Micro, small and medium enterprises (MSMEs) are turning to cleaner and cheaper sources of energy such as gas-powered generators for their operations as a cost-cutting measure.
Following the surge in the price of petrol from N196 earlier in the year to over N600 in less than three months, businesses are now converting their petrol-powered generators to gas to save cost.
This move became necessary as Nigeria’s over 39.6 million MSMEs have been struggling to survive in recent years due to the COVID-19 pandemic, the Russia-Ukraine war and other internal macroeconomic problems they face.
Energy is a key element of the production process and businesses spend about 40 percent of their total production cost on generating energy, according to the Manufacturers Association of Nigeria (MAN).
Janet Akindele, who makes and sells custard, told BusinessDay that she converted her petrol-powered generator to Liquefied Natural Gas (LNG) as she could not keep up with the increasing price of petrol.
Now her 5.5kva which used to consume 20 litres of petrol now lasts at least 25 to 30 hours with a 12kg gas cylinder.
“Now I’m free from issues around fuel scarcity, or hike in petrol, though the cost of gas installation may be slightly high but it is much more economical,” she said.
Breaking down the cost of installation, she said that it costs N25,000 to convert her generator from petrol to gas, as the carburettor costs N20,000 and was installed for N5,000.
Other things used in the conversion were a gas regulator, hose, clips and a gas cylinder.
Similarly, Rose Etim who sells frozen foods – chicken, fish and turkey, said her business relies heavily on constant power, adding that she resorted to using gas when she started spending almost N50,000 weekly to run her generator.
“I was scared initially but when I started running at a loss, I converted to gas and it has paid off; it is cheaper and works well too. My plan is to get another gas cylinder,” she said.
Hassan Idowu, a generator technician told BusinessDay that there has been an increased demand and inquiry on converting petrol gen to gas.
He, however, noted that some people have been doing it before now but due to the surge in the price of petrol, the demand has increased and even the prices of the carburettor for gas increased as well, as it was formerly sold for as low as five thousand Naira before now.
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“It is cheaper for businesses to use because it has a high thermal efficiency and offers increased efficiency in terms of output at a lower cost, it also does not release smoke or harmful gas too,” he said.
He noted that although it also has its drawback it can be controlled with strict adherence to safety measures.
Micheal Ola Adebayo, chairman of the Manufacturers Association of Nigeria (MAN) Gas Users Group, said this is a good development that should have been done since 2020.
“If we had done this thing since 2021, Nigeria would have been better for it now. It is good that businesses are using gas now,” he said.
He advised that the government look for means to subsidise gas conversion for businesses to further encourage the transition to gas-powered generators.
According to Nigeria’s energy transition plan, gas will play a critical role as a transition fuel in the country’s net-zero pathway particularly in the power and cooking sectors which will be supported by its large gas reserves.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) in April this year urged schools, banks, hotels, factories, estate developers and other big companies that consume huge volumes of petrol and diesel to consider switching to gas to keep their operations sustainable.
