The massive sources required by personal traders to faucet President Bola Tinubu's initiative to construct a gas-powered economic system earlier than 2030 pose a significant problem to attaining the objective, writes DARE OLAWIN.
Since taking workplace, President Tinubu has been clear about his need to shift the nation's dependence from fossil fuels to cleaner vitality sources. Nigeria has lengthy been closely depending on gasoline and little has been executed to discover different vitality choices.
Nonetheless, the top of petrol subsidy has opened a brand new chapter for dialogue within the nation's vitality sector. Gasoline costs have risen by greater than 240 % for the reason that president introduced the disappearance of the gasoline subsidy throughout his inaugural tackle on Might 29, 2023. The costs of petrol, which Nigerians depend upon to energy their automobiles and generator units, have risen from N195/liter earlier than Might 29 to over N665/liter relying on location, making it unaffordable for many Nigerians. It has additionally created inflationary pressures within the nation, pushing greater than 130 million Nigerians into multi-dimensional poverty.
Tinubu takes the step
In a bid to alleviate the hardships confronted by Nigerians, President Tinubu is contemplating different vitality sources similar to transition to pure gasoline. This comes at a time when the worldwide group is shifting in the direction of the brand new vitality world order, which refers back to the altering panorama of the vitality sector as renewable vitality sources develop into more and more essential; in contrast to the previous vitality world order, which was dominated by fossil fuels and a handful of huge gamers.
The brand new vitality world order is characterised by a extra various and distributed vitality combine, with smaller gamers gaining a foothold alongside bigger firms. It’s extra sustainable.
Lately, the Presidential ComPRESS Pure Gasoline Initiative held its first stakeholder and investor discussion board, unveiling Tinubu's plans for a gas-driven economic system. In his phrases, the Mission Director and CEO of PCNGi, Michael Oluwagbemi, highlighted the Federal Authorities’s “bold plan to have a million gas-powered automobiles on the street by 2027, with a mean annual price of 250,000 car conversions per yr”.
Oluwagbemi had disclosed that the federal government seems to be ahead to establishing 40,000 LPG conversion workshops and creating 750,000 jobs by 2027. The challenge director famous that contemplating the traits of CNG and its benefits as a less expensive gas, the strategic imaginative and prescient guiding the initiative was to to ease the price of residing for Nigerians by considerably lowering transportation prices and in the end bettering residing requirements with a cleaner and safer gas.
“On all these points, our strategic targets are very clear: how can we cut back transportation prices for the widespread man? How can we make Nigerian gasoline work for her or him? How will we be certain that this gasoline working for Nigeria delivers an financial profit to Nigeria? We’re not solely specializing in conversion facilities but additionally driving funding on the provision aspect, taking an end-to-end strategy,” Oluwagbemi mentioned.
One other member of PCNGi, Mr. Toyin Subair, highlighted the financial good thing about Nigeria's adoption of CNG in its place gas, reaffirming that the transition will profit each Nigerian and the nation's economic system.
“The wonderful thing about this initiative is that we don't should subsidize or purchase imported gasoline. We (Nigeria) have our personal gasoline right here, and the six million business automobiles (which can be transformed) are ours. If we leverage this business alternative, we are going to cut back the price of transportation for the typical Nigerian,” Subair mentioned.
FG supplies incentives
In a bid to encourage traders, the federal government has permitted one hundred pc exemption from VAT and import duties on the whole lot associated to CNG, LPG, electrical automobiles, gasoline air conditioners and others.
In a round titled 'Fiscal Incentives for the Presidential Gasoline for Progress Initiative', the Ministry of Finance had acknowledged: “Consistent with His Excellency, Mr. rising gasoline on the home market:
“In accordance with Half 1, Part 5 of the Customs and Excise Tariff Act, which supplies an exemption from import duties on equipment, gear and spare elements imported into Nigeria for the usage of Nigerian gasoline ('Gasoline Utilization Waiver'), the importation of all gear associated to compressed pure gasoline and liquefied petroleum gasoline into the Nigerian market will appeal to a zero % (0%) import responsibility.
“Consequently, the Federal Inland Income Service and the Nigeria Customs Service are hereby directed to use a VAT price of zero % (0%) on the next objects: Feed Gasoline for all gasoline processed; Compressed pure gasoline; Imported liquefied petroleum gasoline; Compressed pure gasoline gear elements, conversion and set up companies, i.e. liquefied petroleum gasoline gear elements, conversion and set up companies;
“All gear and infrastructure associated to the growth of compressed pure gasoline, liquefied petroleum gasoline and the Presidential CNG initiative, together with conversion kits.”
The PONS reported that the Nigeria Customs Service had on December 15 commenced implementation of the responsibility waiver on the mentioned objects.
Nonetheless, regardless of the incentives, traders within the vitality sector are but to point out curiosity in investing in CNG. At present, there are a really insignificant variety of CNG stations in Nigeria. And this, it was believed, discouraged requires automobiles to be transformed from petrol or diesel to CNG.
The instance of Abiodun
In Ogun State, for instance, Governor Dapo Abiodun introduced in a four-member workforce of technical engineers from India in July 2023 to transform buses from gas to CNG. This was 4 months after receiving the conversion kits. About 15 buses are mentioned to have been transformed thus far, though the governor promised to transform 2,000 automobiles, together with personal ones.
Abiodun highlighted how unaffordable the conversion was when he supplied to assist personal car house owners.
“We’ll convert the buses at our expense. If we don't try this, the house owners of the buses received't be capable to afford the price of the conversion, so the state has determined to soak up that price and discover a approach for them to recoup the associated fee through the years. We’re already considering of what number of gangs we’d like and the way shortly we will full the conversion of practically 2,000 buses within the state,” Abiodun mentioned in July.
Our correspondent's findings couldn’t verify whether or not the state had transformed any personal car as far as many authorities automobiles nonetheless run on petrol. It was discovered that the dearth of adequate CNG stations and the excessive price of conversion are hindrances to the CNG initiative in Ogun, and by extension Nigeria.
In August 2023, The Nigerian Nationwide Petroleum Firm Restricted introduced that it was partnering with NIPCO Gasoline Restricted to develop CNG stations within the nation, as a part of its drive to cut back carbon footprint and supply cheaper different fuels to motorists.
Underneath the NNPC-NIPCO strategic partnership, it mentioned that solely “35 state-of-the-art CNG stations can be constructed throughout the nation” within the first quarter of 2024 and 2025. This reveals how costly it may be for a person to arrange a CNG station of the required customary.
Marketer regrets the excessive funding prices
In an unique interview with The PONSSurajudeen Bada, nationwide ex-officio of the Impartial Petroleum Entrepreneurs Affiliation of Nigeria, mentioned the CNG initiative was a welcome thought however the facility couldn’t be arrange instantly within the case of liquefied pure gasoline, which is broadly out there in Nigeria. to be used within the kitchen.
He famous that entrepreneurs weren’t but investing in CNG because it was capital intensive and there have been no CNG compliant automobiles within the metropolis for potential traders to patronize.
In response to him, organising an ordinary CNG station would require compliance with all vital security necessities to forestall any type of explosion.
He famous that anybody utilizing a CNG car in Ogun State, for instance, would drive to Arepo, alongside the Laos-Ibadan Expressway, to have their cylinder refilled.
“This CNG factor is a good suggestion, however a CNG set up can’t be arrange instantly. In Abeokuta right here I’ve not seen a single CNG station. In all the Ogun State, we’ve got solely about one or two CNG stations alongside the freeway.
“It's an excellent factor, however can all of us take our automobiles to Arepo as a result of I do know the station is in Arepo? And it’s good to refill. That is no odd gasoline; it’s a compressed gasoline, very completely different from the LPG we use for cooking. Automobiles should be transformed. What number of automobiles have already been transformed?
“The conversion prices are excessive. There are lots of people taken with CNG, however it’s capital intensive. To arrange an ordinary CNG station that meets all security necessities to forestall explosions presently requires some huge cash. That's why traders aren't going there in the intervening time.
In his advice, Bada opined that the federal authorities ought to encourage entrepreneurs to spend money on CNG. In response to him, this might be executed by subsidizing CNG merchandise in order that they’re available to traders.
“The federal government ought to encourage these taken with CNG to get into it. The supplies and different prices will be closely backed in order that these can be available to those that need to spend money on CNG actions,” Bada urged.
