• Thursday, April 25, 2024
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BusinessDay

Compressed natural gas in Nigeria

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  If all heavy trucks in the world switched to gas, much fuel costs could be saved. At the moment 15 million vehicles – in Iran, Pakistan, Argentina, Brazil and India – run on CNG. Trucks plying Nigerian roads, laden with fuel and food, would be immediate beneficiaries.

CNG in Box, a technology that fills trucks with compressed natural gas (CNG), has been designed by GE. The system, fitted into a 20-foot freight container, is mobile and easily installed. What is instructive about this innovation is its relevance to Nigeria’s bold plan to make gas a catalyst for economic development. 

Jeff Immelt, CEO of GE, in his letter to shareholders, reckons the company could have “$1 billion franchises” in Nigeria, South Africa, Mozambique and Angola. In Nigeria alone, GE intends to invest $1 billion over the next five years to build an assembling factory, sell gas turbines and turn Nigeria into its regional hub for manufacturing services. The investment is expected to generate 2,300 jobs. A huge multiplier effect can be expected as an ecosystem of manufacturing services, industrial and commercial customers of gas evolves.

Dangote Industries, a potential customer of GE’s CNG in Box, lately launched a plan to invest $20 million in CNG. Borkir Energy Company, a subsidiary of Dangote Group, has just signed a 20-year gas purchase agreement with the Nigerian Gas Company (NGC). Specifically, Sagas, a division of Borkir, will buy CNG from NGC. The initial plan will involve trucks owned by Dangote Group; 5,000 of them will be converted for dual-fuel or bi-fuel use, i.e., gas and diesel. Eventually, 20,000 trucks will be converted.

Gas is not only environmentally friendly; it is economical and, with help of new technologies, commercially viable. Besides, the price of gas, since the shale gas bonanza in the US, has dropped steeply. 

Last November, a report by the International Energy Agency estimated that the US would be a net exporter of energy by 2030 with more natural gas than oil in its energy mix. With the US, a major market for Nigeria, on the road to energy independence, the domestic market offers immense opportunities for gas utilisation. Unfortunately, the PIB is at odds with Nigeria’s gas potentials.

Regulating the price of gas, imposing domestic gas supply obligations while ignoring that over $25 billion is needed to plug the infrastructural deficit across the electricity and gas value chain will not increase investments required for gas supply. Such conditions risk making Nigeria’s 183 trillion cubic feet of proven gas reserves redundant. 

A more balanced set of fiscal incentives and prices will help actualise government’s aspirations to provide security, welfare and infrastructure, particularly transportation. In Edo State, a pilot project, by NIPCO Plc in collaboration with the state government, is using CNG for mass transit buses.

NIPCO Plc, a CNG pioneer in Nigeria, already sells CNG to commercial users through eight stations located in Edo and Delta State. And through its three conversion workshops, NIPCO says it has retrofitted 1,500 vehicles. At the moment the company is constructing infrastructure to ease distribution of CNG across Benin City.