The model used in Benin City to covert thousands of taxis and private vehicles from petrol-powered to run on Compressed Natural Gas (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 filing station in Benin City with a promised 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.
A major impediment to adoption of Natural Gas Vehicles (NGVs) is the cost of conversion from petrol to gas, since the cars were built to run on fossil fuel. Experts say this cost ranges anywhere between €1,000 and €1,500.
In Benin City, the taxi drivers were spared this initial capital investment, through a joint venture arrangement between NIPCO and the Nigerian National Petroleum Corporation (NNPC). In 2012, they injected over N17 billion in the provision of CNG infrastructure in a joint venture scheme with the Nigeria Gas Company (NGC), a subsidiary of the NNPC.
The JV scheme, which resulted in the setting up Green Gas Limited, led to completion of eight CNG stations and three conversion workshops in the city of Benin, the Edo State capital.
To support the project, the JV laid over 50km steel pipeline for gas distribution to the CNG stations across the city to guarantee access to gas.
A typical conversion process takes about five hours, and after the conversion, the vehicle can run both on petrol and natural gas, thus giving the motorist a tab switch between using CNG and petrol at will.
With this in place, the company converted vehicles of taxi drivers who agreed to sign without immediately paying the N200,000 conversion cost. They only paid N10,000, and the rest of the cost spread over 10 years. This payment is deducted from each refuelling.
“To install the gas is now N200,000, but when I installed it was N150,000 and I started paying little by little. In the finance package, the amount is N120 per kg while they will deduct about N25 in each kg till you are able to finish payment. For me, I am in normal because I no longer them, and I pay N90 per kg,” Innocent Imoisili, a commercial bus driver in Benin City, says.
The cab operators interviewed say running on gas is cheaper than petrol. “I have been using fuel but gas is far better. I started using gas four months ago. When I was using fuel, I do buy N4,000 fuel daily, but since I started using gas I do not use half of that amount. If I want to fill N1,250 will take me for more than four hours. I make about N7,000, when I buy gas of N1,200 on a daily basis,” Godstime Osagie, a taxi driver states.
The drivers further say another huge benefit of using gas instead of petrol is that it reduces the cost of maintaining the vehicles significantly. “The advantages are that there is no carburettor over floating, no plug soaking and the cost is cheaper,” Imoisili notes.
Experts say the experience in Benin City can be replicated across Nigeria. Clement Isong, chairman, Major Oil Marketers Association of Nigeria (MOMAN), says states like Lagos where some buses have been acquired already can run on CNG, making it easier to start off with a closed ecosystem wherein the buses can fill up from their terminals.
“The next phase I see is commercial vehicles including mini buses; if the commercial vehicles were encouraged to do this conversion, then you would have set up an ecosystem like you have in Benin,” Isong says.
Analysts say financing will be important. “A PPP structure where the Nigerian government provides take-off grants and generous fiscal incentives like tax and duty waivers on the importation of NGVs, refuelling infrastructure, and accessories to the private sector players will be more sustainable,” Frank Umole, director of Business Development, Axxela, notes.
Umole states that the cost of conversion can be funded by vehicle owners with instalment repayment plans as has been demonstrated in Egypt and this can be further aided by take-off grants and/or subsidies from Nigerian government and DFIs for the initial conversion for major transporters and fleet operators.
The Federal Government seems keen to deepen the use of gas-powered gas in Nigeria. Justice Derefaka says the Ministry of Petroleum Resources is taking this message to the grassroots to focus on triggering and initiating investment in CNG and LPG as alternative by giving the empowering conditions to organisations so they flourish and deliver the services needed.
CNG vehicles operate much like gasoline-powered vehicles with spark-ignited internal combustion engines. The engine functions the same way as a gasoline engine. Natural gas is stored in a fuel tank, or cylinder, typically at the back of the vehicle. The CNG fuel system transfers high-pressure gas from the fuel tank through the fuel lines, where a pressure regulator reduces the pressure to a level compatible with the engine fuel injection system.
Finally, the fuel is introduced into the intake manifold or combustion chamber, where it is mixed with air and then compressed and ignited by a spark plug, Derefaka explains, adding that there are talks with investors on the project.
According to Umole, the project is feasible because other developing economies like Pakistan and India have achieved this feat. Nigeria has a proven natural gas reserve of 200tcf with extensive gas pipelines across the Southern Nigeria and Middle Belt and soon to be in the North with the AKK pipeline recently commenced.
There are also CNG compression stations across Nigeria, which ensures in-country availability, unlike the alternative fuels that need to be imported. Furthermore, natural gas as a fuel has clear cost advantages as it offers savings of about 30-45% when compared with conventional fuels.
More so, there are 27 million NGVs currently running globally, therefore the technology is well proven and already being applied in Nigeria.
The benefits of natural gas vehicles are enormous including helping to cut down carbon emissions from dirty fuels like petrol and saving billions of dollars Nigeria wastes annually on subsidising petrol.
