Autogas: Where’s the N250 billion?

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By Wole Olaoye

The removal of fuel subsidy announced by President Tinubu on May 29, 2023, need not have resulted in the mass misery that has further alienated Nigerians from their government, if only the plans ceremoniously rolled out by the immediate past government to provide succour for the people before fuel subsidy was abolished, had been faithfully implemented.

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In Nigeria, we tend to throw money at problems. When there is a problem, government operatives gather to decide how many billions can be hauled at the perceived solution. A gleeful announcement is made on national television with the movers and shakers of industry in attendance. The picture of a more abundant tomorrow is orally painted to whoever it may concern.

A foreigner watching the spectacle on TV would think that finally Nigeria had come to terms with what it needed to do to make life more abundant for the people. Then… silence; followed by rumours that the billions announced to solve the particular problem in question had started growing wings, or that some powerful people had started eating the budget. Yes, as we found out in the much celebrated case of the former Accountant General of the Federation, money is considered a culinary delicacy by some government officials.

Palliative plan

Back to the subsidy issue and the grand plans to lessen the pains. The government actually planned to provide free conversion of one million cars from petrol to CNG between 2020 and 2023. If the plan had been faithfully implemented, at least one million cars would have been converted by now so that the announcement of May 29 would not have triggered the panic that it did.

The plan did look good on paper. Even self-confessed cynics were willing to cast aside their doubts and believe the sweet music blaring from the loudspeakers of the triune powers — the Petroleum Ministry, the Central Bank of Nigeria (CBN) and the Nigerian National Petroleum Corporation (now NNPCL).

In September 2020, the CBN, in a document titled “Framework for the Implementation of Intervention Facility for the National Gas Expansion Programme”, announced that it was resolved to improve access to finance for private sector investments in the domestic gas value chain. It said its intervention would stimulate investments in the development of infrastructure to optimise the domestic gas resources for economic development. Towards this end, it introduced a N250 billion Intervention Facility for the National Gas Expansion Programme for the commercial utilisation of the country’s natural gas reserves of 188 trillion cubic feet (tcf).

The National Gas Expansion Programme (NGEP) was introduced to make CNG the fuel of choice for transportation and LPG, the fuel of choice for domestic cooking, captive power and small industrial complexes. Provision was also made to support large industries, such as agriculture, industrial applications, textile etc The facility was to be implemented in collaboration with the Ministry of Petroleum Resources (MPR) with the overall goal of improving access to finance for private sector investments in the domestic gas value chain; stimulating investments in the development of infrastructure to optimise the domestic gas resources for economic development; and accelerating the adoption of CNG as the fuel of choice.

As published by the CBN itself, acceptable activities under the intervention include: establishment of gas processing plants and small scale petrochemical plants; establishment of gas cylinder manufacturing plants; establishment of LCNG regasification modular systems; establishment of autogas conversion kits or components manufacturing plants; establishment of CNG primary and secondary compression stations; establishment and manufacturing of LPG retail skid tanks and accompanying equipment. Others are — development/enhancement of auto gas transportation systems, conversion and distribution infrastructure, enhancement of domestic cylinder production and distribution by cylinder manufacturing plants and LPG wholesale outlets; establishment/expansion of micro distribution outlets and service centres for LPG sales, domestic cylinder injection and exchange; and any other mid to downstream gas value chain related activity recommended by the Ministry of Petroleum Resources (MPR).

Loan accessibility

The CBN gave an elaborate breakdown of how it would disburse the funds: “Aggregators, manufacturers, processors, wholesale distributors and related activities will be funded under the Power and Airline Intervention Fund (PAIF) while small and medium-scale enterprises (SMEs) and retail distributors are to be funded by NIRSAL Microfinance Bank (NMFB) under AGSMEIS. The term loan for manufacturers, processors, wholesale distributors, etc., will be determined based on the activity and will not exceed N10 billion per obligor while working capital is set at a maximum of N500 million per obligor. Small & Medium Enterprises (SMEs) and Retail Distributors term loans will be determined based on the activity and will not exceed N50 million per obligor with working capital pegged at a maximum of N5 million per obligor.”

The Bank stated that the interest rate under the intervention would not be more than 5.0% p.a. (all inclusive) up to February 28, 2021, after which interest on the facility would revert to 9% p.a. (all inclusive) effective from March 1, 2021.

As usual, there followed a period of stasis. Details of how the intervention was being implemented reverted to the usual opaque recesses of secret conclaves where stakeholders and interested local investors had to rely on rumours or outright fibs designed to mask the scent.

It was gladdening therefore when the then Petroleum Minister, Timipre Sylva, assured Nigerians on behalf of the Buhari administration in January 2022 that he would work with marketers to convert 200, 000 vehicles from petrol to compressed natural gas (CNG) within the year. Many people said they had heard such a rumour before. But Sylva was insistent. He told marketers that the government was planning to provide 50 percent funding for them to bring equipment from Original Equipment Manufacturers (OEMs) for both vehicle conversion kits and petrol station conversion technologies. He said that the government was desirous of having the CNG system running across the country as alternative fuel before petrol subsidy would be removed.

He stressed the need to have a critical number of vehicles converted and a requisite number of dispensing stations in place. “If not, you will have a situation where converted vehicles do not have places to refuel or you will have a situation where fuel stations do not have converted vehicles to fuel”. He confirmed that the funding would come from the N250 billion provided by the Central Bank of Nigeria (CBN).

What could have been

Since that time, the government relapsed into silence again until the recent flurry of activities in the wake of the removal of fuel subsidy which has generated so much anger nationally. Imagine what the atmosphere would have been today if the original plan to convert one million vehicles between 2020 and 2023 had been followed through!

The immediate task before the Tinubu administration is to first identify where the N250 billion budget earmarked for the project is. This step is urgent to prevent pythons from swallowing it. Then, the government should ensure a transparent disbursement of the loans to genuine players, big and small, so that the transition to autogas will be a truly all-encompassing productive activity.

The new Minister of State for Petroleum Resources (Gas) Mr. Ekperikpe Ekpo, needs all the support he can get from his substantive minister to untie this gaseous knot to enable Nigerians breathe easier. Fortunately for him, his minister is also the President.

Olaoye is an Abuja-based PR practitioner.

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