Stakeholders in the oil and gas sector have urged the Federal Government to do more in ensuring effective utilisation of domestic gas consumption. Nigeria is the seventh country with largest gas reserves with proven 187 trillion cubic feet reserves gas. Speaking with the Nigerian Tribune during a visit to former President Olusegun Obasanjo at the weekend, the former Special Adviser on Petroleum Resources during Olusegun Obasanjo administration, Dr Mohammed Ibrahim, mni, stated that “I was one of the team members, when Obasanjo was in office, in 2006 and initiated the whole concept of development of gas utilization for vehicular uses and other applications in the country.
“It was during his regime that Obasanjo awarded three licenses to three companies to invest in the promotion of Compressed Natural Gas (CNG) for vehicular application in the country. The three companies are NIPCo Plc which later got into partnership with Nigeria Gas Company (NGC) and became Green Gas Limited (GGL); Content Global Limited and Global Steel Limited.
“Because of the capital intensive nature of the project and huge technical nature, only one out of the three companies that were licensed in the last 10 years has invested millions of dollars in the projects.”
CNG is used by vehicles as alternatives to premium motor spirit (PMS) and Automotive Gas Oil (AGO) otherwise called diesel.
He commended the management of NIPCo Plc for its steadfastness and ensures that the entire Benin City was never part of the worst fuel scarcity in Nigeria’s history recently.
“That the entire Benin city is encircled with network of gas pipeline with about seven CNG gas stations providing CNG for more than 4000 vehicles. Benin residents are very happy because at the moment, anytime there is fuel scarcity, Benin is the only place or city in Nigeria that people did not feel the pains of the recent fuel scarcity.
“These services were therefore extended to Lagos with the construction and building of the largest CNG station on the African continent in Ibafo, Ogun State.
“One of the commercial drivers who have converted to CNG said he saves N3,500 on every trip to Ibadan from Lagos. He spends N2,500 on CNG while he uses N6,000 on premium motor spirit (PMS) otherwise called petrol on same trip.
That’s what we called economic empowerment.
“Essentially, if we replace 20 per cent of the current petrol consumption in Nigeria with CNG, Natural gas requires less than five per cent of what we are producing to replace 20 per cent of current petrol consumption. We will be saving over $2 billion annually on every $200 million that was supposed to have been used to import the 20 per cent fuel.
“Don’t forget that the $200 million we are saying will be domesticated in naira and save the foreign exchange that would have been used for the importation,” he said.
On provision of incentives on gas utilization, Mohammed stated that “there are different schemes all over the world to promote gas utilisation. It would have been ideal for the government to give federal, states and local government officials free kits to convert and run their vehicles on natural gas.
“Government could also ask corporate bodies like the banks, telecommunication companies to give free kits to their staff members. Government and banks can design a scheme whereby if you buy a kit, you can spread the payment over 1-2years. We believe it is still at its infancy and after 10 years, to have just one company, it shows that government support and intervention is key to promote gas utilisation.
“The policy was designed on a zero refining basis that is all our refineries are down, Nigerians would still have been moving without importing petrol. All the billions of dollars that were wasted on fuel importation wouldn’t have been wasted. All the economic dislocations that we experienced during fuel scarcity would have not happened. It was unfortunate that successive governments didn’t do anything.”
In his comment, the Managing Director of NIPCo Plc, Mr Venkataraman Venkatapathy, argued that “Nigeria is abundantly blessed with gas.
We must begin to shift focus from importation of fuel which is taking a big drain in the economy. We are optimistic and enthusiastic because during the tenure of Obasanjo, he initiated this and supports the project 100 per cent. We believe it is going to happen now.
“We have been with this vision for the past 10 years and we know the future of this country is gas. We know that benefits will not come immediately but we are ready to wait patiently for the benefits to come.
“If the government can formulate adequate policy that will promote domestic consumption of gas, CNG is cheaper than petrol by over 50 per cent and cheaper than diesel by 45 per cent. Natural gas is a cleaning burning fuel and hence lower carbon deposits. Other benefits include lower maintenance cost, social benefits, environmental benefits and direct economic benefits,” he said.
The NIPCo boss urged the government to declare that gas should be used as one of the fuel for vehicles by giving incentives, for instance, weavers on kits or zero duties on imported kits and perhaps reduction in gas pricing. Higher incentives for conversion, the market forces will play and force down the price further.”
The General Manager, GGL, Mr Rajesh Prabhu, explained that the company has introduced affordable financing scheme that will assist motorists to convert and pay instalmentally.
“In Benin, people complained that they didn’t have money to convert their vehicles, so we introduced a finance scheme where a customer is allowed to pay as low as N5000 and the rest is spread through gas sales. We added N25 on pump price of CNG and that’s how they are paying off. Out of over 4000 vehicles that keyed into the scheme, 3000 customers have fully paid and the remaining 1000 will soon settle their outstanding.
“We have introduced same scheme at Ibafo station and we are hoping customers will buy the idea and do the conversion,” he said.
Nigerian governments have been paying subsidy on petrol and kerosene following huge sums of money that runs into trillion of naira being paid to marketers as subsidy.
The government has said it cannot afford to sustain the programme, hence the need for total removal. This has resulted into increase in pump price of petrol from N86.50 per liter to N145 per liter.
If gas utilisation as alternatives to petrol, diesel and kerosene can be embraced, it will reduced volume of fuel consumption and thereby reducing volume of importation of refined petroleum products.