Subsidy Removal: Marketers Jostle For N250bn Gas Expansion Fund

Petroleum marketers are currently jostling for access to the N250 billion intervention fund for the National Gas Expansion Programme (NGEP) following recent petroleum subsidy removal.

To this end, industry operators are looking forward to a pleasant operating environment which subsidy on petrol had not allowed over the decades.

Key investors are considering major investment decisions in the Compressed Natural Gas(CNG) space which they see as viable alternative to petrol. following exit of subsidy regime by President Bola Tinubu.

According to LEADERSHIP findings, some companies are about making fresh investments, specifically keying into the federal government’s gas expansion initiative.

LEADERSHIP gathered that NIPCO Plc has spent well over $100 million in gas infrastructure development which has resulted in key projects like pipeline construction, inauguration of over 12 CNG stations providing gas to motorist.

With this efforts, motorist can ply Lagos – Abuja on gas powered cars with three of its gas service outlets at Ibafo , Ogun state; Ajaokuta, Kogi state and Abuja station in Airport road ,FCT conveniently, a feat that is novel in the country.

Also, the Independent Petroleum Marketers Association of Nigeria(IPMAN) is now demanding access to the N250 billion intervention fund for the National Gas Expansion Programme.

The national president of the IPMAN, Chinedu Okoronkwo, told our Correspondent that the N250 billion can be used by cars, tricycles and truck owners to convert to gas due to the hike in Premium Motor Spirit (PMS) after the subsidy removal.

Okoronkwo noted that, the removal of subsidy has raise the cost of petrol, significantly above the current pump price.

Okoronkwo said, aside from the N250 billion intervention fund request to help cushion the impact of the subsidy removal, the IPMAN has entered into partnership with Gas Analytics & Solutions Ltd to locate natural gas dispensers at over 30,000 filling stations in Nigeria.

He said: “our partners, Gas Analytics & Solutions Ltd, have an agreement with the independent Petroleum Marketers Association of Nigeria to co-locate natural gas dispensers on our network of over 30,000 filling stations in Nigeria.

“This collaboration with IPMAN presents the most economic and expedient platform to deploy the necessary infrastructure to support a fast national roll-out of CNG (Compressed Natural Gas) for vehicles.

“What is left is the support of the Central Bank of Nigeria to provide access to the Gas Expansion Fund for vehicles, Keke, and truck owners to access loans to finance the acquisition of natural gas conversion kits.”

The conversion to gas will increase demands that will enable oil marketers to set up more Compressed Natural Gas across filling stations.

He explained that: “Without a large pool of CNG customers, IPMAN will not be able to raise the funds required to set up CNG filling stations.

“We believe that with the support of the Ministry of Finance, IPMAN’s partnership with Gas Analytics will provide a platform that can in a matter of a few months cushion the impact of petrol subsidy removal and significantly reduce the need for foreign exchange to import petrol.”

He said, the new government should urgently address the requests to galvanize the industry.

Manager, Corporate Communications of NipCo, Biodun Lawal, speaking on the company’s desire to depeen investment in the gas sector, said the savings that will accrue from subsidy removal offers more vista of opportunities to fund the enormous gas infrastructure deficit in the nation .

“We are still investing more infrastructure with a proviso that clientele will improve sporadically. Some of the challenges in harnessing the abundant gas resources in the country includes – paucity of pipelines to transport gas across the country ,cost of conversion to use gas as auto fuel , access to gas through stations. With all modesty NIPCO gas Limited is the only company with over 12 CNG get to get gas for motorist” he said.

Continuing, Lawal said, motorist can now see the innate benefits in running their vehicles on gas rather than fossil fuels which government has in the past graciously subsidized even at the expense of the overall economic growth and other socio -economic development of the nation .

According to him, CNG as a preferred alternative to petrol is good for gas companies as the nation at large as or offered veritable opportunity of creating more employment opportunities ,better value creation in the Industry, better utilisation of the endowed gas resources of the country.

He said, the benefits are enormous for motorist in terms of savings and life span of such automobiles and that the

conversion cost should not be a drawback with support from government especially with fiscal policies to encourage investors to go into kits manufacturing and ancillary items like cylinders etc .

“In the interim policies can be put in place for exemption from levies of imported accessories pending when the environment will be made more conducive for it’s manufacturing in Nigeria CNG business has a good horizon in the country with the challenges tacked headlong,” he said.