Experts advocate sustainable financing for CNG vehicle conversion

Piqued by the attendant effect of the removal of fuel subsidies, experts have identified gas as a ready alternative but lamented the high cost of converting vehicles from premium motorspirit (PMS) to gas.

Besides, industry experts said there is no gainsaying that gas has become the way to go as an alternative to fuel, especially in the transport and logistics chain of the economy.

However, a major hindrance identified is that funding the conversion of vehicles from PMS to gas comes with a huge cost. The experts spoke at the Nigeria Auto Journalists Association (NAJA) 2023 yearly workshop held in Lagos.

Chief Executive Officer/Founder Creek Transitway Limited, Elijah Wisdom, said that financing conversion is a challenge because the operators do not have the initial capital.

Conversion from PMS to CNG, according to him, comes at an average cost of N325,000, which most transporters would not be able to pull out at a go, noting that the movers of the economy are public transport operators such as tricycles (Keke), taxi and bus operators who have a direct impact on the economy.

To tackle this, he said, his company has built a model that enables transporters to convert their vehicles and pay in installments, adding that it seeks collaborations and guarantees from the government.

“We built a finance model where you convert and repay over one year. The cost of transportation can come down.

“With the CNG adoption, we want the government to stand as a guarantor to propel finance institutions to fund conversion. We are not asking the government for money but to guarantee.

“The government is already pushing for gas conversion, but the challenge is the implementation. Funding is needed to implement this. The gas expansion fund is actually domiciled with the Central Bank of Nigeria (CBN) but now the rules the CBN gave to access the fund is stringent,” he explained.

Elijah disclosed that his company is seeking collaboration with states and also showing the states they can diversify their revenue if they invest in the CNG value chain.

He stressed that every investor in conversion would enjoy a return on investment. He lamented that some people have been trained in the skill of conversion of vehicles that run on PMS to CNG but that the inability to pay for conversion remains a hindrance. He said: “It is not about conversion but to be able to pay back. We need to have chains to start converting. We have an end-to-end solution we have built to ensure that every investor would not have their investment go down.”

Elijah allayed fears on conversion cost, saying it is quite expensive now because Nigeria is not manufacturing any of the kits locally and that it would come down when kits are manufactured locally.

“We are looking at a company that can set up a conversion kit center using local materials to reduce cost. We are also looking at setting up a local assembly plant for conversion kits,” he said, assuring that this would bring down the cost shortly.

Also speaking on funding as a bane to the conversion of vehicles from petrol to gas, the Executive Chairman and Founder, Funtay, Olufunso Amoo, said transportation is the company’s major issue, adding that the problem is not that of off-takers but financing.

He said he is already working with some banks to ensure vehicles are converted, stating that 300 tricycles can be converted in three months if the full money is paid. Amoo advised motorists to seek funding elsewhere rather than waiting for the government.

“Where we are now is that we have a lot of yearning for alternative fuel but being deceived by the belief that the government is bringing financing; better go to get a place where you can get finance for 30 percent than wait for the government’s nine percent.

“We need to find a local solution for financing rather than wait for the government, the government itself is struggling. Let us be creative; talk with union leaders, go to one localized area, finish with them, and go to another one,” Amoo said.

Chairman National Gas Expansion Programme (NGEP), Mohammed Ibrahim, corroborated that gas is the way to go, disclosing that already 9,000 out of 10,000 filling stations in Nigeria are qualified to become multi-fuel stations where vehicle owners can refuel for autogas and petrol.

He said: “Under NGEP, we have what we call the multi-fuel scheme whereby we do not intend to shut down the current petrol stations that we have in the country, about 10,000 of them, and as I said earlier we have carried out an audit whereby 9,000 out of 10,000 qualify to retrofit to become multi-fuel.

Source: The Guardian

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