Compressed Natural Gas as Alternative to Petrol

With the recent removal of petrol subsidy and the resultant exorbitant cost of the product, Ejiofor Alike writes that the federal government should create an enabling environment for motorists and other users of fuel to utilise Compressed Natural Gas as alternative fuel in view of its low cost and lack of adverse effects on the environment

The recent removal of petrol subsidy by the federal government expectedly led to an astronomical increase in the pump price of the product from N180 – N200 per litre to N488 – N540, depending on the location.

This development has offered a veritable opportunity for the federal government to encourage the use of gas, particularly Compressed Natural Gas (CNG), which is cheaper and more friendly to the environment.

Though both natural gas and petrol are fossil fuels, gas is less carbon-intensive than other fossil fuels, which emit much carbon dioxide and other greenhouse gases (GHGs) that cause indoor and outdoor pollution.

Apart from making the environment more acidic, the combustion of petrol and other high carbon-intensive fossil fuels also causes respiratory problems such as asthma.

Petrol-powered vehicles are known to emit pollutants that can trigger harmful respiratory and heart conditions as well as several cases of cancer.

GHG emitted by the combustion of petrol also traps heat in the atmosphere and causes global warming.

The emission of GHG also leads to non-communicable diseases, including stroke, ischaemic heart disease, chronic obstructive pulmonary disease (COPD) and lung cancer, according to statistics by the World Health Organisation (WHO).

WHO’s report also showed that the combined effects of air pollution largely caused by the combustion of petrol and other fossil fuels cause an estimated 6.7 million premature deaths in the world yearly.

To avert these health and environmental disasters, the federal government should use the opportunity of this petrol subsidy removal to encourage and expand the use of cleaner fuels such as Liquefied Petroleum Gas (LPG), and CNG that meet the emission targets in the WHO’s guidelines.

With the efforts of the government and private investors, Nigerians are increasingly switching over from kerosene, firewood and other dirty domestic fuels to the use of Liquefied Natural Gas (LNG), better known as cooking gas, which is cheaper and more friendly to the environment than kerosene.

Consequently, the domestic consumption of cooking gas in Nigeria rose from about 70,000 metric tonnes in 2007 to over one million metric tonnes in 2020.

The use of CNG will equally protect both the environment and health, as well as eliminate the economic effects of the subsidy removal on Nigerians.

With CNG, Nigerians will not feel the excruciating effects of the high cost of petrol as CNG is cheaper.

For instance, at a price of between N118 and N170 per standard cubic metre, natural gas is cheaper for power generation than diesel, which is currently being sold at over N700 per litre.

The same huge cost savings are achieved with the use of CNG as alternative vehicular fuel to petrol.

However, for Nigerians to switch over from petrol to CNG, the federal government should create a favourable operating environment as motorists can now see the benefits in running their vehicles on gas.

Nigeria is endowed with enormous gas resources and is more of a gas nation than an oil nation.

In order to utilise these enormous gas resources, CNG should be the preferred alternative to petrol.

But the capital expenditure (Capex) for CNG is intensive as the investment requires expensive expertise and access to huge capital to acquire physical assets. It is primarily a one-time investment in non-consumable assets used to maintain the existing levels of operation.

 Investors in CNG will also require speedy clearances and approvals by the agents of government through single window system for setting up CNG stations. This is very key if the intention of government will be matched with actions by ensuring that operators carry out their operations with ease while following laid down regulations. It is encouraging to note that auto CNG is one of the measures the federal government intends to embark on to reduce impacts of fuel subsidy removal on Nigerians.

The government should therefore pay special attention to save the investors who pioneered CNG projects and had put in several billions of naira over the years.

Connectivity from gas pipelines to CNG stations is key and the government should facilitate it in a speedy manner so that investors are not exposed to the challenges of lack of access to right of way (ROW) for the pipelines.

This will ensure the building of more CNG stations in every nook and cranny of this country and provide motorists more access to gas.

Investments in gas infrastructure should be encouraged to make gas readily available in CNG stations.

For motorists who want to switch over from petrol to CNG, the government should make the cost of conversion kits affordable.

To ensure that the cost of conversion is not a hindrance, the government can put fiscal policies in place to encourage CNG investors to diversify into manufacturing of conversion kits and ancillary items such as cylinders.

In the interim, policies can be put in place to ensure that imported accessories are exempted from import duties, VAT and other levies, pending when the environment becomes conducive for local manufacturing.

Speaking recently on national television, the Chief Executive Officer of the NNPC Limited, Mele kyari said the company was working on palliatives to alleviate the adverse effects of petrol subsidy removal on Nigerians, adding that the use of CNG as auto fuel was top on the priority list.

He said he had just finished a meeting with President Bola Tinubu on the issue.

President Tinubu had also listed eight priority areas for urgent attention, saying the task of turning around Nigeria’s economy had started with the removal of fuel subsidies.

Tinubu spoke at the State House, Abuja, while inaugurating the National Economic Council (NEC), an advisory body comprising the 36 governors, Governor of Central Bank of Nigeria (CBN), and other stakeholders.

Bauchi State Governor, Senator Bala Mohammed, who disclosed this, also announced the setting up of a committee by NEC to work out, within two weeks, the modalities for organising and distributing the palliatives.

Mohammed further revealed that the council also discussed the possibility of obtaining funds from the World Bank and London partners to implement the programme of CNG for vehicles in the country as part of measures to bring down the price of fuel.

The concept of the use of CNG as vehicular fuel in Nigeria was pioneered by NIPCO Gas Limited, a fully owned subsidiary of NIPCO Plc, which has invested massively in gas infrastructure development, particularly pipeline construction.

While other companies were concentrating on petrol importation, NIPCO diversified into the construction of CNG stations in Benin City, Edo State.

Today, the company has over 12 CNG stations that provide gas to motorists in Edo State and other parts of the country.

With the company’s efforts, motorists can now ply Lagos – Abuja route on gas-powered vehicles as three of its CNG stations are now located at Ibafo, Ogun State; Ajaokuta, Kogi State and Airport Road in Abuja.

The company is still investing massively in infrastructure with the expectation that patronage will improve if enabling environment is created for motorists to convert to gas and more gas is also made available by the NNPC Limited.

Having pioneered investment in CNG, NIPCO gas Limited is the only company with over 12 CNG stations across the country.

To address the immediate and remote challenges facing the auto CNG, there is a need for a more beneficial relationship between the operators such as NIPCO and NNPC Gas Marketing Company Limited, a subsidiary of NNPC Ltd.

This gas marketing arm of the NNPC Ltd is the major supplier of CNG to operators and plays crucial roles in the natural gas value chain.