FG to begin autogas conversion, targets 1m commercial vehicles
The Federal government has reiterated its commitment to the autogas program as an alternative fuel for transportation in Nigeria in line with the approved National Gas Policy.
Speaking on the government’s plan to begin the program, Timipre Sylva, the Minister of State for Petroleum Resources stated that issues relating to structures required to ensure smooth transitioning and deregulation of the sector still lingers.
The Minister who disclosed this during a meeting with Petroleum marketers in Abuja on Monday, said that before the removal of fuel subsidy, as well as sector deregulation, can be implemented, there must be conversion of a critical amount of vehicles and corresponding refuelling centres.
According to him, “Part of our engagement with stakeholders was that we should have about 1 million vehicles converted and we have gotten commitment from Original Equipment Manufacturers (OEMs) to give us half of what is required.
“The OEMs are not Nigerians and would need to partner with credible marketers on the installation of refuelling and converting centres.
“We are working to Convert 1million public transport vehicles and install 1,000 refuelling centers within 36 months.”
Speaking on the new structure of the program, Brenda Ataga, Technical Adviser to the Minister explained that 3 years was an average time frame to the 1 million vehicle conversion target with 200,000 vehicle conversion in first year, 300,000 conversion in second year and 500,000 in the third year.
According to her, the government is expected to provide 50 percent of needed investment, which will be in provision of conversion kits and refuelling stations.
“Target is to trigger the rapid conversion of Vehicles by providing equity participation, encourage credit scheme investments with partner nations and OEMS.
“Targets to reach 5,000,000 conversions by achieving 20% y-o-y increment (from year 3) which could be accelerated as the market matures.
Read also: FG’s autogas programme stuck months after ‘fanfare’ launch
She further listed criteria for selecting network operators to include; ownership of a minimum of 21 stations nationwide, operates a minimum of 5 stations in each proposed city and must be willing to demonstrate creditworthiness and ability to pay back within the stipulated time frame of five years.
Running in phases, the program is expected to commence in Abuja, Kaduna, Kano, Kogi, Kwara, Lagos, Ogun, Ondo, Oyo, Edo, Delta, Bayelsa, Niger and Rivers.
Phase 2 will be in Sokoto, Katsina, Jigawa, Borno, Bauchi, Gombe, Yobe, Osun, Ekiti, Enugu, Anambra, Imo, Cross River, Abia, Akwa Ibom and Plateau.
While phase 3 will be in Kebbi, Zamfara, Yobe, Gombe, Taraba, Adamawa, Benue and Ebonyi states respectively.
In his remark, Olumide Adeosun, the National Chairman of Major Oil Marketers Association of Nigeria, stressed on the need to consider issues relating to demand and supply, infrastructure as well as investment rate.
“The way it is looking today, some of the basic needs are infrastructure. Where we are is that we are looking to build a strong investment.
He noted that there was optimism that was not well placed.” Once the numbers are right ,we won’t need to tell investors but they will key in by themselves,” he said.
Igwe Christian, CEO Mainland oil and gas, said that while marketers are committed to the program, factors such as high-interest rate pose a great challenge to their effective participation.
“The cost of importing most equipment such as turbines is quite high. A lower interest rate will encourage us to participate more.
“If there are ways that the government can intervene by subsidising the cost of these equipment, it will encourage marketers.