CNG pumps: FG may fund installation as marketers lament high cost

The Federal Government may consider assisting independent fuel marketers with funding to install Compressed Natural Gas sales pumps at filling stations across the country,

This followed the lamentation of the Independent Petroleum Marketers Association of Nigeria that its members were unable to finance the installation of CNG sales pumps at their filling stations in line with the presidential directive promoting the CNG initiative.

The marketers said the cost of installing CNG pumps was prohibitive for its members, adding that the high-interest rate charged by banks also made borrowing money 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, however, promised to roll out measures, including CNG-powered mass transit buses and tricycles, to cushion the impacts of the subsidy removal. After almost one year in office, that initiative is set to come to life.

According to presidential aide, Bayo Onanuga, the Federal Government planned to launch its compressed natural gas initiative in May ahead of President Bola Tinubu’s first anniversary.

“In all, over 600 buses are targeted for production in the first phase that will be accomplished this year,” he said in a statement.

“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. About 2,500 of the tricycles will be ready before May 29, 2024,” he added.

Onanuga said the Federal Government was targeting the purchase of 5,500 CNG vehicles (buses and tricycles), 100 electric buses and over 20,000 CNG conversion kits, in addition to spurring the development of CNG refilling stations and electric charging stations.

“With necessary tax and duty waivers approved by President Tinubu in December 2023, the Presidential CNG Initiative committee is partnering with the private sector to deliver the promise of the initiative. The private sector has responded with over $50m in actual investments in refuelling stations, conversion centres, and mother stations,” he said.

Also, the FG, through the Chief Executive Officer of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, Farouk Ahmed, had issued a directive mandating oil marketing companies to instal CNG pumps in filling stations across the country.

Ahmed, who described the push by the Federal Government to encourage the use of CNG as an alternative to petrol as a revolution, said the government was determined to reduce the burden of petrol on the economy. As such, the government said intending retail licensees would now be required to establish CNG points in their filling stations before getting final government approval.

He said, “We want to reduce the burden of the importation and consumption of PMS. We explored the possibility of converting the energy requirement of retail outlets and depots by the stakeholders here going into solar, but there is a high entry cost. We have discussed that, and it is going to be in phases. By doing so, we will reduce the demand for diesel in terms of powering our generators by utilising solar options. Once we are done with consultations, we will require that CNG add-ons be put in petrol stations and for new applications, one of the requirements will be that you must have a CNG add-on in the petrol station.”

Marketers seek funding

Speaking with Saturday PUNCH in an exclusive interview, the Public Relations Officer of IPMAN, Chinedu Ukadike, said its members lacked the funds to install CNG pumps in filling stations across the country.

He also called for the establishment of an ‘energy bank’ to provide accessible loans to marketers.

Ukadike, however, said the deployment of CNG was welcomed by the association, noting that it had the potential to reduce the importation of petroleum products, while also helping to strengthen the naira by international procedures.

He said, “Compressed Natural Gas is a welcome development. In the last meeting held 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 centre. The government had agreed that some of our filling stations will be used as conversion points for CNG vehicles. Unfortunately, we are still not aware of the next plan to commence this process to integrate independent marketers into the CNG programme.

“On the financing part, some banks had approached us and have mapped out some money for this kind of venture, but I also believe that there should be a microfinance bank set up by the government to help marketers engage in this venture. We have also advocated for an energy or petroleum bank, just like we have the Bank of Industry and Bank of Agriculture, where marketers can seamlessly obtain loans without any extra charges or high interest rates.

“The interest rates in commercial banks are burning our business. We cannot source fresh capital to fund this venture from them, and that is why we need the government’s assistance. We are already spending a lot on distributing petroleum products.”

Asked if the marketers needed assistance from the government to install CNG pumps, he said, “Yes, we definitely will appreciate that if the government can assist us.

“We would, however, also appreciate having an energy bank to enable us obtain loans at a better rate than the current one. I will also state clearly that marketers can distribute CNG. We control over 80 per cent of the distribution outlets scattered across the nooks and crannies of the nation.”