Nigeria’s projected $3.2 billion expenditure on conversion of petrol vehicles to natural gas is generating uproar in the nation’s oil and gas sector.
Stakeholders raised eyebrow over the development and emphasised the need for the private sector to take the driver’s seat in the implementation of the project.
They made allusions to similar project which was conceived in other parts of the world and was efficiently managed by the private sector with attendant multiplier effect in the economy and the lives of the citizens.
They also said because of the bureaucratic nature of government in Nigeria, the project would turn out to be a conduit pipe for officials who would make the conversion very prohibitive and inaccessible to most Nigerians, thereby defeating the intent of the project
The Director of Petroleum Resources, Mr. Sarki Auwalu, had penultimate week in Lagos said the Federal Government would need not less than $3.2 billion to be able to switch vehicles from the use of petrol to natural gas.
He said the cost is to enable the government convert eight million public vehicles from running on petrol or diesel to running on either Liquefied Natural Gas (LNG) or Compressed Natural Gas (CNG) at the value of $400 per vehicle, adding that this was what it would cost the country to switch to an alternative fuel regime in its bid to eliminate fuel subsidy and its attendant drain in the nation’s resources.
He maintained that converting eight million public vehicles currently present in Nigeria to gas-powered would cumulatively cost $3.2 billion to achieve.
He said, “So, to eliminate subsidy, they don’t call it subsidy anymore now, it’s under-recovery of purchase. So, to eliminate under-recovery, what you need is alternative fuel. Without alternative, you will subject people to higher prices and that is why we go for price freedom.
“As of today, there are 22 million cars in Nigeria. Eight million are for public use. Imagine if you want to convert every car into gas, the average cost of conversion is $400. Converting eight million cars requires $3.2 billion. To do that, there are a lot of environmental investors which can invest and recover from the sale of gas and we are encouraging that.
“Once that is achieved, you will see that PMS can be sold at N1000. After all, the average distance covered by one gallon equivalent when you compare it with LNG or CNG with respect to energy for mobility, is 2.7 against one. One for PMS, 2.7 for LNG or CNG. So, with that advantage, you will see that it creates opportunities for this industry again. The issue of subsidy, volume will all vanish and that is what we are working towards.”
Goody Duru-Oguzie, Managing Director/Chief Executive Officer of PowTech Power International Limited, said that all over the world where the Compressed Natural Gas conversion has been implemented, it is private sector-driven.
He said government only sets regulations to guide the private sector investors towards ensuring the best practices in safety is adhered to in the sector.
He added, “Government has no business investing the people’s scarce resources into such a venture especially with the huge debts owed over infrastructure projects driven across the country. Does it mean that government will also invest in electric cars whenever the craze gets to our shores? If government decides to put money into this, then there is a hidden agenda for siphoning money.
“The technology for achieving the CNG conversion for cars, trucks and others is one that even a good mechanic can handle after studying the guidelines and installation manuals. Indeed, I have been discussing with some interested colleagues on the possibility of venturing into the business having been briefed by a foreign provider of the technology and service in Germany. If the Central Bank of Nigeria (CBN) can provide low interest loans to interested private investors, it can be implemented here in Nigeria. All the investor needs is to be a franchise holder for the foreign OEM to import the necessary kits for carrying out the required modification and connections.”
Mr. Kunle Olubiyo, an electricity consumer advocate, stated that it was an unnecessary involvement in virtually everything it ought not to venture into.
He said the conversion of vehicles are elementary things which could be handled by local mechanical engineers in Nigeria as part of capacity building process, while the $3.2 billion could be used on infrastructure.
He added, “Retrofitting or conversion of vehicles is a basic thing that could be handled by Nigerian indigenous mechanical engineers. $3.2 billion could spent on infrastructure. This is like throwing money into the oceans.”
John Adebayo, an oil and gas analyst, said that government projection of $3.2 billion for Compressed Natural Gas (CNG) was needless and should be discarded.
He emphasised the need to allow private sector handle the project, explaining that people can sign up using subscription models with their dealers
An industry observer, Feyi Adebayo, said that the fear of corruption, bureaucracy and inefficiency may punctuate the implementation if the government should handle it.
He added, “It is better for the private sector to drive this project because anything government will easily be infected by corruption such that the normally very conversion cost will be out of reach of the people.”
SOURCE: independent.ng