FG’s CNG Initiative Undermines Nigeria’s New Auto Policy, Auto Makers Allege

Bennett  Oghifo

The recent announcement that the federal government will launch the first batch of about 5600 “palliative” compressed natural gas (CNG) and electric vehicles before the first anniversary of President Bola Tinubu’s administration, has set the Nigerian automotive industry wondering why the choice of the semi knock down (SKD) assembly, which is almost like importing the vehicles fully built and “coupling” them locally, instead of getting the local manufactures to build them.

The stakeholders alleged that this decision by the government goes against the spirit of the new Nigerian Automotive Industry Development Plan (NAIDP-2023).

The Special Adviser to the President on Information and Strategy, Mr. Bayo Onanuga, had in a press statement recently announced that the vehicles and 20,000 CNG conversion kits, worth about N100 billion, were procured as part of the many intervention programmes to reduce the burden of increase in the pump prices of petroleum products following the removal of petrol subsidy on May 29, 2023.

Onanuga disclosed that the PCNGI committee’s plan to deploy “CNG buses and tricycles and the vision to get at least one million natural gas-driven vehicles on Nigerian roads by 2027, will mark a major energy transition in our country’s transportation industry.”

With many vehicles, including trucks and buses running on CNG, and electric vehicles infrastructure expanding, the use of more expensive diesel and PMS will gradually be phased out.

Four plants owned by JET Motors, Mikano Motors, Kojo Motors, and Brilliant EV “located in various parts of the country,” are involved in the assembly of the semi knocked down (SKD) components of the CNG buses.

The press statement informed that JET Motors, “is coupling” the buses in Lagos towards delivering 200 units before the first anniversary of the Tinubu administration.

But the disclosures in the presidential press statement have since been ruffling some feathers in the Nigerian auto manufacturing sector.

Some of the key players and stakeholders have been wondering the criteria (if there were actually some) adopted by the PCNGI committee in selecting the auto plants that benefited from the huge patronage, and why the SKD option, which will have little or no impact on the local industry, was chosen.

With the exception of Brillant, which it has been confirmed is not a member of the Nigerian Automotive Manufacturers Association of Nigeria (NAMA), the rest of the beneficiaries are known in the industry.

The option of SKD assembly, which is almost like importing the vehicles fully built and “coupling” them locally, has also been heavily knocked by the stakeholders as being against the spirit of the new Nigerian Automotive Industry Development Plan (NAIDP-2023).

Reacting to what he described as government’s policy inconsistency in the auto sector, the Managing Director of D.V.C Ltd, Dr. David Obi, said it was unfortunate that years after vehicle plants like PAN Nigeria, Kaduna; ANAMMCO, Enugu; Volkswagen in Lagos; and lately, Innoson Vehicle Manufacturing Company Ltd (IVM) in Nnewi, took giant steps in CKD mode of auto manufacturing, Nigeria is still fixated on SKD which has little or no local value addition.

“Are we moving forward or going backwards?” asked Obi who was once the Chairman of ALCMAN, the umbrella body of automotive local content manufacturers in Nigeria. “If we did not do it before, it would have been understandable. But, these companies did CKD production years ago and I supplied chemicals and sealants to some of them. So, why are we going back to SKD?”

Obi, who until recently, was the Chairman of the auto group of the Manufacturers Association of Nigeria (MAN), argued against the production of the 6000 units scheduled for delivery this year and the total of one million for production between now and 2027, based on SKD.

According to him, “coupling” vehicles on SKD basis, is also an irony considering that the NAIDP-2023 for which an inter-agency and inter-ministerial committee was inaugurated early this month by the Industry Trade & Investment Minister, Dr. Nkiruka Uzoka-Anite, is promoting “the transition of SKD to CKD type of automotive manufacturing over the next 10 years.”

This is a view shared by the General Manager of a company behind the success of a Japanese brand in the local auto industry, who pleaded anonymity.

He lamented a situation where the NAIDP-2023 seems to be signposting the way forward, while the implementers “are suddenly approving something else and giving contracts to companies who have not delivered such tasks before.”

He further remarked, “How were the companies that won the contracts even selected? Was there a transparent bid process? If so, how come an entirely new assembly plant that is yet to commence operation was awarded the contract for the assembly of tricycles? 

And, what roles are the existing and popular bus assemblers and manufacturers with pedigree playing in the entire presidential CNG initiative?”

The question of whether there was a bid process was addressed by another key player in the industry, and Managing Director of Transit Support Services Ltd (TSS), Mr. Frank Nneji, who took a wider view of the bus contract, declaring that assembling the vehicles locally whether on CKD or SKD basis, have benefits.

The most important thing, he stated, is to advance the local production capabilities and create better technical transfer. This is in addition to the larger public being served through lower costs of transportation.

Nneji further stated, “The information that orders have been placed is not new one. I also know that sometime ago, there was some kind of competitive bid. We (TSS) were called in to participate. In a competitive bid, the experts have the right based on their criteria to choose what they want or who they want based on the laid down criteria.”

But, not a few of the other auto makers and stakeholders have since cast a huge question mark on the claim of a bid process by the PCNGI committee, even as some have questioned the composition of the “experts” none of whom is a member of the auto manufacturers association or is a core industry player.

They argued that since the “experts” are not auto makers, and may not have even heard of the Auto Policy (NAIDP 2023) not to talk of understanding the content, “it will be difficult for them to know the difference between SKD and CKD or know who has capacity to produce what vehicle.”

Interestingly, when contacted on Wednesday, two prominent managers in PAN, Kaduna and ANAMMCO, Enugu, said their companies were neither contacted to bid to produce the buses, nor were they even aware.

Similarly, speaking on phone, the Chairman of Innoson Vehicle Manufacturing Co Ltd, Dr. Innocent Chukwuma, CON, said his company, which is a member of NAMA, did not know when the bid process opened or when it closed.

Speaking further, Chukwuma asked, “Is there anybody in this country who does not know that Innoson is so far the only auto manufacturer in this country that has been doing CKD production of CNG buses of various sizes for about two years now? So, why was it that when it was time to bid for the contract, nobody remembered us. Let them tell Nigerians the truth.”

Also reacting in a statement, the Head of Communications at Innoson Vehicles, Mr. Cornel Osigwe, said that at various times Innoson Vehicles has shown and demonstrated the capacity of producing CNG-powered vehicles. The Nnewi plant commenced the manufacture of CNG buses long before the politics of oil subsidy removal started, and wondered “why we were totally excluded from the entire process.”

Osigwe, who issued a press statement, appealed to the committee to explain to Nigerians if there were preferred bidders and why the auto plants with high installed capacities to manufacture buses on CKD bases, were not given equal opportunities to bid.

The press release further stated, “We at Innoson have been manufacturing various models of CNG buses for over two years now. We made history by becoming the first, and so far the only, manufacturer of CNG/LNG-powered vehicles in Nigeria, for which we have earned many recognitions, including awards from The Sun Publishing, Silverbird and the Nigeria Auto Journalists Association (NAJA), all in 2023.

“Moreover, the presentation of the Quality Management Certificate and the MANCAP Certificate by the Standards Organisation of Nigeria (SON) to Innoson in 2023 is a confirmation  of our adherence to high international quality standards in the manufacture of our range of vehicles.”

A member of NAMA Board of Directors, Bennett Ejindu, bemoaned the loss of a great opportunity to use the procurement of the thousands of the CNG and electric vehicles to rev up activities in the auto industry which has been witnessing a long lull.

Ejindu, who is the Chief Operating Officer of ANAMMCO, blamed the non adoption of the CKD option on the absence of a member of NAMA in the Presidential committee.

He explained why, saying “This is because I know that if a member of NAMA were to be in that committee, even if it was an oversight, that person would have pointed out that look the way for this thing to happen would be to let the Nigerian automotive plants produce the vehicles in a way “to trigger life again back in the the automotive industry.”

Ejindu stated that the most important thing is not if Innoson, ANAMMCO, or PAN bidded and won the contract to produce the buses, or not, but that the contracts are executed in such a way that the multiplier effects are felt in the industry.

And for the desired maximal impact to be achieved, companies that got the orders but do not have the capacity to manufacture and deliver as ordered,  should approach plants with higher capacities for contract production.

According to him, this is not new in the local industry, because a few years ago, his company collaborated with TSS to assemble thousands of Shacman trucks for Dangote.