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Home Sectors Energy

CBN introduces N250 billion stimulus package for gas investment to ease pain of fuel price increase

Chike Olisah by Chike Olisah
September 19, 2020
in Energy, Spotlight
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As part of the palliative following the sharp increase in the price in the pump price of petrol, the Central Bank of Nigeria (CBN) has introduced a N250 billion stimulus package under a National Gas Expansion Programme that it hopes will help stimulate investment in the gas value chain and spur its use in transportation as an alternative to fuel-powered cars.

Large scale projects under this intervention programme will be financed under the Power and Airlines Intervention Fund (PAIF), in line with existing guidelines regulating the PAIF, while small scale operators and retail distributors will be financed by the NIRSAL Microfinance Bank (NMFB) and/or any other Participating Financial Institution (PFI) under the Agribusiness/Small and Medium Enterprises Investment Scheme (AgSMEIS).

READ: NIRSAL explains why it is not disbursing N50 billion CBN loan

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This initiative is to be implemented in collaboration with the Federal Ministry of Petroleum Resources.

The objectives of the facility include;

  • Improved access to finance for private sector investments in the domestic gas value chain.
  • Stimulate investments in the development of infrastructure to optimize the domestic gas resources for economic development.
  • Fast track the adoption of Compressed Natural Gas (CNG) as the fuel of choice for transportation and power generation, as well as Liquefied Petroleum Gas (LPG) as the fuel of choice for domestic cooking, transportation, and captive power.
  • Fast track the development of gas-based industries particularly petrochemical (fertilizer, methanol, etc) to support large industries such as agriculture, textile, and related industries.
  • Provide leverage for additional private sector investments in the domestic gas market.
  • Boost employment across the country.

READ: CBN’s N50 billion loan: NIRSAL warns Nigerians against fake loan adverts

The activities that are eligible under the intervention shall include;

  • Establishment of gas processing plants and small scale petrochemical plants.
  • Establishment of gas cylinder manufacturing plants.
  • Establishment of L-CNG 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 refilling equipment.
  • Development/enhancement of autogas 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.

READ: CBN warns SMEs not to pay any fee to access its N50 billion stimulus package

The aggregators, manufacturers, processors, wholesale distributors, and related activities shall be funded under the Power and Airline Intervention Fund (PAIF), while the Small and Medium-scale Enterprises (SMEs) and retail distributors shall be funded by NIRSAL Microfinance Bank under AgSMEIS.

For the manufacturers, processors, wholesale distributors, etc, the term loan shall be determined based on the activity and shall not exceed N10 billion per obligor. The working capital shall be a maximum of N500 million per obligor.

While for the small and medium enterprises, the term loan shall be based on the activity and shall not exceed N50 million per obligor. The working capital shall be a maximum of N5 million per obligor.

READ: How to access the N50 billion CBN Covid-19 intervention fund for SMEs

Interest Rate

The interest rate under the intervention shall be at not more than 5% per annum (all-inclusive) up to February 28, 2021, thereafter, interest on the facility shall revert to 9% per annum (all-inclusive) with effect from March 1, 2021.

Loan Tenor and Moratorium

The manufacturers, processors, wholesale distributors, will have term loans which shall have a maximum tenor of 10 years (not exceeding December 31, 2030) with a maximum of a 2-year moratorium on principal repayment only. The working capital facility of 1 year with a maximum rollover of not more than twice, subject to prior approval.

The small and medium enterprises (SMEs) and retail distributors will have term loans that shall have a maximum tenor of 5 years (not exceeding December 31, 2030) with a maximum of 2 years on principal repayment only. The working capital facility of 1 year with a maximum rollover of not more than twice and subject to prior approval.

This new initiative involves getting many vehicles to run on gas by collaborating with investors to build the required infrastructure such as pipelines and petrol stations. It is also expected to help accelerate the use of natural gas and end gas flaring.


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Tags: Business NewsCBNCentral Bank of NigeriaGodwin EmefieleNational Gas Expansion ProgrammeNigeria NewsPower and Airlines Intervention Fund
Chike Olisah

Chike Olisah

Chike was a banker with over 11 years experience in retail and commercial banking, risk management, treasury portfolio management and relationship management. He also acquired some experience in financial management and do have some special interest in investment analysis and personal finance. He had stints with financial institutions like the former Intercontinental Bank and Fidelity Bank.

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Comments 4

  1. Charles Ejike says:
    October 26, 2020 at 5:59 pm

    Hi, please how do one access or apply for the National Gas Expansion Programme. I have been to Nirsal office, they said they are not aware of any programme.

    Reply
  2. Pav viashima Victor says:
    February 1, 2021 at 11:18 pm

    Good day sir, it’s good to see you here,I applied and delivered personally to CBN,copied nirsal office in both in Abuja and got acknowledgement on the 5th of December last year but up till date no SMS,or email from any of them, some times one Begin to Wonder if the scheme is true or not ,help me if you can

    Reply
  3. Mr Leslie Halliday says:
    May 25, 2021 at 10:38 am

    Good-day Sir, please i love access the Establishment/expansion of micro-distribution outlets and service centres for LPG sales, domestic cylinder injection, and exchange.

    thanks

    Reply
  4. Omang George otabi says:
    July 27, 2022 at 8:15 pm

    I promise to comply with the laid down rules

    Reply

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