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Energy sector players have advised the federal government to address inherent challenges as it relies on the Central Bank of Nigeria’s intervention to implement the National Gas Expansion Programme and National Autogas Roll-out Initiative.

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Recently, the Central Bank of Nigeria (CBN) established a N250 billion intervention fund under the National Gas Expansion Programme, and Minister of State for Petroleum Resources, Timipre Sylva, stated that the government would collaborate with the CBN to ensure full implementation of the AutoGas Policy.

In its gas policy framework, the CBN stated that low levels of investment were impeding domestic gas consumption and that it would encourage the production and use of compressed natural gas (CNG) and liquefied petroleum gas (LPG) as clean alternative sources.

“We are currently working with the Central Bank of Nigeria to ensure that we are able to bring in conversion kits for a critical mass of vehicles,” Sylva said.

“And then give soft loans to downstream operators at the same time to fix their filling stations, so that when we put the two together, it works.”

According to PWC’s Habeeb Jaiyeola, government interventions are being used to catalyze economic development all over the world.

“In many cases, government interventions are critical in controlling borrowing costs in developing sectors.”

“The CBN intervention continues to be a beneficial tool for the development of the domestic gas sector,” he said.

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However, the payback must be enforced in order for the fund to be available for future critical interventions, according to Jaiyeola, who added that further sensitization on the autogas initiative would be required for its acceptance.

“This is a highly technical area where safety is critical, particularly when a mechanical item is designed to run on fuel feedstock that differs from its original design.”

This must be approved on a global scale, particularly by the original manufacturers.

Potential negative consequences must also be identified in order to make an informed decision prior to implementation,” he added.

According to him, an appropriate pricing system is required to allow the forces of demand and supply to determine the price and enable adequate returns on investment.

Michael Faniran, an energy expert, noted that one of the autogas policy’s imperatives remained the need for people to convert their vehicles so that they could use both petrol and gas.

“This is an extra cost for vehicle owners.”

As a result, the government must create incentives for vehicle owners, such as loans or tax credits, to offset some or all of the cost of vehicle conversion, as well as incentives for retail outlets to build CNG dispensing units.

“The CBN intervention is a welcome idea because it will jumpstart the adoption of autogas by vehicle owners and retail outlets while also building critical market mass.”

This, however, is not sustainable, as Faniran pointed out.

He insisted that a public-private partnership (PPP) type of fund was required to finance vehicle and retail outlet conversion kits to ensure sustainability, adding that the CBN could disburse the funds through a special purpose vehicle with private sector players.
Faniran stated that in order for the private sector to enter, there must be a very clear enabling policy and the government must have a well-thought-out and bankable plan to attract the private sector.

 

 

 

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