- We spend hours on queues to top-up gas- Motorists
- More gas refill stations underway – PCNGI
- I would have gone for gradual removal of fuel subsidy – Atiku
The full deregulation of the downstream petroleum industry, which led to an increase in the price of premium motor spirit popularly called petrol, has pushed more Nigerians into embracing a cheaper alternative – the Compressed Natural Gas.
The Federal Government had last year removed the subsidy on premium motor spirit, a development that pushed the price of petrol from N195 to N617 per litre.
Nigerians embrace CNG, narrate experience
Following the commencement of the initiative, many Nigerians bought into the plan of the government by converting their vehicles.
Many motorists who spoke to THE POINT said they decided to convert their vehicles because CNG offers a cheaper alternative to petrol.
A banker, Kelechi Nwosu, who resides in Ushafa, Abuja told THE POINT that he decided to convert his car to CNG because he spends an average of N60, 000 per week fueling his car to the office in Central Area.
Giving an analysis of his spending on petrol, the banker said that he covers an average of 80 kilometers daily to and from work, adding that using petrol; he spends an average of between N10, 000 and N15, 000 daily to fuel his car depending on the traffic situation.
However, he noted that since he converted his car to CNG last month, he spends about N10, 000 to N12, 000 weekly to buy gas that would cover the same distance to his office.
In terms of the daily cost of refilling his gas cylinder to power his car using CNG, Nwosu said that he spends between N1, 400 and N2, 200 per day to buy gas that would cover the same distance.
This, he noted, gives him a daily savings of about N8, 000 for using CNG as opposed to petrol.
Nwosu said, “The removal of fuel subsidy last year pushed my spending cost on petrol very high. Before the removal of petrol subsidy, I was spending about N2, 500 per day to drive to my office and back. Petrol was N195 per litre then. When the price was raised to N617 per litre last June, I started spending about N7, 500 daily on petrol to my office, which gives about N40, 000 weekly. But when the price was raised to about N900 per litre, my weekly spending on petrol to fuel my car rose to over N55, 000. This means I was spending about N220, 000 monthly on just petrol to and from work.”
“I spent about N1.2m on conversion, and the experience has been good. Unlike before, when I spent N10, 000 daily to fuel my car to work, I now spend about N2, 000 to buy CNG gas that takes me to work and back.”
Nwosu explained further that it was the high cost of buying petrol that made him convert his vehicle to CNG, which is a cheaper alternative.
He continued, “I spent about N1.2m on conversion, and the experience has been good. Unlike before, when I spent N10, 000 daily to fuel my car to work, I now spend about N2, 000 to buy CNG gas that takes me to work and back.”
Inadequate gas refill stations may frustrate FG’s CNG adoption drive
For another user who gave her name as Precious Ene, she told THE POINT that while she is making a lot of savings from the usage of CNG, the main challenge for her with the initiative is that there are very few gas stations to refill vehicles using CNG.
According to her, only six CNG gas refill centres are currently operational in the entire Abuja, adding that this is not inadequate to meet the growing demand for the product as a cheaper alternative to petrol.
She said that while the government had opened some CNG gas stations in July to serve Nigerians, they are operating sub-optimally.
Ene said, “I stay in Dutse and work in the Central Area. I converted my car to CNG because it offers a cheaper alternative than petrol, and we were made to understand that it is a cleaner form of energy.
“When I converted last month, I was spending less than 30 minutes on the queue at the CNG gas station in NIPCO at Kubwa. But since the beginning of this month, the queue has increased because more people are now converting their cars from petrol to CNG. Currently, I spent over two hours refilling my CNG tank. Sometimes, it lasts up to three hours just to refill. That is not good enough, and it may discourage people from converting their vehicle to CNG.
“There is a need for the government to encourage investors to open up more refill stations to match the growing rate at which the CNG conversion is being done because some of us drive up to 20 kilometers just to refill our CNG cylinder, by the time we drive back home, what we bought may have reduced” she added.
Another CNG user who gave his name as Isaac Agbaje told THE POINT that more investments need to be made by those currently offering CNG gas refill service.
He said that while the number of gas refill pumps in the NIPCO CNG gas refill centre in Gwoza on Airport Road is too small to cater for the huge volume of motorists that visit the station to refill, the NIPCO centre in Kubwa is worse off because the gas station does not have pressure pumps that would deliver the maximum
More gas refill stations underway – PCNGI
Speaking on the development, the Special Project Advisor, Presidential Compressed Natural Gas Initiative, Olayinka Rufai, said that currently, only a few filling stations exist in Nigeria to serve the emerging CNG auto market in the country, a situation that informed the need for increased investment from private organisations.
He said the government was not intending to establish CNG filling stations and conversion centers to avoid crowding out investors, pointing out that the government only plays the role of business enabler through the introduction of policies and programmes such as the P-CNG initiative.
He added that the government was currently running the kits conversion incentive programme where about 10,000 commercial vehicles will be converted free of charge on a first-come-first serve basis within the next 18 months, while targeting to ramp it up to one million converted vehicles by 2027.
Rufai stated, “We are encouraging private investment to see that there is an opportunity here. And trust me, we receive letters of intent and requests for information from all kinds of private investors who are willing and able and ready to set up filling stations all over the nation, and you will see a lot of those as well.
“Remember that the government is not in the business of business.
So, we are encouraging private investors to do what they can to establish CNG refilling stations nationwide and I expect that that is something that is happening on a daily basis. We do not believe that this is something that is going away.
“So, I call on any organisations, groups or individuals to get on board to support this initiative of the Federal Government of Nigeria to support what we are trying to do here. It’s a win-win for everybody.
“So, yes, it is something that we are doing. This is part of the encouragement. If you wait to have enough filling stations before you start converting, it doesn’t make sense.”
He said the government was doing everything necessary to increase CNG filling stations as well as increasing the number of people that require filling to further encourage people to adopt the alternative cheaper energy product.
The removal of petrol subsidy by President Bola Tinubu marked an era of full deregulation of the petroleum industry where the forces of demand and supply would determine prices.
The implication of this is that Nigerians now spend more on buying petrol and paying for transport from one location to another.
When the government announced the removal of subsidy last year, it made a promise that a cheaper alternative of energy would be provided to Nigerians.
Specifically, in a bid to implement the initiative, the Federal Government set up the Presidential CNG Initiative (Pi-CNG) as a component of the palliative intervention of the President Tinubu administration directed at providing succor to the masses.
This was occasioned by the transitive hardships of the fuel subsidy removal policy of the federal government.
Sequel to the removal of the PMS subsidy and the full deregulation of the petroleum products market, which raised the price of PMS significantly, the government had proposed that there was a need to consider alternative sources of fuel, primarily CNG and EV for vehicles.
The key objective is to drive down and manage transportation costs for Nigerians by utilizing the cheaper gas alternative that is abundant but currently underutilized in Nigeria.
An incremental objective is to deliver cleaner alternatives to PMS and diesel fuel for transportation and, as such, meet Nigeria’s National Determined Contributions commitments while capturing a precious resource that is currently being flared.
CNG conversion process
An Engineer, Ahmed Usman told THE POINT that the conversion process starts with an inspection of the vehicle to determine its suitability.
Once the vehicle is cleared, conversion takes one to three days with the first steps including mapping the vehicle for the best positioning of the CNG kit, installing it, and programming the Electronic Control Unit (ECU) to ensure smooth operation.
The process ends with a test drive to confirm the system works.
He clarified that converting to CNG does not remove the petrol or diesel engine as the vehicle becomes a hybrid, capable of switching between petrol/diesel and CNG
Once the engine of a vehicle is converted to CNG, it can switch between CNG and petrol or diesel.
Joseph explained that the switch occurs after the engine starts, with two key modalities in the ECU.
He said that based on the way the car is programmed, the switch from petrol to CNG occurs within 30 to 60 seconds of starting the vehicle.
If the CNG is exhausted, the engineer added that the CNG-converted vehicles automatically switch back to petrol or diesel when gas is exhausted, ensuring the driver is not stranded.
Conversion cost of petrol to CNG
The conversion cost of vehicles to petrol varies from centres.
“I spent over two hours refilling my CNG tank. Sometimes, it lasts up to three hours just to refill. That is not good enough, and it may discourage people from converting their vehicle to CNG.”
For instance, findings by THE POINT revealed that at the CNG Conversion Centre in Utako, Abuja, it costs about N1.2m to convert a four cylinder plug engine while that of six cylinder plug engines goes for N1.5m.
However, the conversion is a bit cheaper in the ABG CNG Conversion centre in Dawaki, Abuja, where it costs about N1.159m to convert a four cylinder plug.
But in Lagos, it was learnt that commercial vehicles can access free CNG conversions at the six approved centers under the Presidential Compressed Natural Gas Initiative (PCNGi), but interested vehicles owners must be registered with the Road Transport Employers’ Association of Nigeria (RTEAN), the National Union of Road Transport Workers (NURTW), or be state-owned taxis and vehicles with commercial plate numbers.
I would have gone for gradual removal of fuel subsidy – Atiku
Meanwhile, former Vice-President Atiku Abubakar has accused the present administration of indulging in “trial-and-error economic policies”, saying he would have acted differently if elected President.
In a statement he personally signed on Sunday, the People’s Democratic Party presidential candidate in the last election alleged that the President Tinubu administration is undertaking a “palliative” economy, something his administration would not have done.
Atiku, who blamed the reforms of the present administration for the present malaise, said, “Unleashing reforms to determine an appropriate exchange rate, cost-reflective electricity tariff, and PMS price at one and the same time is certainly an overkill.” The opposition leader noted that while he had advocated for subsidy removal, his administration would have gone for a gradual removal as is being done in countries like Malaysia in 2022 and Indonesia, 2022 -2023.
He said, “I’ve been inundated with inquiries of what I would have done differently if I were at the helm of affairs of our country. I am not the president, Tinubu is. The focus should be on him and not on me or any other. I believe that such inquiries distract from the critical questions of what President Bola Tinubu needs to do to save Nigerians from the excruciating pains arising from his trial-and-error economic policies.
“We would have planned better and more robustly: My journey of reforms would have benefited from more adequate preparations; more sufficient diagnostic assessment of the country’s conditions; more consultations with key stakeholders; and better ideas for the final destination.
“We would have been guided by my robust reform agenda as encapsulated in ‘My Covenant With Nigerians’, my policy document that sought to, among others, protect our fragile economy against much deeper crisis by preventing business collapse; our document had spelt out policies that were consistent and coherent.”
Atiku further said, “Unleashing reforms to determine an appropriate exchange rate, cost-reflective electricity tariff, and PMS price at one and the same time is certainly an overkill. Add CBN’s bullish money tightening spree. As importers of PMS and other petroleum products, removing subsidies on these products without a stable exchange rate would be counterproductive.
“We would have been more strategic in our response to reform fallout.
We would not over-estimate the efficacy of the reform measures or underestimate the potential costs of reforms. I would recognise that reforms could sometimes fail. I would not underestimate the numerous delivery challenges, including the weaknesses of our institutions, and would work assiduously to correct the same. I would, as a responsible leader, pause, reflect, and where necessary, review implementation.
“I would have led by example. Any fiscal reform to improve liquidity and the management of our fiscal resources must first eliminate revenue leakages arising from governance, including the cost of running the government and the government procurement process. I (and members of my team) would not have lived in luxury while the citizens wallowed in misery.”
The former Vice President who said his reforms would wear a human face, added, “We would have been more strategic in the design and implementation of reform fallout mitigating measures. I would not run a ‘palliative economy’ yet, we would have a robust social protection programme that will offer genuine support to the poor and vulnerable and provide immediate comfort and security to enable them to navigate the stormy seas.”
Speaking on specific measures, the PDP chieftain said, “We would have launched an Economic Stimulus Fund (ESF), with an initial investment capacity of approximately US$10 billion to support MSMEs across all economic sectors.
“Alongside the ESF, we would have launched a uniquely designed skills-to-job programme that targets all categories of youth, including graduates, early school leavers as well as the massive numbers of uneducated youth who are currently not in education, employment, or training.
“I have always advocated for the removal of subsidy on PMS because its administration has been mildly put, opaque with so much scope for arbitrariness and corruption. Mind boggling rent profit from oil subsidy accrued to the cabals in public institutions and the private sector. I would have prioritized the following:
“First, tackling corruption. Fighting corruption should have commenced with the repositioning of the NNPCL, which is a huge beneficiary of the status quo. Its commitment to reform and capacity to implement and enforce reforms is suspect. The subsidy regime has provided an avenue for rent seeking, and the NNPCL and its guardians will be threatened by reforms.
“Second, paying particular attention to Nigeria’s poor refining infrastructure. We are by far the most inefficient OPEC member country in terms of both the percentage of installed refining capacity that works and the percentage of crude refined. We would’ve commenced the privatization of all state-owned refineries and ensure that Nigeria starts to refine at least 50% of its current crude oil output. Nigeria should aspire to export 50% of that capacity to ECOWAS member states.
“Third, adopt a gradualist approach in the implementation of the subsidy reforms. Subsidies would not have been removed suddenly and completely. It is instructive that when I was Vice President, we adopted a gradualist approach and had completed phases 1 and 2 of the reform before our tenure ended. The incoming administration in 2007 abandoned the reforms, unfortunately. The majority of the countries that review or rationalize subsidy payments adopt a gradualist approach by phasing price increases or shifting from universal to targeted approach (Malaysia, 2022 and Indonesia, 2022 -2023).
“In many EU economies, complete withdrawal often takes 5 years to effect. The gradualist approach allows for adjustments, adaptation and minimizes disruptions and vulnerability.”
