Experts Laud CBN’s N250bn Gas Intervention Fund, Seek Supply Boost

•Want overly stringent access conditions relaxed

Emmanuel Addeh in Abuja

Various stakeholders in the oil and gas sector have urged operators to take advantage of the Central Bank of Nigeria’s (CBN) recent N250 billion intervention to boost the much-needed infrastructure in the sector.

With 208 trillion standard cubic feet of gas reserves, Nigeria, which should ordinarily be a leader in the gas supply business worldwide, has been struggling to even meet domestic needs due to the paucity of the needed infrastructure for production and transportation.

The CBN had introduced the N250 billion facility to help stimulate investment in the gas value chain, to improve private financing access, boost investment and develop gas-based industries.

In his comments on the matter, President of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), Dr. Billy Gillis-Harry said while the N250 billion funding made available by the CBN remains key, the conditions for accessing the facility were overly stringent.

He urged the apex bank to take into cognisance the dynamics of the situation in which most of the small scale indigenous companies in the petroleum marketing sector operate and review the rules.

He added that unless the conditions were lowered to accommodate the marketers, the projected objectives of the intervention could remain unachieved.

According to him, there was need for more investment in Liquefied Petroleum Gas (LPG) and Compressed Natural Gas (CNG), adding that huge gap exists in gas infrastructure in the country.

Gillis-Harry maintained that the CBN would need to work with associations in the sector to drive the agenda of domestic gas utilisation, stressing that the country has everything it takes to stop the importation of LPG.

He added: “Nigeria has huge gas resources and should not be importing gas. I think the intervention by the CBN is commendable but more is needed. The infrastructure needed to unlock gas is huge.”

Given growing gas demand in Nigeria, Gillis-Harry said it did not make any sense if the current LNG production in the country is focused on the export market when  Nigeria is attempting to increase domestic LPG consumption to 5 million metric tonnes (mmt).

Also in his intervention, PricewaterhouseCoopers’s Associate Director, Energy, Utilities, and Resources, Habeeb Jaiyeola, stated that it was high time the government stopped the importation of LPG, stressing that the CBN’s N250 billion intervention was critical to realising the government’s objectives.

He explained that if complemented with existing gas infrastructure investment like the AKK pipeline, the provisions in the Petroleum Industry Act (PIA) and other initiatives, the country stands a chance to meet its LPG demand.

Jaiyeola urged industry players to take advantage of the N250 billion CBN intervention facility to address the bottlenecks in the domestic gas market, while urging sustainable finance into the gas sector.

He noted: “The move by the CBN is laudable and the intent of the fund is also quite comprehensive and seeks to ease funding challenges for all players within the LPG value chain.”

Also speaking on how operators could access the fund, the Programme Manager, National LPG Expansion Implementation Plan, Dayo Adeshina, said there was the need to tweak the plan to ensure that players in the sector seamlessly access the loan.

He noted that the objectives of the intervention would be achieved if commercial banks stop treating the loan as commercial loans.

“To access the loan, it is your commercial banks that will approach the CBN but unfortunately the banks were treating it as commercial loans. Typically, they would ask for the same things they ask when you ask for normal loans; equity contribution, security and all.

“All these slowed down the amount of people whose balance sheets can allow them access the loan. That is being looked at to see how associated bottlenecks can be resolved to make it easier for people to access,” Adeshina said.

Also, Chief Executive Officer, Selai Gas Station Ltd., Damilola Owolabi said a lot could happen in the LPG if the funding of critical infrastructure was easily accessible.

She noted that her company has had to limit operations due to lack of infrastructure to lift products adequately from the port.

An industry operator who pleaded anonymity, stated that although members had been able to access the funding, a lot had to be done to make LPG competitive.

Accordingly, the stakeholder stated that while the financial support would improve domestic gas utilisation, subsidies on electricity and petrol remain a disincentive to investment in gas space.

He argued that as long as people have cheaper option of cooking with biomass, electricity or power their vehicles with cheap petrol, investors in the gas space would not have needed returns on investment.

As it is, Nigeria imports roughly 55 per cent of LPG as the demand continues to increase in the country and could even worsen with the recent disruption in NLNG’s operations.

Nigeria’s inability to meet local and global demand, has been linked to lack of investment which compelled the CBN to inject the financing facility to ramp up the domestic gas expansion programme.

Among others, the CBN said the facility would help fast-track the adoption of CNG as the fuel of choice for transportation and power generation, while LPG will serve as the fuel of choice for domestic cooking and transportation.