Experts urge FG to subsidize CNG vehicle conversions

The IPMAN boss said that foreign exchange modulation would affect CNG that would be imported.

Some oil and gas experts have appealed to the Federal Government to subsidize the cost of converting petrol or diesel vehicles to gas for Nigerians as palliative measures.

They gave the advice in a separate interview with the News Agency of Nigeria (NAN) on Sunday in Lagos.

The experts said this would cushion the effect and encourage average Nigerians to use the opportunity as an alternative to petrol.

NAN reports that President Bola Tinubu on Aug. 18 approved the establishment of the Presidential Compressed Natural Gas Initiative (PCNGI) to facilitate nationwide adoption of gas-powered vehicles.

The initiative was in furtherance of his commitment to easing the impact of fuel subsidy removal on Nigerians by reducing energy costs.

Dr Ayodele Oni, Partner, Bloomfield Law Practice, said that the introduction of CNG-powered vehicles is a welcome development, and would cushion the effects of subsidy removal on Nigerians.

Oni suggested that government should ensure that gas reserves were readily available to buffer the distribution of gas.

He said that one of the major disadvantages of CNG-powered vehicles is low energy density, which means that CNG vehicles might need to refuel more often than PMS-powered vehicles.

According to him, the introduction of CNG-powered vehicles by the Federal Government as one of the efforts to cushion the effects of subsidy removal is a welcome development.

“This is an immense opportunity to leverage the existing natural gas resources.

“CNG has been reported to be cheaper than petrol or diesel, and also, this is a way to counter environmental degradation caused by pollution through vehicles on PMS and diesel.

“China has been reported to lead in the use of CNG-powered vehicles with over five million vehicles. Therefore, this is a good initiative if well implemented,” he added.

The expert noted that CNG is a deregulated product, just like petrol, saying ‘it is cheaper than it and diesel’.

He said that the implication of this is that people would rely more on using CNG and further reducing the cost of petrol because its demand would also be reduced.

According to Oni, determining affordability is hinged on efficiency, while it is not new that cost of transportation has increased.

He, however, said that with the proven efficiency of CNG and cost, an average Nigerian would take advantage of the CNG because of its efficacy and being cheaper than petrol.

“Nigeria, as at May 2023, has over 209 TCF of proven gas reserves, making it the largest in Africa.

“This is an opportunity for the government to explore gas as a stand-alone resource, and also facilitate the use of clean energy.”

This, he added, is in line with the energy transition plan, reduces the cost of transportation, and generates funds for the government.

Similarly, Ayobami Olarinoye, Branch National Chairman, Liquefied Petroleum Gas Retailers (LPGAR), said that the cost of conversion might not be friendly to the poor, for now.

Olarinoye said that perhaps, with time and as the policy penetrates, the cost of conversion and kits could become gradually affordable.

He advised the government to carefully undertake the process and ensure that those that would be entrusted with the conversion kits get the best ones, necessary training, and equipment to guide against situations where citizens would be short-changed.

The gas retailer boss said that all required standards must be met.

He urged that Nigerians should not be exposed to another round of arrowing experience in the process.

According to him, it is a welcome initiative by the Federal Government.

“It will argue the downstream sector as it regards cushioning and serving as an alternative to petrol.

“Available safety measures and standards, peculiar to the oil and gas industry, should be strengthened, while additional ones generated to cushion the negative effect of CNG.

“More public enlightenment should be put in place on the subject matter,” Olarinoye added.

Alhaji Debo Ahmed, the President, of the Independent Petroleum Marketers Association of Nigeria (IPMAN) said that the Presidential Compressed Natural Gas Initiative is part of the palliatives that come with the removal of oil subsidy.

Ahmed said that petrol, which hitherto has been a monopolistic product without alternative, is going to have an alternative.

He also said that would bring about competition which remains the bedrock of deregulation and market forces.

He said, “It is a good initiative by President Tinubu’s administration. It is an initiative that is long be expected.

“CNG is a different product of its own from petrol but they perform the same function. It is now becoming a matter of choice.

“The price of petrol hinges on the movement of the foreign exchange market because it is imported and has nothing to do with CNG price

“The competition that will exist between petrol and CNG will be preferential competition and pricing advantage,” he said.

The IPMAN boss said that foreign exchange modulation would affect CNG that would be imported.

“But in all sense of humility, we were told the price of CNG is cheaper than petrol.

“If the government follows the National Gas Expansion Programme (NGEP) initiatives on the cost of conversion this is going to be paid on an installment basis as pay-as-you-purchase CNG, anywhere at any time.

“The more interesting part is that you can switch to petrol if you cannot get CNG.

“It is a dual-purpose conversion at one’s convenience,” he said.

Ahmed advised the government should allay the fears of Nigerians on the use of CNG, make the conversion cost affordable, and make sure also that availability of the products is guaranteed.

He added that he hoped the common man would be able to afford the conversion as propagated by NGEP.

He said that it is a seamless cost arrangement that would not take too much money to transit and payments on an installment basis.

“So far, there are enough gas deposits for the government to store. I think all these factors of gas availability will be deeply considered so as not to truncate the initiative.

“The measure government can put in place to cushion the effects of CNG usage is to make the cost of conversion affordable, so as to reach wider users as palliative for an alternative to petrol usage,” he added.


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