• Wednesday, April 24, 2024
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Gas-powered vehicles now cost-effective as fuel subsidy ends


Switching to gas-powered vehicles can cushion the impact of petrol subsidy removal as it offers a cleaner, safer, and more affordable alternative to petrol and diesel engines, experts say.

The high cost of conversion and concerns about safety have led to many shunning autogas. But with the determination of the new administration of President Bola Tinubu to cut subsidies, which has more than doubled the cost of petrol, autogas now appears more attractive.

This realisation compelled labour unions to demand the implementation of the government’s autogas policies which include the revitalisation of Compressed Natural Gas (CNG) projects in labour centres ignored by the previous administration of former President Buhari, as part of conditions to shelve their planned strike over subsidy removal.

Launched in December 2020, Nigeria’s autogas policy sought to reduce heavy reliance on petrol and promote the use of gas as a cleaner and cheaper energy source for vehicles.

In the pilot phase, the Federal Government would finance the conversion of a million vehicles from petrol to natural gas. These are mostly passenger and haulage vehicles that run on Nigerian roads – by the end of 2021.

This did not happen as labour unions were not amenable to reason. The government continued funding subsidies hence there was no money to provide the infrastructure. Natural gas prices were high and the prevailing harsh economy post-COVID affected the plan.

Some analysts have advised the government to provide financing options for local car assembly plants and ease gas supply to companies interested in depressurising a gas transmission line to build a mother station with CNG trucks and skids.

Kelvin Emmanuel, energy sector expert and co-founder/CEO at Dairy Hills, suggested a single-digit unsecured loan for local car assembly plants to deliver gas-powered buses across states to transport companies.

“Give them a concession to offtake gas without a bank guarantee to open a credit line. Ensure they serve both gases to power for estates and markets that require industrial gas generators to run,” he said.

“Set up auto-compression kits with mother stations to enable conversion. One standard cubic meter of CNG ranges between N175-N270 depending on location. That means it is 30 percent the price of diesel, and 41 percent the price of petrol from the top line.”

According to a statement by Banner Energy, autogas conversion could save up to 50 percent on fuel costs for vehicle owners.

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 or LPG engine, depending on the nature and condition of the car.

Ayoola Ashiru, energy sector expert and CEO/founder at Truckademy, in a LinkedIn post, called on the government to create a deliberate policy and master plan in the CNG ecosystem.

“There is a need to give private investors the license to set up as many CNG re-filling stations across the six geo-political zones for easy access and employment generation,” he said.

“There is a need to incentivise the sector to attract as many investors as possible in the entire value chain of the CNG conversion industry and supply chain.”

In addition, the model used in Benin City to convert thousands of taxis and private vehicles from petrol-powered to run-on CNG offers Nigeria the best way to ramp up the plan to shift towards gas-powered vehicles.

In January 2010, the management of NIPCO Plc commissioned its first CNG plant and filling station in Benin City with a promise that the new initiative will not only reduce the cost motorists spent on powering their vehicles but also get value for their money.

One of the factors accounting for its success is that it was implemented in a closed system. This means that rather than general adoption, it was started among cab operators and filling stations within a closed loop, which makes it easier to provide support.