Nigeria has set out to completely deregulate the downstream oil and gas sector. This means removing government subsidy on petrol with the attendant consequence of an increase in the retail price of petrol to reflect the market forces of demand and supply.
However, natural gas offers new options that lead to energy savings, although high conversion costs and few refueling stations pose obstacles.
Retrofitted natural gas vehicles (NGVs), that is, vehicles that initially ran on either diesel or petrol but have been converted to also use either compressed natural gas (CNG), liquefied petroleum gas (LPG) or liquefied natural gas (LNG) bring significant savings.
Tunji Adeniji, former president, Independent Petroleum Marketers Association of Nigeria (IPMAN) recently converted his Toyota Hilux truck to use CNG (two cylinders) at the NIPCO gas station at Ibafo, which also houses a conversion workshop.
Tunji says the two cylinders take him as far as Lokoja from Lagos where there is a CNG refueling station. It cost N7, 000 to fuel at Ibafo and another N7, 000 at Lokoja for refuel to get to Abuja. This is a trip that costs N25, 000 on petrol in the same vehicle to Lokoja and another N25, 000 from there to Abuja.
“The savings are massive,” he said.
A two-cylinder conversion kit costs N400, 000 to install and a single-cylinder kit costs N250, 000. Depending on the weight of the vehicle, a single cylinder of 14 standard cubic metres (SCM) takes a commercial bus from Ibafo, Ogun State to Ibadan. But the drivers buy petrol on their way back because there are no refueling stations along the way.
Additionally, it costs an average of N2500 for petrol to travel to Warri and back from Benin City, a journey of 193 kilometres. On compressed natural gas, the same journey costs on average N1300, according to Emmanuel Uzoefune, an operator of commercial buses in Benin City. A litre of petrol costs on average N160, while a standard cubic metre (SCM) of compressed natural gas (CNG) costs N90.
However, without CNG refueling stations and high conversion costs, the Federal Government’s drive to deepen gas utilisation for transportation through its autogas programme is likely to suffer significant setbacks and retard the benefits in savings for Nigerians.
Early last month, the Department of Petroleum Resources (DPR) ordered 9, 000 petrol stations across the country to immediately start the upgrade of their facilities to allow them to dispense gas to vehicles for transportation.
These petrol filling stations were listed in Category 1 (there are Categories 2 and 3), and had been identified as suitable for immediate integration of Add-On facilities based on robust safety assessment and technical considerations by DPR.
Nevertheless, some teething problems persist. People with deep knowledge of the sector have said conversion kits require standardisation, like the cylinders used for LPG, so that they do not take up too much space in private cars. Gas pricing has to be addressed too, they say, to make it economical for users and more refueling stations are in demand. An enabling environment would attract investments and the kits would be made in Nigeria. In the interim, makers and importers of conversion kits require subsidies.
NIPCO Plc, a major player in Nigeria’s natural gas vehicles (NGVs) space is currently constructing a pipeline from Ibafo-Sagamu-Ibadan to provide CNG services for vehicles. The savings after the conversion are significant.
