BusinessDay

Experts list benefits of CBN’S N250bn gas expansion plan, decry deforestation

Energy expert s have insisted that a N250 billion gas expansion fund championed by the Central Bank of Nigeria (CBN) could push penetration of Liquefied Petroleum Gas (LPG) consumption in the country to five million metric tonnes (mmt) by 2021 and address disasters associated with cooking with firewood.

They also noted that the initiative could reduce the rate of deforestation in the country, address health burden, limit wastage of time and number of mortality associated with firewood smoke.

The stakeholders, including Programme Manager, National LPG Expansion Implementation Plan, Dayo Adeshina and Pricewaterhousecoopers’s Associate Director, Energy, Utilities, and Resources, Habeeb Jaiyeola noted that financial incentives remained critical to government aspiration of increasing cleaner energy use in the country.

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Central Bank of Nigeria ( CBN) set aside N250 billion intervention facility for the national gas expansion programme. The aim was to make Compressed Natural Gas (CNG) the fuel of choice for transportation and Liquefied Petroleum Gas (LPG), domestic cooking, captive power and small industrial complexes.

Nigeria’s gas deposit stands at over 203 trillion standard cubic feet but domestic use of gas has been a challenge. Last year, gas utilisation, especially cooking gas in the country moved from about 400 metric tons four years ago to over 1 million metric ton on the backdrop of the removal of subsidy from kerosene. But the penetration is still dismal when compared with a national target of five million metric ton by next year.

The experts therefore urged industry players to take advantage of the N250 billion CBN facility to address the bottlenecks in the domestic gas market, while urging sustainable finance into the gas sector.

Pricewaterhousecoopers’s Associate Director, Energy, Utilities, and Resources, Habeeb Jaiyeola, said the CBN intervention remained a welcomed development to facilitate investment in the domestic LPG sector and achieve the desired retail penetration.

“The intent of the fund is also quite comprehensive and seeks to ease funding challenges for all players within the LPG value chain,” Jaiyeola said.

According to him, while the fund remains a loan with set payback period, it’s application has to be strictly monitored to ensure the most critical sections of the LPG value chain are targeted for maximum impact.

Jaiyeola added that the payback has to also be enforced to ensure the fund remains available for further critical interventions.

Speaking further on the LPG sector, Jaiyeola insisted that appropriate pricing system must be instituted to enable the forces of demand and supply determine the price and enable adequate returns on investment.

“Safety of LPG for domestic use also remains a concern. This is largely due to shortages of reliable infrastructure and need for standardization and monitoring to avoid distribution of adulterated products within the retail markets.

“LPG penetration requires relatively high investment, leading to prevalence of unsafe makeshift distribution facilities within the retail channels. Also some residential facilities may not have considered appropriate and safe domestic gas location within the facility resulting in several accidents,” Jaiyeola stated.

He noted that while the use of kerosene, charcoal and wood remains prevalent, sensitization of the advantages of LPG would help to improved its acceptability and penetration. To him, an increase in LPG penetration would aid Nigeria’s effort to reduce emission of green house gases and further support the global energy transition as this would aid the growth of investments in the sector.

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