It is over 13 months that President Muhammadu Buhari launched the National Autogas Scheme on December 1, 2020, promising Nigerians that the nation has finally made an alternative move to maximize its rich natural gas reserves as a means of fuel consumption. According to the President, by 2021, the country would have converted a million cars to cushion impacts of petroleum subsidy removal, which the government said, gulped trillions of naira yearly.
Over a year now, hopes of several Nigerians have been dashed, as not much has has been heard about the scheme. That is not all. The Scheme, which was supposed to create about 12.5 million direct and indirect jobs for Nigerians, appears to have been another abandoned project, as the plan is yet to take off despite the commitment of resources for the conversion.
Also, Dr Mohammed Ibrahim, Chairman, National Gas Expansion Programme (NGEP), had said in November 2020, ”We need about 500, 000 conversion engineers in the next 90 days to ensure that the retrofitting of the vehicles go as planned. Fifty conversion centres are currently upgrading for mass conversion and trainings and over 30,000 vehicles are already running on dual fuels in Nigeria. NGEP would also train 10 entrepreneurs from every local government area in the country in the areas of burners, cookers, accessories production and development of MDCs.”
What experts are saying
Experts who spoke with Nairametrics in separate interviews, listed infrastructure, high cost of gas, lack of proper planning, prevailing harsh economic realities and safety concerns as bottlenecks, which may limit the autogas plan to the pipeline.
According to them, the cost of gas has increased by over 200% since the announcement was made, the infrastructure to convert cars to be powered by gas has also skyrocketed alongside foreign exchange and dwindling value of the naira.
Nairametrics also found that vehicles had stopped fueling at gas pumps in some areas. For instance, our analyst, who spoke to an attendant at a pump along Lagos/Ibadan expressway (around Magboro, Ogun State), confirmed that no one has come to fuel their cars at the gas pump for over four months, alleging that vendors that were converting petrol vehicles to gas at the fuel station have also deserted the location.
An Energy expert, Dr. Biyi Odu, explained that he had read a report that only two stations are operating in Abuja and they are owned by the Nigerian National Petroleum Corporation (NNPC. He added that the existing private investors, who had invested in the market segment are struggling to survive as the disparity between the price of Premium Motor Spirit (PMS) and the price of autogas makes PMS a preferred option.
He said, “The scheme looks like mere political expediency, which is conflicting with economic effectiveness and efficiency, as the policy for gas as a transition fuel towards removing fuel subsidy is misleading. It was bound to fail from the start because there was no infrastructure on ground to achieve the desired result.
“The full deregulation of the downstream sector remains the only sustainable option. There must also be a departure from central planning of the energy sector. Things must be done according to the Act of the National Assembly. The Petroleum Industry Act (PIA) calls for deregulation, and delaying the implementation is postponing the evil day.”
Another expert, Victor Eni, a Petroleum Engineer, explained that using autogas as an argument for removing fuel subsidy is actually below the expectations from the federal government and that if the conversion of the 1 million vehicles had taken place, it would not have made much impact in the industry.
He said, “Our inability to refine petroleum products locally as a nation is a slackness on the part of the federal government. I am not sure how the conversion of cars to run on gas can quickly address the removal of petrol subsidy. Government has to work assiduously to get the refineries to work to complement Dangote Refinery. It is until then that government can justify subsidy removal.
“The mechanisms of the conversion are different with different car manufacturers. Any intended conversion of the energy source of the engine must be with necessary consultation and guidance from the original car manufacturers. Gas is extremely flammable and must be treated with caution. We have not really done much on identifying the comprehensive benefits and risks before launching the scheme, as that will enable the government determine if the benefits outweigh the risks and if measures could be put in place to mitigate the risks.”
What you should know about the conversion cost
The Technical Adviser on Gas Business and Policy Implementation to the Minister of State for Petroleum, Justice Derefaka, had said motorists in the country would need to pay about N250,000 to convert their vehicles to run on gas. However, worsening economic indexes has more than doubled the cost, making the process for the masses a mirage.
In November 2021, the Federal Government announced it had set aside N250 billion for willing investors in autogas assembly plants in the country to ensure that autogas conversion of vehicles yielded the desired results. The funds would barely convert 100,000 vehicles to autogas going by market rates.
Timpreye Sylva, the Minister of State for Petroleum had said the money was already in the coffers of the Central Bank of Nigeria (CBN) and those interested in opening conversion centres could access it, adding that the decision to make the money available as a result of the huge amount spent by the government on fuel subsidy is in line with President Muhammadu Buhari’s commitment to adopt gas as an alternative fuel for the country.
“If we focus on moving from fossil fuel to Liquified Petroleum Gas (LPG) and Compressed Natural Gas (CNG), it will save us a lot of money because the benefits are enormous,” the minister had said.