The removal of petrol subsidies has propelled the federal government to provide alternative fuel for Nigerians, with the Compressed Natural Gas (CNG) positioned as the more efficient and cost-effective option. BENJAMIN SAMSON in this report examines the sustainability of CNG as an alternative to petrol.
After the removal of the petrol subsidies by President Bola Ahmed Tinubu on his assumption of office in May, last year, many Nigerians decided to park their vehicles and resorted to public transportation. This was because the pump price of petrol surged from below N200 per litre to over N600.
Initiatives, timelines
Since the removal of fuel subsidies, several initiatives have been rolled out by the federal government to ensure that CNG usage is widespread across the country.
During his Independence Day speech, President Tinubu said his administration would open a new chapter in public transportation by deploying cheaper and safer CNG buses across the nation. And on August 19, 2023, he approved the establishment of the Presidential Compressed Natural Gas Initiative (PCNGI) Committee.
Also, on December 9, 2023, the government announced full-scale exemptions from import duty and value-added tax (VAT) for compressed natural gas (CNG) and associated equipment.
The Committee, on May 15, 2024, said a conversion incentive would be developed for Nigerians, especially road transport operators, to convert their existing vehicles to run on CNG.
What’s CNG?
Speaking with on how the conversion works, the managing director of OMAA Motors, Chinedu Oguegbu, said, “Compressed Natural Gas is fuel that can be used in place of petrol, diesel, and liquefied petroleum gas (LPG). It is used in traditional petrol/internal combustion engine automobiles or specifically manufactured vehicles.
“Converting an existing petrol-powered or diesel-powered vehicle to one that operates on CNG includes conversion kits and cylinders.
“The cylinder is to store the CNG, just as you have in fuel tanks, and then the conversion kits have different components which are usually added to the engine side of the vehicle and then pipes connected to the cylinder. So, there is a connection between the kit and the cylinder.”
Oguegbu said further that motorists could convert their petrol-powered vehicles to run 100 per cent on CNG.
He explained that owners of petrol-powered vehicles “can install a storage cylinder, a pressure regulator, a CNG tank, and a heating system, among other necessary conversion kits, to transform their vehicles to run on CNG.”
However, Oguegbu said diesel engines can not be converted to run on 100 per cent CNG, adding that conversion “can only be 50 per cent diesel and 50 per cent CNG.”
“So, you can not just use CNG alone for diesel-powered vehicles because they do not use spark ignition engines. So, the way diesel ignites is like compression.
“Consequently, that means that you need the diesel for that ignition to happen. In that case, you would probably be able to convert a diesel engine to use 50 per cent diesel and 50 per cent CNG. Hence, you are not running 100 per cent on the lower-priced and cleaner CNG,” he said further.
Oguegbu also said some other vehicles had 100 per cent natural gas engines “which is not a case of conversion in that the engine is already designed and built to run on CNG.”
Benefits
On the benefits of CNG as a sustainable alternative to petrol, an energy expert, Engr. Muktar Bello, said, “According to a report on CNG versus traditional gas fueling released by Virginia Natural Gas, the fuel economy of a petrol vehicle converted to run on CNG is better when compared in terms of costs.”
Engr. Bello said, “An average of 10 litres of petrol is consumed in 100km, it means 10 litres of CNG is also consumed in 100km. That means CNG is more cost-effective when compared to petrol.
“However, based on current price differentials in Nigeria, a Dataphyte analysis revealed that if CNG is adopted as automobile fuel, there is the potential for a car driver to save six hundred and eighty naira (N680), driving a CNG-powered car over driving a petrol-powered car for each 100km travelled.
“This amount was arrived at assuming that the CNG and petrol-powered cars are of a similar model and are both driven for 100km.
“There is also a significant reduction in the emission of Co2 by 70% when CNG is used as transportation fuel compared to when petrol or diesel is used.
“Several researches have shown that CNG automobiles make less noise than gasoline and diesel automobiles. There is also a drastic reduction in air pollution when automobile users adopt the use of CNG for their automobiles.”
Cost
However, the chairman of Zip-Tech Energy, Dr. Adebowale Ologbenla, said the price of the CNG is too expensive for Nigerians. He said selling a kilogramme of CNG at the rate of N250 was unaffordable, adding that the rate should be N50/kg.
According to the Zip-Tech Energy boss, the country has been flaring the same natural gas for many years, and wondered why gas being wasted should now be sold at a high price.
“How can you sell CNG at N240, N250, when we have been flaring it since 1947? Why should you be selling it at that rate? It should be sold at N50 per kg.
“CNG is not imported; CNG is from your soak-away, from your dump waste sites and oil wells. We just burn it. So, it should be sold at N50/kg maximum,” he said.
Ologbenla disclosed that many would not want to convert their vehicles to CNG because of the high price.
“Converting a car like a Corolla will cost about half a million Naira. If you are still buying gas to power the same car at N250, N300 or more, people cannot afford it. But if people can buy the CNG a bit cheaper, the economy will blossom. If we have been burning this gas for all these years, why should we now be buying it at an expensive rate? Nobody should hide under the cost of investment. CNG should not be more than N50/kg.”
He noted that the lack of pipelines to transport CNG limited CNG stations across the country.
“You have to go to Ogun, Ore or Lokoja to load your CNG with very heavy trucks that can break down the roads. The trucks are like tubes, heavier than the petrol tankers. You compress the gas, and then take it to your stations.
“But our strategy is different. We take it not as CNG; we look for LNG vehicles. We want to take it as LNG and convert it, then we de-pressurise it, re-gasify it into CNG to sell at the stations.”
Similarly, in an interview with this reporter, the CEO/founder of Creek Transitway Limited, an energy company that develops natural gas solutions for Transport and Power Sectors, Mr. Wisdom Elijah, said financing for conversion “is a challenge because the operators do not have the initial capital to convert.”
He said conversion from petrol to CNG according to him comes at an average cost of N300, 000 to N350, 000 which most transporters would not be able to pull out at a go, adding that the movers of the economy were public transport operators; the likes of the tricycle (keke) operators, taxi and buses who are having a direct impact on the economy.
To tackle this, he said, the government has to build a model that enables transporters to convert their vehicles and pay in instalments.
“The federal government must build a finance model where you convert and repay for one year and like that the cost of transportation can come down.
“With the CNG adoption, we want the government to stand as guarantors to propel finance institutions to fund conversion. We’re not asking the government for money but to guarantee.
“The government is already pushing for conversion to gas, 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 the rules that the CBN gave to access the fund are stringent.”
Elijah disclosed that his Company was seeking collaborations with states and also showing the states that they could diversify their revenues if they invested in the CNG value-chain.
He stressed that every investor in conversion would enjoy a return on investment.
“To convert 1, 000 keke would cost N350 million and in some states you have a minimum of 30, 000; also taxis and buses are in huge numbers,” he said.
He lamented that some people had been trained in the skill of conversion of vehicles that run on PMS to CNG, but that the inability to pay for conversion remained the hindrance.
“It’s 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 that conversion “is quite expensive now because Nigeria is not manufacturing any of the kits locally, but would come down when kits are manufactured locally.”
“We’re looking at a company that can set up a conversion kit centre using local materials to reduce cost. We’re also looking at setting up a local assembly plant for conversion kits,” he said, assuring that “this would bring down the cost in the near future.”
FG’s assurances, admonition
Meanwhile, the Minister of Information and National Orientation, Mohammed Idris, has said Nigerians would soon begin to feel the impact of President Bola Ahmed Tinubu administration’s investment in CNG.
Idris, who stated this while addressing members of the Diplomatic Corps in Abuja Wednesday, urged members of the private sector to invest in the government’s CNG initiatives.
He said, “One key development in the wake of the petroleum subsidy removal, the energy transition from petroleum to Compressed Natural Gas (CNG), for vehicles and other machinery, opens a world of opportunities for Nigerians to massively participate in the vast value-chain of the CNG energy transition, which requires infrastructure rollout across Nigeria.
“The Presidential Compressed Natural Gas Initiative will bring down transportation costs for Nigerians by as much as 50 per cent, while also unlocking the nation’s huge potential in the gas sector.
“CNG conversion centres are growing exponentially across the country, creating more job opportunities. Since the launch of the initiative last year, we have seen over $50 million in private-sector investments in setting up CNG conversion and fueling facilities nationwide. Nigerians should please key into this wealth-creating sector.”
Idris said further that, “The federal government has also made available 30, 000 kits for the conversion of 30, 000 petrol-powered commercial vehicles to CNG-powered engines at no cost within the next 90 days. Also, the first batch of CNG Mass Transit Buses procured by the federal government for distribution to the 36 states and FCT has arrived.”
