Although Nigeria’s real estate sector benefits immensely from its relatively large
market size – an important factor for attracting investment – investor apathy is
fast creeping into the sector as a consequence of insecurity in the country, writes EDDY OCHIGBO
Since the year 2020, when President Muhammadu Buhari announced an autogas policy that would see mass deployment of vehicles in Nigeria that will use compressed natural gas (CNG) instead of premium motor spirit (PMS), Nigerians are still expecting to see that policy on a larger scale aside from the few branded vehicles being used by government agencies that are tasked with managing the autogas policy.
It has been reported that about 12 million motor vehicles run on Nigerian roads, but the slow pace at which the autogas policy seems to be running may end up putting Nigeria behind her peers in terms of gas utilization for a greener economy and a more sustainable and prosperous business ecosystem with less negative impact on the natural environment.
Had the policy adequately taken off, there would have been gas-powered cars, buses and trucks running on CNG and LPG. This would have helped greatly in moderating the anxieties over the proposed increases in the pump price of petroleum prices in Nigeria, while also helping the country on the journey towards the transition to greener and cleaner energy forms.
Unfortunately, Valuechain findings indicate that commuters in Nigeria will still have to wait a bit longer to see the autogas policy of their government begin to show meaningful or significant results.
It is now just three months away from attaining two full years since President Buhari launched this policy on December 1, 2020, which was expected to thrive on the heels of the National Gas Expansion Programme. Also considering the fact that the period between 2020 and 2030 has been labelled “The Decade of Gas” in a country that holds 206 trillion cubic feet of gas in reserves, the Federal Government’s projection during the unveiling of the policy that at least 40 per cent of vehicles on Nigerian roads would be gas-powered was received with great enthusiasm.
Unfortunately, the initial plan by the Federal Government to roll out millions of gas-fired engine vehicles as a means of moderating the harsh impacts of PMS subsidy removal that costs the country trillions of naira yearly has so far failed to pick up steam.
Described as an alternative fuel, the Minister of State for Petroleum Resources, Timipre Sylva, had disclosed that the Federal Government’s plan was to ensure that gas prices remained within the threshold of between N95 and N97 per litre.
Instead of supplying autogas to Nigeria’s domestic market for the price range of N95 to N97 per litre as initially proposed by the Federal Ministry of Petroleum Resources, the price of gas has rather skyrocketed, thereby further putting the whole autogas policy in jeopardy.
Currently, the cost of gas has moved up by over 200 per cent since the policy was announced nearly two years ago, while the infrastructure to convert vehicles that would be gas-powered remains scarcely available.
Valuechain investigations reveal that LPG currently sells at N883.33 per kilogram around Abuja and its environs. This may be responsible for gas-fueling patronage from only NNPC vehicles that were converted to gas-powered ones during the pilot phase of the project.
Initially, the Technical Adviser on Gas Business and Policy Implementation to the Minister of State for Petroleum, Justice Derefaka, had said motorists in the country would need to pay about N250,000 to convert their vehicles to run on gas, but government contractors or partners who were doing the conversion from petrol to gas vehicles have rather disappeared. This is even further complicated by negative economic trends in the country, where the cost of items has more than doubled.
Nearly one year ago, the Federal Government announced it had set aside some N250 billion to support willing investors in building autogas assembly plants across the country and to facilitate autogas-vehicle conversion. However, the total funds set aside could convert just a paltry 100,000 vehicles into autogas models, based on prevailing market rates.
Valuecahin learnt that the N250 billion has already been put into the vaults of the Central Bank of Nigeria (CBN) in order for those interested in opening PMS to auogas engine conversion centres to access.
The government’s decision to provide such funds was due to the huge amounts it spends annually on fuel subsidy. It was also considered as being in line with the Buhari’s commitment to adopting gas as an alternative and transition fuel for Nigeria.
According to Sylva, “if we focus on moving from fossil fuel to Liquified Petroleum Gas (LPG) and Compressed Natural Gas (CNG), it will save us a lot of money because the benefits are enormous.”
Although12 states have been selected for the pilot phase of the conversation of petrol and diesel vehicles into autogas engines and engineers from about four automobile manufacturers are already receiving training on how to convert vehicles assembled or produced in Nigeria into autogas models, the results are yet to be seen on a larger scale. The 12 states are Lagos, Ogun, Bauchi, Gombe, FCT, Niger, Katsina, Sokoto, Ebonyi, Enugu, Delta and Bayelsa.
The National LPG Expansion Implementation Plan is domiciled in the Office of the Vice President and has been making moves to ensure the usage of gas both for cooking, in automobiles and for other purposes.
The Programme Manager, National Liquefied Petroleum Gas Expansion Implementation Plan, Dayo Adeshina, said “I am in charge of the LPG expansion programme; yes, there is an autogas element of it, but it is the LPG aspect that I am responsible for. And in this aspect, we are concentrating our target on 12 pilot states and our approach is simple. We are starting with the state governments by getting the vehicles that they are using in those states.
“So, if I take Lagos for example, in the last eight years, Lagos has had vehicles from GAC, JAG, Toyota and Coscharis. So, what we have done is that we have gone to those four companies to tell them that we would like to train their engineers to convert vehicles that they supplied to Lagos State already.
“The idea is that they can convert the vehicles from the use of petrol to LPG and then we can now scale it massively. So, we have done the online training, and we started with Lagos for those four companies.”
He however lamented that because of the COVID-19 pandemic, the engineers who were supposed to come and train the personnel in Lagos could not make it last year.
“But we are hoping that by the end of the first quarter of this year, they can come in to start the physical conversion of those vehicles,” he said.
While the government had promised to ensure that fuel stations across the country were forced to provide gas dispensing pumps for cars, investors did not buy into the plan, considering the investment to be too risky as market, citing bankability, consistency of government policies, product plan, among other prohibitive factors.
Most of the marketers, including the independent players, see the business as too risky to venture into, as prevailing realities show no viability.
In the whole of Abuja, only two stations are operating; one along Airport Road, owned by NNPC and the other along Kubwa Expressway, also owned by NNPC. Therefore, the entire Federal Capital Territory (FCT) has only two pumps dispensing CNG.
It was reported that some private investors, including Nipco and Oando, who had invested in the business have been struggling to survive, as the disparity between the price of PMS and the price of autogas makes PMS a preferred option.
This made Prof. Wunmi Iledare, who is the Professorial Chair of the Oil and Gas Institute at Cape Coast University, Ghana, to call this scheme a “mere political expediency, which is conflicting with economic effectiveness and efficiency.” He also described the whole policy towards the removal of fuel subsidy as “misplaced and misleading, hence the failure was guaranteed from the start, with no infrastructure that left much to be desired.”
To him, Nigeria’s autogas policy has fallen well below all expectations. Iledare further argued that full deregulation of the downstream sector remains the only sustainable option.
As it currently stands, Lagos seems to be the only place where the private sector is showing signs of significant activity, as the Lagos Metropolitan Area Transport Authority (LAMATA) has assured that the pilot phase of the use of CNG-powered buses for passenger operations will soon begin on the Marina/CMS to Lekki/Ajah-Epe routes.
LAMATA’s Consultant, Corporate Communication, Mr Kolawole Ojelabi, made this known in a recent statement in Lagos, assuring that under the pilot phase, 10 high occupancy vehicles would be deployed for the service.
According to him, “the operation, which has been franchised to a bus operating company named Femadec, will progressively increase the number of buses to 100 after data has proven the sustainability of the use of CNG.
“LAMATA has over the years been involved in studies aimed at alternative fuel energy sources in transport operations.
“The deployment of buses powered by CNG will provide useful data for future decision on wholesome wide use of such buses for passenger transit operations in Lagos. CNG burns cleaner and reduces carbon monoxide by more than 80 per cent when compared to traditional petrol and diesel.
“CNG-powered vehicles also run quieter than gasoline and diesel vehicles, which results in less noise pollution.”