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FG’s autogas plan stalls amid costly diesel, poor planning

Date:

Almost two years after the Federal Government launched the Autogas Initiative on the back of National Gas Expansion Programme, prevailing circumstances, especially with rising cost of diesel, is forcing motorists, most importantly those with high fuel-consuming vehicles, to convert their diesel engines to petrol, Compressed Natural Gas (CNG) or Liquefied Petroleum Gas (LPG).

The Guardian learnt that many of such operators, who hitherto, preferred diesel engines due to its heavy capacity and low combustion rate, are beginning to find the cost of sustaining their operations unbearable, notwithstanding the many hours of travel time due to traffic congestion.

Though the price of natural gas trades higher, operators noted that at N110 per scm, the equivalent of a litre of petrol, CNG remains the cheapest alternative in the country, ahead of petrol and diesel.

At almost N850 a litre of diesel as of yesterday, as well as scarcity of Premium Motor Spirit (PMS), otherwise known as petrol, the global market is in an unusual state of turmoil and uncertainty as fuel prices are high everywhere, spiking inflation.

The government had anticipated that within one year, one million of the estimated 12 million vehicles plying Nigerian roads would be running on CNG and LPG as part of measures to mitigate tension over the proposed removal of subsidy and save the environment from hazards of PMS. It was also believed that it would facilitate the transition to a clean energy source.

The plan, however, witnessed setback, going by what stakeholders described as high cost of conversion and non-availability of the one million conversion kits promised by the Federal Government.

The Guardian had earlier reported that infrastructure, high cost of gas, lack of proper planning, prevailing harsh economic realities and safety concerns continue to frustrate President Muhammadu Buhari’s autogas plan.

A major operator in the gas value-chain told The Guardian that the cost of conversion is a disincentive for many people that desire the service.

According to the operator, at N250,000 conversion cost for a single cylinder and about N400,000 for two cylinders, many interested parties have had to reconsider their options.

 

The planned conversion may have hit roadlock as it was gathered yesterday that the cost of converting a vehicle, especially heavy-duty trucks, has moved to N5 million.

Most of the Federal Government agencies and ministries expected to spearhead the progress of the conversion had no meaningful explanation as to whether any achievement had been made under the scheme.

This is coming as scarcity of petrol persists in parts of the country, especially the commercial city of Lagos, the Western region and parts of the Northern states.

In Abuja, yesterday, motorists are spending longer hours at the pump as the jostle to fuel their cars is now going messier than the situation was earlier in the week.

On the backdrop of an investigation by The Guardian, which revealed that the conversion plan is yet to take off despite the commitment of resources into it, Nigerian Association of Road Transport Owners (NARTO), yesterday, said no heavy-duty vehicle has been converted by government since the promise made nearly two years ago.

According to the operator, at N250,000 conversion cost for a single cylinder and about N400,000 for two cylinders, many interested parties have had to reconsider their options.

 

The planned conversion may have hit roadlock as it was gathered yesterday that the cost of converting a vehicle, especially heavy-duty trucks, has moved to N5 million.

Most of the Federal Government agencies and ministries expected to spearhead the progress of the conversion had no meaningful explanation as to whether any achievement had been made under the scheme.

This is coming as scarcity of petrol persists in parts of the country, especially the commercial city of Lagos, the Western region and parts of the Northern states.

In Abuja, yesterday, motorists are spending longer hours at the pump as the jostle to fuel their cars is now going messier than the situation was earlier in the week.

On the backdrop of an investigation by The Guardian, which revealed that the conversion plan is yet to take off despite the commitment of resources into it, Nigerian Association of Road Transport Owners (NARTO), yesterday, said no heavy-duty vehicle has been converted by government since the promise made nearly two years ago.

Horatius Egua, who is the Special Adviser to the Minister of State for Petroleum, said, yesterday, that stakeholder engagement emanating from the National Gas Expansion (NGEP) has forced Federal and state government actors to participate collaboratively with private sector on autogas.

He said the Minister at the federal level, in conjunction with office of the Head of Service already signed an agreement for civil service mass transit buses to be powered by CNG in Abuja.

“The first 20 of the buses were launched on Wednesday with an additional 200 to 500 to follow over a year. On the sub-national level, Lagos State and Oando have signed an MOU on a CNG bus conversion plan for Lagos Bus Rapid Transport (BRT) system. The first batch has commenced conversions.

“Associations are not left out with RTEAN signing the purchase of 2,300 locally produced buses with Omaha. In all, we should have about 3,000 to 4,000 new CNG buses plying Nigerian roads in one year’s time. This will be in addition to the 8,000 plus vehicles already operating in country,” the Minister’s spokesman said.

The Major Oil Marketers Association of Nigeria (MOMAN) had earlier told The Guardian that investment in autogas is too risky as market, bankability, consistency in government policies, product plan and other elusive factors made the scheme dead on arrival.

Most of the marketers, including the independent players, see the business as too risky to venture into, as prevailing realities show no viability.

Group Chairman/CEO at International Energy Services Limited, Dr Diran Fawibe, had also noted that using autogas as a basis for fuel subsidy removal falls below expectations, adding that even if the government successfully converts one million vehicles to run on gas, it will still be a drop in the ocean.

According to him, the inability of the country to refine petroleum products locally remains a critical loophole on the part of government in its bid to remove subsidy.

“I am not sure how the conversion of cars to run on gas can quickly address the removal of petrol subsidy. Government has to work assiduously to get the refineries to work to complement Dangote Refinery. It is until then that government can justify subsidy removal.”

Chief Executive Officer of Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, stated that the transition is the rational thing to do considering the rising cost of diesel. According to him, doing haulage with diesel at over N800 per litre is not sustainable as diesel is a major commodity fuelling inflation.

“It will hopefully help the government to accelerate the autogas scheme. This is an opportunity to intensify advocacy for transition to gas if the government is serious,” he added.

In November, last year, weeks to the first anniversary since the President made the promise, the Federal Government announced it had set aside N250 billion for willing investors in autogas assembly plants in the country to ensure that autogas conversion of vehicles yielded the desired results. The funds would barely convert 100,000 vehicles to autogas going by market rates.

Sylva, who made the disclosure, said the money was already in the coffers of the Central Bank of Nigeria (CBN) and those interested in opening conversion centres could access it.

He explained that the decision to make the money available was as a result of the huge amount spent by government on fuel subsidy, adding that it is in line with President Buhari’s commitment to adopt gas as an alternative fuel for the country.

The Federal Government, in January, this year, said it has selected 12 states for the pilot phase of the conversion of vehicles using petrol and diesel to enable them run on autogas.

 

MEANWHILE, the Independent Petroleum Marketers Association of Nigeria (IPMAN) has commended President Buhari for sustaining the subsidy on petrol without which Nigerians would have been paying between N850 to N900 per litre by now.

The National President of IPMAN, Elder Chinedu Okoronkwo, at a press conference in Abuja, yesterday, debunked insinuation that its members were engaged in sabotage of the effort by government to subsidise the product with N4 trillion.

“You are talking about sabotage, the only thing members of this association get is N10. For over 20 years, each time government raised this product our margin has not been up to N10. That is why a lot of our people are not in business. We are the worst beaten with huge investment and low return. We should be the one complaining,” he said.

He asked Nigerians to stop panic buying of petrol as they will continue to sell the products at the government approved price of N165 per litre.

“I told you the cost of doing business has changed and my members in Lagos before they did what they did, they called me and told me that they are now getting this product at N162 to N165 per litre with transportation of another N8, aggregating to about N170 to N173 per litre. Even the N10, which is supposed to be our own has been eroded. So, what do we do?

“It became so difficult for them to sell at N148.17, but yesterday I want to tell you that NNPC and PPMC went to their tank farms and released products. That is why we are thanking them that we can now access the product at N148.17 and from what they have told us, they have product that can last us up to 32 days. We must be happy with that knowing full well the challenges we have globally on energy.”

He said massive loading of the product is ongoing in Lagos and that in a matter of days the long queues will fizzle out.

He added that the body has engaged a consultant who will go into the books to determine exactly what the Association of Distributors and Transporters of Petroleum Products (ADITOP) are being owed in terms of bridging claims.

He pleaded with the Downstream Regulatory Authority to make prompt payment regarding marketers’ product differentials and bridging claims to enable their members continue to be in business, as some have been owed claims for upward of six months.

 

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