Private cars and commercial bus owners who have converted their engines to use both petrol and natural gas say the economic benefits are large but refuelling stations and the cost of conversion have remained major hurdles.
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 scm takes a commercial bus from Ibafo, Ogun State to Ibadan. But the drivers buy petrol on their way back because there are no refuelling stations along the way.
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. Nonetheless, the savings after the conversion are significant.
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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 refuelling 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.
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 refuelling 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. Already, it was initially planned for the nation-wide rollout of the programme to start in October.
This has been moved to December for the Nigerian National Petroleum Corporation’s mega stations, according to Mele Kyari, group managing director, NNPC. The Ministry of Petroleum Resources counts on these mega stations for the rollout.
Under its National Gas Expansion Programme (NGEP), the FG has outlined timelines for a massive rollout of CNG, liquefied petroleum gas (LPG) and liquefied natural gas (LNG) for vehicles. The autogas programme was slated to start by October but people familiar with the matter say not much is happening yet.
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 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.
“So far I have not seen anyone given authority to construct. No one has received the licence to my knowledge for autogas upgrade, no stations, no pipelines,” Lawal Taofeek, assistant manager communication, NIPCO told BusinessDay. “Meanwhile, the DPR initially said there should be no add-on facilities.”
Justice Derefaka, technical adviser, Gas Business and Policy Implementation to the minister of Petroleum Resources has on a number of occasions stated that the FG has made available a million conversion kits. However, Taofeek and many Nigerians are unsure how the kits would be distributed – subsidised or given out free of charge.
Uzoefune in Benin City told BusinessDay that there were two routes to acquiring the conversion kits, outright purchase or financing.
For those who opted for the financing option, when the kit cost N150, 000 they made an upfront payment of N5, 000 and paid the rest in instalment as they purchased CNG at the station. Rather than pay N90 per scm, they pay N115 for the duration of the credit facility. However, now that the conversion kit costs N250, 000, they pay N50, 000 up front and the rest in instalment.
Another player positioning in Nigeria’s NGVs space is the Axxela Group, a gas and power portfolio company. The company is planning a pilot project with big mass transit buses to be retrofitted and run on natural gas.
Some teething problems exist. 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 refuelling 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.
