The federal government has failed to make good its promise to convert at least one million vehicles to run on gas under the national autogas initiative.
Launched in December 2020, the national autogas initiative is aimed at reducing the country’s high reliance on petrol and promoting the use of gas as a cleaner fuel for vehicles.
However, 22 months later, the government failed to meet the target of converting one million vehicles by the end of 2021.
A combination of infrastructure, high cost of gas, lack of proper planning, and prevailing harsh economic realities have affected the implementation of the autogas policy, BusinessDay has learnt.
“All the 1 million cars that we promised will be done through a structure that the ministry of petroleum resources will put in place to ensure that any Nigerian who has to convert his car will get it done for free,” Mele Kyari, group managing director of the Nigerian National Petroleum Company Limited (NNPC) said in December 2020.
Experts say lack of proper planning, infrastructure, high cost of gas, prevailing harsh economic realities and safety concerns continued to frustrate Nigeria’s autogas plan.
“Two years after the fanfare, all the plans and policy promises concerning import duties and tax incentives made by the government are still; the government is basically paying lip service in terms of actual implementation,” Ola Alokolaro, partner, energy and infrastructure at Advocaat Law Practice, said.
Nonetheless, investors want the government to match intent with actions.
“Compressed natural gas (CNG) can save Nigeria billions of Naira as cars run on a cleaner and healthier fuel, but the sector needs more action from the government, not promises or projections,” Niyi Awodeyi, CEO at Subterra Energy Resources Limited, said.
Zakka Bala, an Abuja-based oil and gas expert, said the government failed to make adequate preparation before going into the programme.
According to him, it will be impossible for the government to deliver on the project because Nigeria is not a vehicle-manufacturing country.
He said: “From the onset, I knew that this administration would not deliver the project. Firstly, Nigeria is not an auto manufacturer, even if we have some companies that produce but Nigeria is not known for car manufacturing.
“Nigeria does not have the capacity, technology and intellectual right to adjust a car manufactured by another country.”
Bala, who decried the lack of proper planning, said that there are still not enough filling stations that dispense gas across the country.
Habeeb Jaiyeola, partner, energy utilities and resources at PwC, said the autogas project is highly technical and requires carefully-thought-through processes.
He said using gas to power vehicles is a sensitive operation which can only be delivered after ensuring that all precautionary measures are put in place.
He said: “The autogas initiative will involve several processes that require time to deliver. The government has to get the original manufacturers of these vehicles involved in the process to know the dangers involved.
“It also requires a lot of study and test runs by relevant research bodies both within the country and internationally to certify the processes. This is a good initiative but we have to get it right even from the planning stage.”
Noting that the project requires several years of preparation, Jaiyeola said the present government may not successfully deliver the project as it has few months to serve.
The numbers look good for autogas
Africa’s biggest economy could spend up to N6.72 trillion next year if it keeps petrol subsidy in place, Finance Minister Zainab Ahmed said in July, a 68 percent jump from this year’s fuel subsidy budget of N4 trillion.
But without subsidies, CNG per cubic meter costs between N100 and N110 per standard cubic meter (the equivalent of a litre).
A survey by BusinessDay shows it costs between N200,000 and N300,000 to purchase the kit needed in converting a car from a petrol or diesel engine to a CNG engine, depending on the nature and condition of the car. But experts say the conversion leads to a 40 percent savings in energy cost for car owners.
As of yesterday, a litre of autogas was selling for an average of N110 at the Nigerian Independent Petroleum Company (NIPCO) retail outlet.
“Patronage is still very low; a lot of our outlets are struggling despite million-dollar investment,” Taofeek Lawal, spokesman of NIPCO Plc, told BusinessDay.
According to him, NIPCO Gas has retail CNG-dispensing facilities at Ibafo, Benin, Ajaokuta, Okene, and Abuja where it currently dispenses autoCNG to vehicles.
An attendant at another CNG station told BusinessDay that no one has come to fuel their cars at the gas pump for over two months, adding that only NNPC vehicles, which were converted at the pilot phase of the project, continue to come for a refill once in a while.
A technician at the NNPC retail station, Lugbe, in Abuja, told BusinessDay that Nigerians were yet to embrace the programme. “We have not seen anyone come around to request for car conversion even though the programme is still on hold.”
He said the cost of engaging private technicians is about N300,000 as it is not handled by the federal government despite the assurances of ‘free conversion services’ at the commencement of the programme.
“I cannot give the reason for the low turnout by Nigerians; it may be that many people are not aware of the programme or it may have to do with the money that they would pay,” he said.
All efforts to reach NNPC’s spokesperson, Garba Deen Muhammad, for comment proved abortive as he did not respond to calls and messages.
A review of the 2023 budget appropriation bill showed that Nigeria’s Ministry of Petroleum Resources has budgeted N18.2 million for the implementation of the National Gas Expansion Programme (NGEP).
NGEP is a programme introduced by President Muhammadu Buhari’s administration to carry out mass campaigns and action steps towards making CNG the fuel for transportation and liquefied petroleum gas (LPG), the fuel for cooking, captive power, and small industrial complexes.
Reacting to concerns about implementation, Nigeria’s ministry of petroleum said various stakeholder engagement emanating from the NGEP has been a trigger for federal and state government actors to participate collaboratively with the private sector.
“The federal level, the Office of the Head of Service and compressed natural gas (CNG) transport company, Femadec Group, have signed an agreement for civil service mass transit buses to be powered by CNG in Abuja. The first 20 of these buses were recently launched with an additional 200-500 to follow by 2023,” the ministry said in a note seen by BusinessDay.
It added: “On the sub-national level, Lagos state and Oando have signed a memorandum of understanding on a CNG bus conversion plan for the Lagos state Bus rapid transport system. The first batch has commenced conversions.
“The Road Transport Employers Association of Nigeria has also signed an agreement for the purchase of 2,300 locally produced buses with CNG vehicle company, Omaa. In all, we should have about 3,000 to 4,000 new CNG buses plying Nigerian roads a year from now. This will be in addition to the 8,000 plus vehicles already operating in the country.”
Timipre Sylva, minister of state for petroleum resources, had said before the removal of petrol subsidy, there must be conversion of a critical amount of vehicles and corresponding refuelling centres.
He said: “Part of our engagement with stakeholders was that we should have about 1 million vehicles converted and we have gotten commitment from Original Equipment Manufacturers (OEMs) to give us half of what is required.
“The OEMs are not Nigerians and would need to partner with credible marketers on the installation of refuelling and converting centres. We are working to convert 1 million public transport vehicles and install 1,000 refuelling centres within 36 months.”
The minister had told BusinessDay that after the rollout of the programme, the government converted 100 commercial vehicles, which were handed over to the labour union to kick start the programme.