of 1.6 litre engine could cost between N300,000 and N400,000 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.
The federal government had, in 2020, put in motion programmes aimed at utilising the country’s huge gas reserves, which include the National Gas Expansion Programme and the National Autogas Roll-out Initiative.
Government sees the availability of autogas as an alternative fuel that will afford Nigerians a cheaper, cleaner and eco-friendly option, with lesser impact on vehicles. It projected that about one million cars would be converted before the end of 2021.
The PwC Nigeria also estimates that economic activities stimulated by the domestic utilisation of Nigeria’s recoverable proven gas reserve has the potential to generate a Gross Value Add, GVA, of $18.3 billion yearly to the domestic economy and $10.5 billion through direct economic value addition, with Liquified Natural Gas (LPG) contributing $1.3 billion, and its excess allied components, Propane and Butane, contributing a further $2 billion of this, which compares to generating annual export value of $7 billion.
Also, PwC projected that harnessing the country’s proven reserves for domestic utilisation can also support 6.5 million full time equivalent jobs annually.
However, in driving the programme, the NLPGA has released a joint document with the Nigerian Gas Association (NGA), the Association of Local Distributors of Gas and the Lagos Chamber of Commerce and Industry (LCCI).
The LPG group further explained what engines can use autogas , the various types of autogas, commercial benefits of autogas and proposed palliatives that government can embrace and offer to the public.
The NLPGA said it is already investing in research and training and has already unveiled a training and resource centre project which on completion will provide over 30 areas of study in a curriculum based on the field of gas operations, usage and safety among others.
The managing director, Asiko Energy, Felix Ekundayo, has also raised concerns about infrastructure gap and conversion costs, which may drive people to engage the services of unqualified persons
But aside from the presidential directive, NIPCOGAS is sustaining the promotion of CNG, and has completed four CNG, stations in Lagos.
But given the number of vehicles on Lagos roads such number is regarded as very inconsequential.
The facilities which was opened for commercial operations at the end of May became the first of its kind in the state which is now contending with long queues at filling stations.
The managing director ,NIPCO Gas Ltd , Nagendra Verma, said the firm is involved in AutoCNG development and expansion since 2009.
Verma, who assured sustainability of supply after commissioning said presently, for Cars, Taxis and Keke’s; AutoCNG is being sold at NGN200/standard cubic feet scm against the petrol price of NGN610 per liter, in Lagos and NGN230/scm against the PMS price of NGN670/ltr in Abuja.
The managing director, further informed that similarly for heavy commercial vehicles; AutoCNG is being sold at NGN260/scm against the AGO price of NGN1250/ltr in Lagos and NGN290/scm against the AGO price of NGN1300/ltr in Abuja.
“NIPCO Gas is sure that with the continuous focus and push by current government, AutoCNG will become the Choice fuel for Nigeria which has the potential to reduce the pressure on importation as well as on Forex.” he added.
According to him, AutoCNG is a project for masses and of National Cause and Importance, adding “We are sure once expanded across Nigeria; will surely and definitely relieve the masses and motorists from high fuel cost.
“We continuously seek blessing and support of the Government and media to make AutoCNG a Reliever, Cleaner and Greener fuel of Nigeria”
Speaking on the company’s strategy, Verma said, initially the company started with Benin City and expanded the AutoCNG network to Ibafo in Ogun State and later-on in Kogi State.
He stressed further that wiith the initiatives and clear mandate by current government, AutoCNG network also expanded to Abuja FCT, Ibadan in Oyo State and Oron in Akwa Ibom State.
NIPCO Gas presently operates 15 AutoCNG stations across Nigeria and CNG vehicles from Lagos can travel upto Abuja and Kaduna by taking CNG from the in-between NIPCO Gas AutoCNG stations. We are sure, soon motorists can travel across every nook and cranny of Nigeria.
Under current government directives, NIPCO Gas has partnered with the Nigerian National Petroleum Company Limited, NNPCL for expansion of AutoCNG stations across various states of Nigeria.
” Partnering with NNPCL under directives from The Presidency brings along huge sense of responsibility and commitment towards masses of Nigeria and Government.
“NIPCO Gas is honored with this trust and belief by the Government and NNPCL and have assured that we will not leave any stone unturned to make this AutoCNG expansion plan a reality which will relieve thousands and millions of citizens from the pain they are going through presently.” added Verma
He also disclosed that under the current partnership, 35 AutoCNG are planned to be constructed in phased manner. He also revealed that location for 19 CNG stations have been identified and the firm has received stage-wise approval from NMDPRA and other statutory authorities.
He said four CNG stations in Lagos are scheduled to be completed in May, 2024, adding, “For making this AutoCNG expansion project a reality, we are getting due support and guidance from all including but not limited to PCNGI, NMDPRA, SON, NNPC, other Ministries and Departments and Media too who are also keen to see this as reality in near future.”
Verma, said gas distribution and AutoCNG projects are highly capital-intensive projects which require huge investment and highest level of commitment and perseverance, and expressed hope that with support from all and with continuous push from the Presidency, the firm will surely make it happen.
He went further to state that NIPCO Gas in addition to AutoCNG is also expanding gas transportation pipeline towards Ibadan and gas distribution network in Lekki Free Zone.
” All these projects require huge investment and high gestation period.Once the above projects are commissioned, it will help in greater way in deepening the utilisation of indigenous gas which still remains under-utilised and reduce dependency on importation of other fossil fuels thereby reducing the pressure on Forex.” he added.
In addition to NIPCOGAS, efforts, the Independent Petroleum Marketers Association of Nigeria, IPMAN is embarking on massive Investment in the CNG infrastructure across the country.
Refilling Outlets And Funding Challenges
Though the projected mass rollout of CNG, refilling outlets across all states of Nigeria is becoming a reality with seven banks ready to manage revolving fund facility from the African Development Bank, AfDB, funding constraints still persists.
The IPMAN had already sealed the deal with the bank, according to IPMAM Board of Trustees, BoT, Treasurer, Elder Chinedu Okoronkwo.
The association made the approach after it conducted a market survey on the cost of converting existing petrol stations to CNG outlets and has already commenced identification of members interested in co-locating CNG dispensers and infrastructure on their existing petrol retail outlets .
The exercise is to identify qualified potential candidates for loans to support its target of establishing 10-20 colocated CNG stations in each state of the federation during the first phase of its planned nationwide rollout.
Take for instance a minimum investment required for a CNG station with 2 dispensers and 4 hoses colocated in an existing or inactive station capable of dispensing 250,000 standard cubic feet daily SCFD or 500,000 SCFD of natural gas equivalent to 7,480-15,000 liters of petrol a day is approximately N300 million.
Also a dedicated CNG station serving trucks with daily dispensing capacity of 500,000 SCFD to 1,000,000 SCFD of natural gas equivalent to 14,280 to 28,000 liters of diesel a day requires investment of approximately N1.4 billion.
Retrofitting a typical auto workshop which is found in a filling station requires investment of approximately N8 million while building a new CNG station with 4-10 dispensers requires an investment of about N500 million.
With an anticipated price range that is 40 per cent – 60 per cent cheaper than PMS or AGO, CNG offers a compelling alternative to traditional petrol, providing consumers with a more financially viable option. This stable pricing mechanism not only insulates consumers from the volatility of global oil markets but also fosters economic predictability and resilience, experts presume.
Moreover, the environmental benefits of CNG are significant and as Nigeria strives to mitigate its carbon footprint and address environmental concerns, the adoption of CNG presents a tangible solution.
Its combustion emits significantly fewer greenhouse gases compared to petrol, contributing to a cleaner and more sustainable energy landscape.
With the knowledge that Nigeria is actually a gas province, with oil, leveraging her abundant natural gas reserves is crucial, gas serves as a domestically sourced energy solution, bolstering energy security and reducing dependence on imported petroleum products. This strategic utilization of domestic resources not only enhances national sovereignty but also stimulates economic development by capitalizing on local assets and reducing the pressure of Forex.
Despite the initial gaps and difficulties in bringing the objective to reality, CNG also stands out for its safety and stability.
Unlike traditional fuels, CNG has limited flammability, reducing the likelihood of accidental combustion and minimizing associated risks.
Moreover, CNG cylinders are engineered with stringent safety measures, ensuring their durability and resilience even in the face of challenging conditions.
The impact of CNG extends beyond economic and environmental spheres, permeating society at large and through vehicle conversion initiatives, CNG facilitates a seamless transition for existing vehicles, minimizing the need for extensive infrastructure overhaul. This inclusive approach ensures that individuals from all socio-economic backgrounds can access the benefits of this transformative energy source.
However central to the success of Nigeria’s CNG initiative is the government’s unwavering commitment and through a series of proactive measures, including financial incentives, tax breaks, and subsidies, the government is creating an enabling environment for industry players to thrive.
The government’s ambition is to see 1 million CNG vehicles on Nigerian roads by 2027 and achieving this goal involves establishing 1,000 conversion and refueling stations across the nation, a move that is poised to generate over 50,000 jobs. Such efforts underscore the government’s commitment to robust infrastructure development, paving the way for widespread adoption of CNG technology.
The government’s pragmatic approach to advancing the CNG agenda is also commendable said stakeholders although proactive measures will not only facilitate industry growth but also nurture an enabling environment for indigenous gas players.
This commitment to infrastructure development and energy independence heralds a more sustainable and prosperous future, benefiting the industry and society at large, they argued.
