By Bennett Oghifo
Players in the nation’s energy sector have said advised the federal government to address inherent challenges as it relies on intervention by the Central Bank of Nigeria to implement the National Gas Expansion Programme and National Autogas Roll-out Initiative.
Recently, the CBN introduced a N250 billion intervention fund under the National Gas Expansion Programme, Minister of State for Petroleum Resources, Timipre Sylva, had disclosed that the government would work with the Central Bank of Nigeria (CBN) to ensure full implementation of the Auto Gas Policy.
CBN had, in gas policy framework, said low level of investment was hindering domestic gas consumption, adding that the would stimulate production and utilization of Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG) as clean alternative sources .
Sylva had said: “We are working right now with the Central Bank of Nigeria to ensure that we are able to bring in conversion kits for a critical mass of vehicles.
“And then also give soft loans at the same time to downstream operators to fix their filling stations, so that when we fit the two together, it will work.
PWC’s Habeeb Jaiyeola across the world, government interventions are being used to catalyse economic development.
“In many cases government interventions are quite critical in controlling cost of borrowing in developing sectors. The CBN intervention remains a positive tool for the development of the domestic gas sector,” he said.
However, the payback has to be enforced to ensure the fund remains available for further critical interventions, Jaiyeola noted, adding that further sensitization on the autogas initiative would be needed for its acceptability. “This is a highly technical area where safety is of high importance especially where a mechanical item is made to run on fuel feedstock different from its original design. The global acceptability of this needs to be obtained, especially from the original manufacturers. Possible negative impact needs to be identified as well to enable informed decision prior to implementation,” he added.
Appropriate pricing system needs according him must be instituted to enable the forces of demand and supply determine the price and enable adequate returns on investment.
An energy expert, Michael Faniran, noted that one of the imperatives of the auto gas policy remained the need for people to convert their vehicles so that it could use both petrol and gas.
“This is an additional cost to the vehicle owners. As such, government needs to create incentives aimed at vehicle owners, in the form of loans or tax credits, to offset part or all of the cost of conversion of vehicles and even for retail outlets to build dispensing units for CNG.
“The intervention by the CBN is a welcome idea, as it will jumpstart the adoption of the auto gas by vehicle owners and retail outlets, as well as also build critical market mass. However, this is not sustainable,” Faniran noted.
He insisted that there was for need for public-private partnership (PPP) type of fund to finance vehicle and retail outlets conversion kits to guarantee sustainability, adding that the CBN could disburse the funds through a special purpose vehicle with private sector players.
For the private sector to come in, Faniran noted that there must be a very clear enabling policy and government must have a well thought out and bankable plan to attract the private sector.
