Page 6 - DMEA Week 39

DMEA COMMENTARY DMEA

Nigeria touts gas use in transport

Nigeria wants to bolster the use of gas as a vehicle fuel, to utilise more of its
gas resources and lower fuel prices after ending state subsidies.

NIGERIA NIGERIA recently embarked on fuel reforms in the form of LNG. However, the government
to help bolster supply security and attract more wants gas to play a much larger role in the coun-
WHAT: investment in refining. But these reforms have try’s energy and fuels mix.
Nigeria’s central been roundly condemned by consumers. So far investment in the use of compressed
bank has unveiled The government took advantage of record- natural gas (CNG) and liquefied petroleum gas
a $648mn incentive low gasoline prices during coronavirus (COVID- (LPG) as alternative fuels has been low. But the
package to encourage 19) lockdowns to end decades of fuel subsidies. central bank wants to make CNG the “fuel of
the development of Now that prices have recovered, though, the choice” for transportation, and LPG the favoured
natural gas vehicle government is under pressure to reverse course. option for domestic cooking, captive power and
infrastructure. So far, though, President Muhammadu Buhari small industrial complexes. It also wants to scale
has refused to do this, and authorities are instead up gas-based industries such as petrochemicals.
WHY: offering incentives to spur the use of cheaper nat- This will be achieved by spurring private invest-
Nigeria’s central ural gas as a vehicle fuel. ment in the sector, the bank said.
bank has unveiled Projects eligible for financing include:
a $648mn incentive State support -Gas processing plants and small-scale petro-
package to encourage Under its National Gas Expansion Pro- chemical plants
the development of gramme, published last month, Nigeria’s cen- -Gas cylinder manufacturing plants.
natural gas vehicle tral bank is offering a NGN250bn ($648mn) -LNG/CNG regasification modular systems
infrastructure. stimulus package which it hopes will encour- -Auto gas conversion kits and component
age gas use in vehicles. Investors can access manufacturing plants
WHAT NEXT: the fund, which has a 10-year maximum -CNG primary and secondary compression
The government has tenor, at interest rates of no more than 5% stations
shown no sign of until the end of February next year. After that -LPG retail skid tanks and refilling equipment
reversing its policy on point rates will rise to 9%. -Auto gas transportation systems and conver-
fuel subsidies so far, The funds for big projects will come from the sion and distribution infrastructure
but high fuel prices will Power and Airlines Intervention Fund (PAID), -Improvements in cylinder production and
encourage unrest and while those for small-scale ventures will come distribution and LPG wholesale outlets
CNG will not become from the NIRSAL Microfinance Bank (NMFB) -Micro distribution outlets and service cen-
as readily available as and other sources. tres for LPG sales, domestic cylinder injection
gasoline overnight. Nigeria has some 188 trillion cubic feet (5.3 and exchange.
trillion cubic metres) of proven gas, according -Any other mid-to-downstream gas value
to its own estimates. But most of the 45bn cubic chain-related activity recommended by the Min-
metres of gas it produces annually is exported istry of Petroleum Resources.

P6 www. NEWSBASE .com Week 39 01•October•2020