The Federal Government on Monday, announced the setting up of an Infrastructure Fund for the midstream and downstream sector, targeted at developing gas infrastructure as an alternative to petrol to reduce the burden of subsidy.
This was revealed at a meeting convened in Abuja by the Minister of State for Petroleum Resources, Timipre Sylva, with oil marketers to perfect plans for the full deployment of autogas in filling stations and the conversion of 200,000 commercial vehicles to run on gas this year.
At the meeting, which was attended by the Major Oil Marketers Association of Nigeria (MOMAN), Depot And Petroleum Products Marketers Association of Nigeria (DAPPMAN), Sylva unveiled the 2022 Framework for the deployment of Compressed Natural Gas (CNG), also called autogas.
He explained that the meeting was convened to discuss private sector’s engagements and structures to put in place before subsidy removal and strategies on how to deploy natural gas vehicles (NGVs) within the shortest timeframe.
The Minister said: “We said we must provide alternative fuel and the alternative that we concluded on was the autogas alternative.”
He added that since the agreement to provide autogas to Nigerians was reached, a lot of work has been done and needed to be leveraged with the support of downstream stakeholders.
Government is coming in; we will provide 50% of the funding while the country OEMs will provide another 50% for you to access. The programme will start in March.
He continued: “So there will be some collaboration between you and the infrastructure fund to set things up for auto gas conversion. We will bring out the fund along with some countries’ Original Equipment Manufacturers (OEMs) to hook up and access.
“The burden will not be on you now, that is why we are bringing you on board, already the funding is in place to enable this aspect of your business.
“Government is coming in; we will provide 50% of the funding while the country OEMs will provide another 50% for you to access. The programme will start in March.”
Sylva noted that with abundant gas reserves of about 206.53 trillion cubic feet (tcf), a population of about 200 million people, and the enactment of the Petroleum Industry Act (PIA), which eliminated the continuous absorption of petrol subsidy, it was imperative to deploy autogas.
He recalled that the agreement around the auto gas policy a year ago was that there must be a critical amount of vehicles converted and corresponding critical amount of dispensing stations in place for the system to kick-start.
“If not, we will have a situation where converted vehicles will not have a place to refuel or stations not having converted vehicles to fill,” he added.
Responding, MOMAN Chairman, Olumide Adeosun, lauded the decision to use CNG cars as a remedy towards escalating cost of fuel and to soften the impact of deregulation on Nigerians.
Adeosun, also the Chief Executive Officer, Ardova Plc., explained that so far marketers had set up a working group on how best to implement the conversion determining the scope of feasibility, supply and demand including infrastructure, finance and investment.