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Energy

FG to deliver 1 million vehicle conversion to autogas by end of 2021

The FG’s Autogas programme is expected to deliver at least 1 million vehicle conversions by the end of 2021.

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FG to deliver 1 million vehicle conversion to autogas by end of 2021

The Federal Government has revealed that its Autogas programme is expected to deliver at least 1 million vehicle conversions by the end of next year.

The implementation of this programme by the government will herald the clean energy transition for Nigeria and the delivery of cheap transportation.

This was disclosed on Sunday, November 29, 2020, by the Federal Government via tweets on its official Twitter handle.

READ: 25 million Nigerians to pay N4,000 monthly for solar power system

READ: N75 billion Nigerian Youth Investment Fund to be rolled out before end of October – Minister

The rollout is the culmination of the resolve of President Muhammadu Buhari-led government to deepen domestic usage of natural gas in its various forms. It is also in line with the government’s plan to make gas the first choice source of cheaper and cleaner energy for Nigerians in their personal and industrial use.

(READ MORE: FG gives reasons why it is repackaging its social intervention programmes)

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The government also stated that there will be a commencement of formal dispensing of Autogas (CNG and LPG) products at two NNPC retail stations.

In addition, there will be a handover of CNG-powered mass transport buses to NLC, in fulfilment of the agreement during recent negotiations. This agreement was reached with labour during negotiations and in recognition of the role organized labour plays in the quest to bring relief to ordinary Nigerians.

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READ: Cornerstone Insurance Plc projects PAT of N537.4million in Q1 2021

What you should know 

Nairametrics reported in September that the Minister of State for Petroleum Resources, Timipre Sylva revealed that Nigerians can now convert cars using petrol to gas, which is cheaper, with effect from October 2020.

The Department of Petroleum Resources also ordered 9,000 filling stations nationwide to begin the installation of facilities for gas products.

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READ: PIB may be passed by first quarter of 2021 – Sylva

In October, the Federal Government estimated that the Compressed Natural Gas (CNG) will cost N97 per litre, as it had promised to provide alternatives to the Premium Motor Spirit (PMS), otherwise known as petrol, for poor Nigerians.

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Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

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Business

NNPC says NO to petrol pump price hike in May

There would be no increase in the ex-depot price of Premium Motor Spirit in the month of May 2021.

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Crude oil market remains unpredictable- NNPC Boss

The Nigerian National Petroleum Corporation (NNPC) has assured Nigerians that there would be no increase in the ex-depot price of Premium Motor Spirit, popularly known as Petrol in May.

This was disclosed by the Group Managing Director of NNPC, Mele Kyari, on Monday via the Corporation’s Twitter handle.

It tweeted, “There would be no increase in the ex-depot price of Premium Motor Spirit in the month of May 2021.”

Ex-depot price is the cost of petrol at depots, from where filling stations purchase the commodity before dispensing to final consumers.

Kyari also added that Petroleum Tanker Drivers had suspended their proposed strike after the intervention of NNPC in the impasse between the PTD and the National Association of Road Transport Owners.

“We have given our commitment to both NARTO and PTD that we will resolve the underlining issue between them and come back to the table within a week so that we’ll have a total closure of the dispute,” he added.

What you should know

  • NNPC has maintained an ex-depot price of N148/litre since February despite the hike in the actual cost of the commodity, hence incurring subsidy of over N120bn monthly.
  • Also in March, the NNPC said it would maintain its ex-depot price for petrol until the conclusion of ongoing engagement with the organised labour and other stakeholders.

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Energy

NCDMB’s Oil and Gas Parks and their many adversaries

New businesses within the NOGAPS will face intense competition from foreign OEMs that do not have to battle with tariffs, a harsh business terrain and different tax treatment.

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In 2018 the Nigerian Content Development and Monitoring Board (NCDMB), the body saddled with driving the development of Nigerian content in the Nigerian oil and gas sector, did a groundbreaking of the Nigerian Oil and Gas Park Scheme (NOGAPS), a scheme that involves the construction of sprawling oil and gas parks in Bayelsa, Imo and Cross Rivers State.

In a visit last week to one of the parks currently under construction in Emeya 1, Ogbia, Bayelsa State, the Minister of Petroleum for State, Chief Timipre Sylva, expressed delight at how the project was quickly progressing and was now at 70% completion. Mr Simbi Wabote, Executive Secretary of the NCDMB, during the visit also noted that the Oil and Gas Park project “is in line with the Federal Government’s mandate to develop indigenous capacities for the oil and gas industry.”

READ: NCDMB, BOI, won’t relax conditions to access $200 million NCI Fund despite complaint 

While this is highly commendable, as the project will indeed reduce Nigeria’s dependence on import of oil and gas equipment and provide jobs for local indigenes -which would likely reduce restiveness in the area-, there exist significant challenges to this project achieving its goals.

Perhaps one of the biggest of them is the African Continental Free Trade Area (AfCFTA) regime which is expected to open Nigeria’s borders to an influx of imports from other countries within Africa. Beyond opening the borders, however, the tax treatment given to domestically produced items will be no different from similar products imported, and the typical tariffs for imported items will be removed.

READ: Aiteo accuses Shell of theft of 16 million barrel of crude oil

This essentially means that large and established original equipment manufacturers (OEMs) from other African countries may on the basis of their economies of scale be able to supply the same products produced in the oil and gas parks at lower rates. A report by Dun & Bradstreet reveals that in Africa, countries like Guinea, Gabon, Burkina Faso and Ghana that flank Nigeria play host to various oil and gas OEMs.

With the large oil and gas market Nigeria has, these companies will seek to make inroads into Nigeria under the AfCFTA regime. This will mean that the new businesses within the NOGAPS will face intense competition from foreign players that do not have to battle with tariffs and different tax treatment. Additionally, the Nigerian culture of preferring imported products over domestically manufactured ones might play a role in this, particularly if the prices of the imported ones even up with domestically produced ones or only have a slim margin.

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READ: NNPC says local operators must improve capacity to achieve low cost of oil production

If the patronage for Innoson vehicles is anything to go by, in a market where there is no real difference in price between that and the domestically produced ones, we will see a preference for imported products.

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All of this will be further aggravated by Nigeria’s doing business difficulties. Things like delays in obtaining permits, approvals and licenses, the corruption that accompanies these processes, weak currency and dual exchange rates, poor infrastructure and lack of power supply abound. While the Nigerian businesses struggle with this, their foreign counterparts get to produce under more convenient conditions and are thus able to deliver within time and without the additional costs passed to consumers through these poor doing business practices.

While Mr Wabote has promised that the park in Ogbia will have dedicated power supply, it is hard to imagine that this power will not significantly cost the businesses if they are served at maximum capacity. At number 131 on the World Bank’s Ease of Doing Business Ranking, a park would not solve Nigeria’s problems, only a positive commitment to fix these doing business issues will.

READ: Seplat incurs N41.1 billion loss from OML 55, blames fall in oil prices

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The christening of a park as an “oil and gas park” in the 21st century, where countries of the world –and indeed private companies- are working towards achieving increased use of cleaner energy sources, is counterintuitive. The park should be an energy park that integrates significant research and development in its function as well as innovation and production of renewable energy equipment, both adapted to benefit from local conditions and standardized for export purposes.

It seems too, that not much consideration has been given to export of these equipment, as the parks earmarked so far are in landlocked Imo, port-less Bayelsa and Cross River that feeds into Cameroon, which is not a very prime market, although the DRC on the other end could attempt to compensate for this. It might be worth considering, the setting up of a park in Lagos – perhaps in the same vicinity as the Dangote refinery.

The park would benefit from being able to supply equipment to the refinery (especially as the refinery starts production in early 2023). It will also be able to tap into the global market through export via the Lekki port. This might also be a good time for the Agge deep sea port mulled by the Bayelsa State government to come onstream to open up the Ogbia park to a global market.

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