The Federal Government is considering providing financial assistance to independent fuel marketers for the installation of Compressed Natural Gas (CNG) sales pumps at filling stations nationwide, Saturday PUNCH has learned.
This follows complaints from the Independent Petroleum Marketers Association of Nigeria (IPMAN), which stated that its members cannot afford the installation costs of CNG sales pumps as mandated by the presidential directive promoting the CNG initiative.
Marketers highlighted that the high cost of installing CNG pumps is prohibitive and that high-interest rates from banks make borrowing for the project an unattractive option.
President Tinubu had announced an end to the fuel subsidy era during his inauguration on May 29, 2023, a move that triggered a hike in the cost of the product.
The President has promised to implement measures, including the introduction of CNG-powered mass transit buses and tricycles, to mitigate the impact of the subsidy removal. Nearly a year into his tenure, this initiative is set to come to fruition.
According to presidential aide Bayo Onanuga, the Federal Government plans to launch its compressed natural gas initiative in May, ahead of President Bola Tinubu’s first anniversary.
“In total, over 600 buses are slated for production in the first phase, which will be completed this year,” he stated.
“A new plant on the Lagos-Ibadan Expressway will assemble thousands of tricycles. The SKD parts, manufactured by the Chinese company LUOJIA in partnership with its local partner to support the consortium of local suppliers of CNG tricycles, are set for shipment to Nigeria and are expected to arrive early in May. Approximately 2,500 of these tricycles will be ready before May 29, 2024,” he added.
Onanuga mentioned that the Federal Government aims to acquire 5,500 CNG vehicles (buses and tricycles), 100 electric buses, and over 20,000 CNG conversion kits. This initiative also seeks to spur the development of CNG refueling stations and electric charging stations.
“With necessary tax and duty waivers approved by President Tinubu in December 2023, the Presidential CNG Initiative committee is collaborating with the private sector to fulfill the initiative’s promise. The private sector has responded with over $50 million in actual investments in refueling stations, conversion centers, and mother stations,” he said.
Additionally, the Federal Government, through the Chief Executive Officer of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, Farouk Ahmed, issued a directive mandating oil marketing companies to install CNG pumps at filling stations across the country.
Ahmed described the government’s push to encourage CNG use as an alternative to petrol as a revolutionary step aimed at alleviating the economic burden of petrol. Consequently, the government now requires new retail licensees to establish CNG points at their filling stations before receiving final approval.
“We want to reduce the burden of importing and consuming PMS. We explored converting the energy requirements of retail outlets and depots to solar, but the high entry cost is a barrier. This will be implemented in phases, reducing the demand for diesel by utilizing solar options. Following consultations, we will mandate CNG add-ons at petrol stations. For new applications, one of the requirements will be a CNG add-on at the petrol station,” Ahmed explained.
In an exclusive interview with Saturday PUNCH, the Public Relations Officer of IPMAN, Chinedu Ukadike, stated that its members lack the funds to install CNG pumps at filling stations across the country.
He also advocated for the creation of an ‘energy bank’ to provide accessible loans to marketers.
Ukadike expressed support for the CNG initiative, noting its potential to reduce petroleum imports and strengthen the naira through international trade practices.
“Compressed Natural Gas is a welcome development. In the last meeting with the Nigerian Midstream and Downstream Petroleum Regulatory Authority, we were advised to install pumps and tanks as an add-on to our stations. We raised concerns about the licensing of the add-on and the conversion center. The government had agreed that some of our filling stations would serve as conversion points for CNG vehicles. Unfortunately, we are still unaware of the next steps to integrate independent marketers into the CNG program,” he said.
“On financing, some banks have approached us and allocated funds for this venture, but we believe there should be a government-established microfinance bank to support marketers. We have also advocated for an energy or petroleum bank, similar to the Bank of Industry and Bank of Agriculture, where marketers can obtain loans without extra charges or high-interest rates.
“High interest rates from commercial banks are hurting our business. We cannot source fresh capital from them to fund this venture, which is why we need government assistance. We are already incurring high costs distributing petroleum products.”
When asked if marketers needed government help to install CNG pumps, he responded, “Yes, we would greatly appreciate government assistance.”
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