Oct 18, 2021

Mawazo Writing Africa

Writing about the main

Stakeholders seek Leeway as FG, CBN address autogas loopholes

As the federal government and the central bank of Nigeria try to remove loopholes in order to accelerate a recently launched LPG policy, energy experts yesterday called for a holistic plan that would create a sustainable energy mix in the country.

Minister of State for Petroleum Resources, Timipre Sylva, had told journalists that the government would work with the Central Bank of Nigeria (CBN) to ensure full implementation of LPG policy.

CBN, as part of efforts to stimulate funding for critical sectors the economy had introduced an intervention of N 250 billion as part of the National Gas Expansion Program.

During the implementation of the intervention, the top bank had determined that the investment in the industry resulted in a minimal production and use of Compressed natural gas (CNG) and liquefied petroleum gas (LPG) found as clean alternative energy sources in Nigeria ührt.

In view of the elimination of subsidies for Premium Motor Spirit President Muhammadu Buhari had the LPG Directive introduced on 1 December 2020 to reduce the impact of high fuel prices in Nigeria.

Although the removal of the subsidies was a challenge due to the setbacks of the unions, the LPG program did not go as planned due to inherent challenges, in particular due to a lack of capacity to enable Nigerians to convert vehicles to petrol and limited amounts of LPG at filling stations.

Regarding the directive, Sylva said, “If you have a critical mass of vehicles that could potentially convert a million to gas, you also need to have an equivalent number of petrol stations that are activated around a million to fill converted cars.

“So one aspect cannot be ruled out, they have to go hand in hand if not, the whole program doesn’t make sense.

“We’re working with the Central Bank of Nigeria to make sure we have conversion kits for a critical mass of vehicles.

” And then at the same time give low-interest loans to downstream operators to repair their gas stations so that it works when we bring the two together.

Main partner, Nertier, Patrick Okigbo, said: “Nigeria needs to switch to gas-powered vehicles “and stressed that the initiative would provide cheaper and cleaner fuels for the country’s environment.

While Nigeria currently has around 206 trillion cubic meters of proven natural gas with dismal local uses, Okigbo said,” We need ours Use abundant natural gas. “

Renowned The energy expert Prof. Wunmi Iledare emphasized that the expansion of the gas market through social investments by companies to create jobs is on the right track Be.

However, he called for meaningful accountability, adding, “CBN must avoid a bailout without accountability going back to CBN.”
Habeeb Jaiyeola, Associate Director, Energy, Utilities and Resources at PwC, said along the way that government intervention is being used around the world to catalyze economic development.

“In many cases, government intervention is very important to the Control borrowing costs in developing sectors. The CBN intervention remains a positive tool for the development of the domestic gas sector, “he said.

However, the repayment needs to be enforced to ensure the fund remains available for further critical intervention, noted Jaiyeola, adding in addition, further sensitization for the LPG initiative would be necessary for its acceptance. “This is a highly technical area where safety is of great concern, especially when a mechanical object is operated on fuels that are different from its original design.

This needs to be accepted worldwide, especially by the Original manufacturers. Potential negative impacts also need to be identified in order to allow an informed decision before implementation, ”he added.

He believes that adequate pricing system requirements need to be put in place so that the forces of supply and demand determine price and allow adequate return on investment.

An energy expert, Michael Faniran, noted that one of the imperatives of LPG policy remains the need for people to convert their vehicles to use both gasoline and gas .

“This is an additional fee for the vehicle owners. Therefore, the government needs to provide incentives for vehicle owners in the form of loans or tax credits to offset some or all of the cost of vehicle retrofitting, and even for retail stores to build dispensers for CNG.

“The intervention of the CBN is a welcome idea as it is the one accelerate the passage of LPG by vehicle owners and retail stores and also build critical market mass. However, this is not sustainable, ”Faniran noted.

He insisted that a public-private partnership (PPP) fund was needed to finance vehicle and retail conversion kits to be sustainable and added that the CBN could disburse the funds through a special purpose vehicle with private sector actors.

There needs to be a very clear policy for private sector involvement and a well thought out government policy bankable plan to attract the private sector.