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One year after: FG’s autogas plan fails to fly ahead of subsidy removal

By Kingsley Jeremiah, Abuja
10 January 2022   |   3:56 am
In December 2020, when President Muhammadu Buhari promised Nigerians, especially labour leaders, that an autogas policy would ensure that vehicles plying the country’s roads run on Compressed Natural Gas...


Planned one million gas-powered vehicles elusive as subsidy removal looms
• Major independent marketers desert scheme as autogas sells for N400/litre
• FG sets aside N250b for vehicle conversion, to begin pilot scheme in 12 states

In December 2020, when President Muhammadu Buhari promised Nigerians, especially labour leaders, that an autogas policy would ensure that vehicles plying the country’s roads run on Compressed Natural Gas (CNG), not many considered it as another government hot air that would add to the administration’s list of failed promises.

It was anticipated that by now, a year after, nothing less than one million vehicles of the average 12 million vehicles plying Nigerian roads would be running on CNG and LPG as part of measures to mitigate the tension over the proposed hike in petroleum pump price and save the environment from hazards of Premium Motor Spirit (PMS). It was also believed that it would facilitate the transition to a clean energy source.

However, an investigation by The Guardian shows that the plan is yet to take off despite the commitment of resources for the conversion.

On December 1, 2020, President Buhari had virtually launched the Autogas Initiative on the back of the National Gas Expansion Programme, a much-trumpeted Decade of Gas policy and 203 trillion cubic feet of gas resources, with a promise that nothing less than 40 per cent vehicles plying Nigerian roads would run on compressed natural gas.

According to the President, by 2021, the country would have converted a million cars to cushion impacts of petroleum subsidy removal, which the government said, gulped trillions of naira yearly.

Described as an alternative fuel, the Minister of State for Petroleum Resources, Timipre Sylva, had disclosed that the Federal Government’s plan was to provide autogas that would cost between N95 to N97 per litre.

But one year after, infrastructure, high cost of gas, lack of proper planning, prevailing harsh economic realities and safety concerns according to stakeholders, continued to frustrate Buhari’s autogas plan. 

The cost of gas has not only gone up by over 200 per cent since the announcement was made, the infrastructure to convert cars to be powered by gas has exponentially gone up as import kits soared alongside foreign exchange and free fall of the naira.

As of yesterday, a litre of autogas was selling for an average N400 at the NNPC retail outlet along Kubwa Expressway in Abuja. 

An attendant at the station told The Guardian that no one has come to fuel their cars at the gas pump for over two months, adding that only NNPC vehicles, which were converted at the pilot phase of the project, continue to come for a refill once in while.

The vendors, which were converting petrol vehicles to gas at the fuel station, have also deserted the location for over a year, The Guardian investigation also revealed.

Initially, the Technical Adviser on Gas Business and Policy Implementation to the Minister of State for Petroleum, Justice Derefaka, had said motorists in the country would need to pay about N250,000 to convert their vehicles to run on gas. However, worsening economic indexes has more than doubled the cost, making the process for the masses a mirage.

In November, last year, weeks to the first anniversary since the promise was made by the President, the Federal Government announced it had set aside N250 billion for willing investors in autogas assembly plants in the country to ensure that autogas conversion of vehicles yielded the desired results. The funds would barely convert 100,000 vehicles to autogas going by market rates.

Sylva, who made the disclosure, said the money was already in the coffers of the Central Bank of Nigeria (CBN) and those interested in opening conversion centres could access it.

He explained that the decision to make the money available as a result of the huge amount spent by the government on fuel subsidy, adding that it is in line with President Muhammadu Buhari’s commitment to adopt gas as an alternative fuel for the country.

“If we focus on moving from fossil fuel to Liquified Petroleum Gas (LPG) and Compressed Natural Gas (CNG), it will save us a lot of money because the benefits are enormous,” the minister said.

AT the weekend, the Federal Government said it has selected 12 states for the pilot phase of the conversation of vehicles using petrol and diesel to enable them to run on autogas.

It was gathered that engineers with four automobile manufacturers had already started receiving training on how to convert vehicles assembled or produced in Nigeria to start using autogas, instead of petrol or diesel.

The Programme Manager, National Liquefied Petroleum Gas Expansion Implementation Plan, Dayo Adeshina, on Friday told newsmen that the LPG component in the autogas initiative would be implemented in 12 states.

The National LPG Expansion Implementation Plan is domiciled in the Office of the Vice President and has been making moves to ensure the usage of gas both for cooking, in automobiles and for other purposes.

According to Adeshina, the 12 states are Lagos, Ogun, Bauchi, Gombe, FCT, Niger, Katsina, Sokoto, Ebonyi, Enugu, Delta and Bayelsa.

Speaking on measures adopted to ensure gas penetration through the autogas initiative, Adeshina said: “I am in charge of the LPG expansion programme; yes, there is an autogas element of it, but it is the LPG aspect that I am responsible for.

“And in this aspect, we are concentrating our target on 12 pilot states and our approach is simple. We are starting with the state governments by getting the vehicles that they are using in those states.

“So, if I take Lagos for example, in the last eight years, Lagos has had vehicles from GAC, JAG, Toyota and Coscharis. So, what we have done is that we have gone to those four companies to tell them that we would like to train their engineers to convert vehicles that they supplied to Lagos State already.

“The idea is that they can convert the vehicles from the use of petrol to LPG and then we can now scale it massively. So, we have done the online training, and we started with Lagos for those four companies.”

Adeshina, however, explained that because of COVID-19, the engineers who were supposed to come and train the personnel in Lagos could not make it last year.

“But we are hoping that by the end of the first quarter of this year, they can come in to start the physical conversion of those vehicles,” he said.

WHILE the government had promised to ensure that fuel stations across the country were forced to provide gas dispensing pumps for cars, investors did not buy into the plan.

The Major Oil Marketers Association of Nigeria (MOMAN) told The Guardian that the investment is too risky as market, bankability, consistency in government policies, product plan and other elusive factors made the autogas scheme dead on arrival. 

Most of the marketers, including the independent players, see the business as too risky to venture into, as prevailing realities show no viability.

Only two stations are operating in Abuja; one along the Airport Road and owned by NNPC and the other along Kubwa expressway, also owned by the corporation. In total, the entire Federal Capital Territory (FCT) has only two pumps dispensing CNG.

It was gathered that existing private investors, especially Nipco and Oando, who had invested in the market segment are struggling to survive as the disparity between the price of PMS and the price of autogas makes PMS a preferred option. 

Renowned energy scholar, Wunmi Iledare, described the scheme as mere political expediency, which is conflicting with economic effectiveness and efficiency, adding that the policy for gas as a transition fuel towards removing fuel subsidy “is misplaced and misleading. Hence, the failure was guaranteed from the start with no infrastructure that left much to be desired.”

Worried over the perennial subsidy removal saga, Iledare insisted that full deregulation of the downstream sector remains the only sustainable option.

“There must also be a departure from central planning of the energy sector. Things must be done according to the Act of the National Assembly. The Petroleum Industry Act (PIA) calls for deregulation, and delaying the implementation is postponing the evil day,” he said. 

Group Chairman/CEO at International Energy Services Limited, Dr Diran Fawibe, noted that using autogas as a basis for fuel subsidy removal falls below expectations, adding that even if the government successfully converts one million vehicles to run on gas, it would still be a drop in the ocean.

According to him, the inability of the country to refine petroleum products locally remains a critical loophole on the part of the government in its bid to remove subsidies. 

“I am not sure how the conversion of cars to run on gas can quickly address the removal of petrol subsidy. Government has to work assiduously to get the refineries to work to complement Dangote Refinery. It is until then that government can justify subsidy removal.”

Energy expert at PWC, Habeeb Jaiyeola, said apart from the elusive state of the plan, conversion of energy source in an automotive engine designed for another source presents serious concerns, especially in a country where gas-related explosions persist.

“This intended plan to run cars on gas, which have originally been designed to run on petrol or diesel, is not popular the world over. In addition, these mechanisms are different with different car manufacturers. Any intended conversion of the energy source of the engine must be with necessary consultation and guidance from the original car manufacturers. Gas is extremely flammable and must be treated with caution,” Habeeb said.

According to him, a full analysis of the programme remained sacrosanct to determine the comprehensive benefits and risks needs to be done, adding that identifying the comprehensive benefits and risks will enable the government determine if the benefits outweigh the risks and if measures could be put in place to mitigate the risks.

Mrs Joyce Daser-Adams, Chief Executive Officer of Auto Lady Engineering Technology, said one of the major challenges in converting a vehicle from fossil fuel to LPG or CNG is the non-availability of parts.

According to her, the parts are not in Nigeria, though she noted that when converted, it was very safe and the risk of an explosion in the event of a collision was very minimal.

NNPC spokesperson, Garba Deen Muhammad, did not respond to a request by The Guardian on the development, just as the Ministry of Petroleum Resources did not also revert to questions by The Guardian on the issue.