Nigeria introduces infrastructure fund for autogas transition

The Federal Government of Nigeria has stated that it will take into consideration the infrastructure fund for the midstream and downstream sector destined for the development of gas infrastructure to update the AutoGas Transition.

Chief Timipre Sylva, Minister of State for Petroleum Resources, revealed this on Monday in Abuja during a meeting with oil traders on the Compressed Natural Gas (CNG)/Auto Gas Transition Programme.

The meeting was organized to discuss private sector commitments and structures that need to be put in place before the removal of subsidies and strategies on how to deploy natural gas vehicles (NGVs) in the shortest possible time.

The conversion of AutoGas was part of the structure and building block that the government planned to implement for the total deregulation of alternative means to avoid the full weight of the impact of the elimination of subsidies on the citizens.

Sylva told oil traders that midstream and downstream regulators already had an infrastructure development fund earmarked to develop the sector.

“So there will be some collaboration between you and the infrastructure fund to set things up for the autogas conversation. We will present the fund together with the original equipment manufacturers (OEM) of some countries to connect and evaluate.

“The burden will not be on you now, which is why we brought you on board, as funding is available to enable this aspect of your business.

“The government is coming in, we will provide 50 per cent of the financing, while the country OEMs will provide another 50 per cent for you to evaluate. The program will start in March,” he said.

The Minister recalled that the agreement around the AutoGas policy a year ago was clear, that there must be a critical number of converted vehicles and the corresponding critical number of supply stations in place for the system to start up.

“Otherwise we will have a situation where the converted vehicles will not have a place to refuel or the stations will not have converted vehicles to fill.

“The conversion process has been underway and we have been talking to the OEMs. To do this, we agreed that we needed to have a million vehicles converted in the first place,” he said.

According to him, the government decided to partner with credible local marketers to engage with OEMs to install their system in Nigerian stations and convert the stations.

Mr Olumide Adeosun, Chief Executive Officer, Ardova Plc. and president of the Major Oil Marketers Association of Nigeria (MOMAN), praised the decision to use CNG cars as a remedy against rising fuel costs and to soften the impact of deregulation on Nigerian citizens.

Adeosun explained that so far it had established a working group on how best to implement the conversion, determining the scope of feasibility, supply and demand, including infrastructure, price and investment.

He noted that, in general, part of what was needed to make the investment case was some of the core infrastructure pieces around the supply infrastructure for CNG, we are willing to go into co-partnership models.

Mr Tunji Oyebanji, CEO of 11 Plc, also lamented that since CNG has already started in Benin, Edo state, it should have been replicated across the country.

Oyebanji noted that although it has not proven to be a profitable venture even with significant infrastructure, he sought additional support from the government to upgrade the transition from gas to cars.

Mr Clement Isong, CEO of MOMAN, who underlined the need for consistency in government communication, added that marketers are ready and committed to updating the project and always aligned with government policy.

Mr Igwe Christian, a representative of DAPMAN and CEO of Mainland Oil and Gas, thanked the minister for the laudable project and called for a lower interest rate on the subsidized and downstream equipment to facilitate the construction of the conversion centre.

The highlight of the event was the presentation of the strategy for the implementation of the transition program, Gas, by the ministry, Brenda Ataga.