The Presidential Initiative on Compressed Natural Gas has a mandate to sell to Nigerians the prospect of using gas as an alternative source of energy. In this report, FESTUS OKOROMADU examines the efforts of the committee so far.
As Nigerians continue to grapple with the economic realities of reform initiatives introduced by the President Bola Tinubu’s administration since its inauguration on May 29, 2023, two key policies pump up as the most critical in terms of impact on the generality of the economy.
First was the announcement of the subsidy on Premium Motor Spirit (PMS) otherwise known as petrol and the floating of the foreign exchange market.
Interestingly, the government and its agencies have not failed to acknowledge the negative impacts of both policies especially as they affect the ordinary citizens.
For instance, the Governor of the Central bank of Nigeria, Olayemi Cardoso, while addressing the media at the end of its monetary policy committee meeting recently, stated that members of the committee noted the huge impact of energy cost on food prices leading to increase in core inflation.
“Members thus reiterated the need to work in close collaboration with the fiscal authorities to address the current upward pressure on energy prices,” he stated.
Expressing optimism on the relief local refining of crude oil could bring with reference to Dangote Refinery, he said, “the lifting of refined petroleum products from Dangote Petroleum Refinery will moderate transportation costs and significantly support the easing of food price pressures in the short to medium term.
“This is also expected to moderate foreign exchange demand for importation of refined petroleum products, with a positive spillover on external reserves and improvement in the overall balance of payment position,” Cardoso stressed.
No one could have captioned it more perfectly than Cardoso who is positioned to have an overview of the working of the economy.
“Market experts say with the International Energy Agency reporting global demand for natural gas put at 4.6 percent, Nigeria needs to focus on increasing productivity so as to harness the international market prospect”
As rightly pointed out by the CBN governor, except deliberate and purposeful plans are initiated to have a convergence of well-articulated policy marriage between monetary and fiscal authorities, Nigeria’s abundant resources may not deliver value for her citizenry.
Termination of petrol subsidy
While critics of the Tinubu administration tend to blame him for the removal of petrol subsidy payment, the reality remains that the cost implication of the policy powered by the political cum corruption imbibed it is enough to run the nation aground.
This is aside from the global perception of the use of fossil fuel as an energy source. The question that readily comes to mind then is, does Nigeria have alternatives to petrol or fossil fuel as a source of energy?
Harnessing natural gas potentials
According to the Nigerian National Petroleum Company Limited, Nigeria has 202 trillion cubic feet (tcf) of untapped proven gas reserves with estimated recoverable gas of 139.4 tcf as at 2018.
Market experts say with the International Energy Agency reporting global demand for natural gas put at 4.6 percent, Nigeria needs to focus on increasing productivity so as to harness the international market prospect.
In addition, they said the government must put in place a conducive environment for enhancing the value chain to provide the much-needed economic returns from the abundance of natural gas as a resource capable of transforming the nation’s economic wellbeing.
According to a recent report by PricewaterhouseCoopers, harnessing Nigeria’s proven gas reserves can stimulate an estimated Gross Value Added of $18.3 billion annually to the domestic economy.
The report further stated that, “In addition, optimizing the domestic utilization of gas could support 6.5 mill Full Time Equivalent (FTE) jobs for the local economy.”
Tapping domestic market potentials
Given the PwC’s perspective, natural gas either as compressed natural gas (CNG) or Liquefied Natural Gas (LNG) seems to be one of the low hanging fruits the Tinubu administration can harness to boost the nation’s economy.
Fortunately, the government seems to have adopted the natural gas option hence the setting up of a Presidential Compressed Natural Gas Initiative (Pi-CGN) by the government in August 2023 to among others ease the impact of fuel subsidy removal.
Upon inauguration, the seven member (Pi-CGN) committee chaired by Mr. Zacch Adedeji, who also doubles as the executive chairman of the Federal Inland Revenue Service had their tasks clearly spelt out for them.
At inception, the Pi-CNG committee announced a transformative plan to revolutionize the transportation landscape of the country, targeting over 11,500 new CNG-enabled vehicles and 55,000 CNG conversion kits for existing PMS-dependent vehicles, while simultaneously bolstering in-country manufacturing, local assembly and expansive job creation in line with the presidential directive.
To achieve this, a CNG comprehensive adoption strategy includes the following: Empowering Workshops Programme, Provision of Nationwide Network of Workshops, Local Assembly and Job Creation as key points of emphasis. In the short- medium term focus on mass transit systems and student hubs in order to significantly reduce transit costs for the general populace.
Determined to ensure a seamless integration of CNG utility within the current midstream and downstream energy value chain to support its sustainability, the Pi-CNG embarked on facilitating the provision of workshops across all geopolitical zones and states with essential kits and comprehensive training for newly employed staff, thus creating new opportunities for technical skill development and employment for Nigerians.
“If we have a lot of the mass transit vehicles being retrofitted with the CNG, it will lower the cost of food, cost of transportation, and then Nigerians will smile”
The new nationwide network of workshops, established through the initiative, is to ensure widespread access and demand side utilization of CNG technology and CNG-related expertise, thereby facilitating smoother transitions for vehicle owners at the wider benefit of the Nigerian economy.
As noted by the committee chairman at its inauguration, President Tinubu’s focus on assembling CNG-enabled vehicles within the country will stimulate economic growth, create employment opportunities, and bolster the nation’s automotive manufacturing capabilities.
According to him, the launch of the initiative also underscores this administration’s commitment to fostering a cleaner environment by reducing carbon emissions and promoting energy security through the utilization of domestic natural gas resources.
Building facilities and acceptance
Despite the economic viability or otherwise of the Pi-CNG programme, it is evidence as usual that in the absence of the necessary infrastructures to facilitate conversion of vehicles as well as getting the citizens buy-in into it, the committee may just end up wasting time and resources.
To avoid that, the committee last year signed a memorandum of understanding (MoU) with competent workshop owners across the country for use as conversion centres to convert one million commercial transport petrol vehicles to CNG by 2027.
At a ceremony held in Abuja, partners like NIPCO Gas, Portland Gas Ltd., Fix It 45, ABG Oil, and the Nigeria Institute of Transport Technology signed up with the Pi-CNG to serve as agents to facilitate the programme.
Speaking at the event, Michael Oluwagbemi, Pi-CNG’s CEO, stated that the programme aims for the highest global vehicle conversions, hinting that above 2,000 workshops has been identified nationwide then, with 123 already approved.
Oluwagbemi further stated that President Tinubu has ordered 1 million free CNG conversion kits to be distributed to commercial vehicles involved in transporting people, food, and goods.
“These kits, along with free installation, will be rolled out over the next 18 months, helping the transport sector quickly transition to CNG and take advantage of the significantly lower fuel prices. The distribution of these kits will be carried out in collaboration with key partners, ensuring nationwide accessibility,” he stated.
Expatiating further, he said, “In the first phase of the initiative, Pi-CNG will begin the immediate distribution of 10,000 free conversion kits.
“These kits will be provided at no cost to transport operators through key national transport associations, including the National Union of Road Transport Workers (NURTW), Moove, UBER, and the Kaduna State Transport Authority (KSTA).
“This will enable commercial drivers to switch their vehicles to run on CNG, thus easing the cost burdens for both transporters and the public.”
A promise kept
By mid-September 2024, the Pi-CNG committee in adherence to its promise of distributing 10,000 free conversion kits, commenced the distribution process in partnership with NIPCO Gas.
Responding to questions from journalists at an event to commence kits distribution in Lagos, Head of Commercial Operations of Pi-CNG, Omoh Imouchuede, who commended the Tinubu-led administration for the initiative, emphasized the need for public acceptance of the programme, stressing that there must be “acceptance for it to have a viral effect on our economy.”
He applauded the turnout of participants at the event saying, “It’s a good turnout. But for us to push through the programme, there has to be acceptance. And from what we can see, there is acceptance.”
Highlighting the transformative nature of the initiative, he said “It’s very critical for us to understand the need for CNG to be adopted across all spheres; hence, we’re starting with mass transit.
“It’s also important for everyone to see the importance of the fact that CNG is here to stay and to rally behind Mr. President to ensure that the initiative hits its mark. We are going to deliver a million vehicles by 2027, and we’re going to do it.”
Speaking to the Pi-CNG committee’s commitment to execute the programme successfully, he said, “All hands are on deck, and we’re working tirelessly every day. Our programme directors are all over the place, ensuring that everyone is aware of what we’re doing.
“The key thing for us is to keep pushing and working with our partners. And we’re looking towards meeting many more milestones come the end of this year, 2025, and towards 2027.”
On measures taken so far to ensure success of the initiative, he noted that availability of kits as well as increase in the volume of the conversion centres tops the team’s priorities.
Operators’ perspectives
During the kit distribution launch in the Lagos axis, some operators in the sector applauded the initiative.
The Managing Director, NASENI Portland Gas Limited, Folajimi Mohammed described the programme as a welcome development, stressing that it will bring relief to the transport sector when fully operational.
As a partner in the vehicle conversion scheme, Mohammed said his firm had received 50 kits and it’s going to convert 50 commercial vehicles into CNG.
“At the moment we have over 30 vehicles, so we have a mark of 50. Once we hit the mark of 50, then we have to close. It’s a free initiative given to mass transit by the Federal Government.
“Aside that CNG is a safe gas, it is safer than petrol combustion, it reduces emissions, as well as promoting cleaner energy. It’s going to be on a first-come, first-served basis.
“If we have a lot of the mass transit vehicles being retrofitted with the CNG, it will lower the cost of food, cost of transportation, and then Nigerians will smile.”
Also speaking, the Chief Operating Officer of the company, Michelle Ejiofor, stated that the firm has a diagnostic machine as well as engineers on ground that confirms the fitness of a vehicle physically and mechanically before approval is given for conversion.
She stated that the firm operates on a first-come, first-served programme. She commended the government for initiating the programme stressing the environmental friendliness of it.
“Introducing the CNG into the vehicle, and retrofitting it, actually gives a better emission as well as it reduces the cost of transportation, that’s a cleaner energy, and cleaner source of oil,” she stated.
She therefore called on all Nigerians to embrace the initiative, while applauding the Pi-CGN team for collaborating with the private sector to empower different conversion centers who had been given the mandate to convert these various vehicles into CNG.
Ajaokuta as a gas hub for Nigeria
Meanwhile, Kogi State seems to be prepared to tap into the opportunities of the expanded programme on natural gas utilization as a source of energy.
Speaking at the launch of the Pi-CGN pilot conversion incentive programme and the handover of CNG buses to transporters in the state on Wednesday, the Minister of Steel Development, Shuaibu Abubakar Audu, said plans are underway to make Ajaokuta one of the CNG hubs of Nigeria, as the Ministry is on the verge of presenting a proposal to Mr President for the establishment of an Industrial Park within the Ajaokuta environment, which will also host a CNG park and a Free Trade Zone.
“Mr President has mandated that we should have one million CNG vehicles and/or conversions, and it needs to be in place before the end of 2025. So, one million vehicles will be converted from petrol to gas in the next year, and this is very significant.
“As the Minister of Steel Development, I want to tell you some of the benefits of this CNG conversion site and the critical role Ajaokuta plays in that light. Ajaokuta is a gas hub for Nigeria. Gas lines are passing from Warri to Ajaokuta, from Ajaokuta to Kaduna and Kano (AKK Pipeline), meaning that billions of cubic feet of gas are being transported from Ajaokuta to other parts of Nigeria annually.
“We are taking a proposal to Mr. President to declare Ajaokuta an Industrial Park that will also have a CNG park which will be one of the CNG hubs in Nigeria. And instead of having situations where most of the CNG conversion centres and CNG parks are outside of Kogi State, Ajaokuta has the land, Ajaokuta has the gas, and Ajaokuta has the facility for conversion kit production. The Industrial Park will attract steel companies to Ajaokuta. So, anything that we need is within our environs. And most importantly, that will create thousands of jobs for Kogites and Nigerians as a whole.
“So, the Renewed Hope Agenda of President Bola Ahmed Tinubu is here and will turn around the economy, therefore, the desire of Mr. President to grow the economy by $1 trillion by 2030, and we will achieve that by the special grace of God,” Audu stated.
Kogi State Governor, Ahmed Usman Ododo said that the CNG initiative is a significant milestone in the “Renewed Hope” Agenda of President Bola Ahmed Tinubu, thanking the President for the initiative, which aims to reduce reliance on petrol, which would in turn alleviate the sufferings of the people.
Governor Ododo, who was represented by the Deputy Governor, Joel Salifu, pledged the commitment of the state to the project, with a promise to train 250 youths in CNG conversion and empower them to enable them to key into global technologies.
On his part, Oluwagbemi said that the P-CNGI chose Kogi for its inaugural launch because the state beyond being a confluence state of water bodies is also significant in the transportation system as a link between the north and other parts of the country, and also hosts an important gas hub.
He said that the event was not designed just to reduce transportation fares for commercial drivers or fulfill Mr. President’s promise to ensure that transporters get their vehicles and tricycles converted for free, but also an opportunity for Nigerians to benefit from the abundant resources of the country, urging everyone to key into the transformative initiative of Mr. President.
