Unlocking potential of compressed natural gas
Nigeria to save N10 trillion yearly from 20 per cent usage
Adepoju Olarewaju was looking happy and fulfilled the moment the gas attendant at Green Gas Limited (GGL), a joint venture company of the Nigerian Gas Company (NGC) and NIPCO Plc., filled his tank with Compressed Natural Gas (CNG).
Olarewaju, who plies Lagos and Ibadan route, was particularly excited because he now makes lots of profit in his transportation business since switching from Premium Motor Spirit (PMS) to CNG.
He said: “The cost of powering my vehicle has drastically reduced from N6,000 to N2,000 since I converted to CNG. In fact, the trip that used to consume N6,000 fuel is now consuming only N2,000 thereby increasing my savings to N4000 per trip.”
It took another one hour for Isaac Isiyemi, another transporter to show up at the green station by Ibafor, along Lagos-Ibadan Expressway with his Shagamu passengers. He also confirmed to The Guardian, that it costs less to use CNG than petrol thereby boosting profit maximisation for transporters.
Notwithstanding these success stories, the patronage of natural gas remains poor and below expectations, as The Guardian, which observed the flow of traffic into the gas station for three hours, noticed that only few vehicles patronised the well-equipped plant, compared to what is seen in PMS stations.
CNG can be used in place of PMS (petrol), diesel fuel and propane/Liquefied Petroleum Gas (LPG).
More than a decade after the kick-off of the promotion of natural gas powered vehicles, statistics from one of the promoters of CNG in Nigeria, showed that only about 5,000 vehicles have been so far converted.
Like Green Gas Limited, a partnership between the Nigerian Gas Company (NGC) and NIPCO Plc., other companies like Oando Gas and Power Gas Limited have also invested about N7.2 billion and $100 million respectively in the construction of CNG plants.
The Guardian leant that apart from Green Gas, which constructed retail outlets for vehicles, other CNG companies have concentrated on supply of the product to industries.
CNG use to yield N10 trillion yearly savings
Statistics from Nigeria Gas Company Limited (NGC) showed that Nigeria could save an average of N10 trillion yearly if three cities alone convert to use of CNG.
NGC data showed that Abuja Investment spends N13.9 billion average daily on Automotive Gas Oil (AGO), but can reduce that cost to N3.6 billion and saving a whopping N10.4 billion daily if their vehicles run on CNG.
In Lagos, the major intra-city transporters are Lagbus and BRT, are estimated to spend an average of N14.8 billion daily on AGO, and can save up to N11 billion by expending just N3.8 billion on CNG.
Port Harcourt is another commercial hub with average daily spend of N8.5 billion on PMS and AGO, which can be significantly reduced to N2.8 billion, saving almost N5.7 billion daily if they’re run on natural gas.
From the analysis, the country could actually be saving about N28.72 billion daily, which translates to N861.6 billion monthly and N10 trillion yearly.
According to Managing Director, NGC, Babatunde Bakare, following the removal of petrol subsidy, CNG as an automotive fuel presents a very attractive business opportunity for both the consumer and the supplier.
A document obtained by The Guardian from NCG on CNG, showed that there were 22.7 million natural gas vehicles around the world in 2015, with Iran, China, Pakistan, Argentina, Brazil, Italy, Colombia and Uzbekistan listed as the leading countries using CNG.
Bakare emphasized the need for the Federal Ministry of Environment and policymakers to be stimulated towards the environmental and economic opportunities inherent in penetrating the large Nigerian vehicular market with a view to utilising alternative fuels.
Dwelling on the importance of clean fuel, he explained that CNG vehicles deliver the lowest emission test result with non-catalyst passenger cars emissions.
He added that Cox and NOx are the main greenhouse gases which contribute to global warming and those are negligible in CNG combustion. “CNG burns cleaner than any other fuels, therefore the issue of acid rain in areas where CNG is utilised as a vehicular fuel does not arise,” he said.
Bakare listed other benefits of CNG to include reduction in environmental pollution; flexibility in choice of fuels for vehicles; cheaper than gasoline or diesel fuel equivalent; lesser volatile than gasoline or diesel; and no direct threat to land or water contamination in the case of a leak.
He said natural gas also extends the engine life of vehicles because it’s easier to combust; reduces engine maintenance cost by extending time between oil changes; eliminates fuel theft as it cannot be siphoned from vehicles.
He stated: “CNG as a vehicular fuel, has a lot of prospects for countries that have realised the need, created the awareness, and made appropriate regulation to support growth.
“Since the 1980s, environmental issues have had a rising impact on most human activities in most countries of the world and it is on this background that major CNG prospects exist in Nigeria.”
Challenges to growth of CNG sub-sector
Decrying the challenges of operating a green station in Nigeria, General Manager, Natural Gas of Green Gas Limited Rajesh Prabhu, said vehicles running on CNG tend to move around at relatively cheaper rate in gas consumption than they could with petrol of equivalent content.
While giving an illustration of a journey from Lagos-Benin City covering 320km, he said the cost of travel on petrol is N6,208, while that of CNG is N2,933, creating a saving of N3,275.
He listed other key benefits of CNG include, very economical as gas is cheaper than petrol, cleaner – providing less carbon emissions, secure, as it’s locally sourced, safe – it’s a clean energy source so there are no toxins.
According to him, the aim of the CNG refilling stations in Nigeria, especially in Lagos, was to provide alternative to PMS at a reduced cost and to boost national socio-economic growth.
He also said that aside from the economic gains, CNG targeted reduction of unfriendly automobile emissions and exposure of Nigerians to the innovation of powering vehicles on gas, adding that the company has about 10 CNG operating stations nationwide, while others are under construction.
He said the patronage of CNG refilling station at Ibafo, Ogun state, has been impressive with an average of five minutes’ drive by commercial buses and private vehicle owners. “CNG sustainability in Nigeria is sustainable considering that Nigeria is one of the largest producers of natural gas.
“Ibafo CNG station, near Lagos, is a world-class facility with about 12 dispensing pumps for light and heavy duty trucks. The innovation is sustainable because the private sector is taking the lead, as government provides enabling environment for it to thrive.
“CNG is even cheaper by 46 per cent from the subsidised petrol. By converting personal cars automobile owners can reduce their fuel bill by 50 per cent, the money saved can better be utilised for other important requirements.
“As a result of the deregulation of diesel, the cost of running mass transit vehicles – buses, trucks has been horrendous. Operating buses, trucks, and even trains running on CNG will result in a cost savings of some 100 per cent.”
Prabhu said that most fleet operators in the developed countries actually operate their fleet on cost effective CNG. “As a demonstration of its technical prowess and versatility, Green Gas is the first company to pioneer in any developing country, the successful use of an energy mix of diesel and CNG to operate heavy-duty trucks.
“In order to sustain continuous production many manufacturing companies have established their own captive power plants to overcome the epileptic public power supply. However, the cost of running a dedicated power plant can be extremely high.
He disclosed that the company has over 55 kilometres of gas pipeline network in Benin City, three state-of-the-art CNG conversion workshops and nine CNG Dispensing Stations operating in the country.
“Over 4,000 CNG vehicles and 25 Edo state buses are currently running on CNG in Benin City and in and around Ibafo. Construction work for building CNG stations along Benin-Lagos (at Ore, Onitsha), Benin-Warri and Benin-Asaba expressways is in progress and would be completed by end of 2016.
“We have stations, one in Warri and two along Benin-Warri Expressway are ready for installation. Along with the CNG project, GGL also supplies Piped Natural Gas (PNG) to industrial and commercial units located in and around Benin City as natural gas is also the most preferred fuel for energy requirements in the commercial and industrial sectors.
He said the company’s workshops are equipped with all the facilities required for converting petrol and diesel vehicles to CNG. “Workshop technicians are trained by the kit manufacturer to carry out pre-conversion checks, installation of the kit, turning of vehicles on CNG and to provide post conversion service support.”
Prabhu said that there is an urgent need to address both retail and wholesale prices of natural gas. “Wholesale prices are set below world prices and need adjustment to encourage supply into the domestic market. With respect to the retail market, a holistic approach to the pricing of petroleum products is required to develop a framework that will accommodate the dynamics that exist for gasoline and create headroom for natural gas to thrive concurrently,” he said.