Deregulation: FG introduces infrastructure fund for auto gas transition
The Federal Government says it will take into consideration infrastructure fund for the midstream and downstream sector targeted at developing gas infrastructure to actualise Auto Gas Transition.
Chief Timipre Sylva, Minister of State for Petroleum Resources, disclosed this on Monday in Abuja during a meeting with Oil Marketers on Compressed Natural Gas (CNG)/Auto Gas Transition Programme.
The meeting was organised 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.
Auto Gas conversion was part of the structure and building block which government planned to put in place towards full deregulation for alternative means to avoid full weight of subsidy removal impact on citizens.
Sylva told the oil marketers that the midstream and downstream regulatory authorities already had infrastructure development fund targeted at developing the sector.
“So there will be some collaboration between you and the infrastructure fund to set things up for auto gas conversation. We will bring out the fund along with some countries Original Equipment Manufacturers (OEMs) to hook up and assess.
“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 per cent of the funding while the country OEMs will provide another 50 per cent for you to assess. The programme will start in March,” he said.
The Minister recalled that the agreement around Auto Gas policy a year ago was clear, 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.
“The conversion process has been going on and we have been talking to OEMs. To do this, we agreed that we needed to have one million vehicles converting in the first place,” he said.
According to him, the government has decided to get partnership of credible local marketers to participate with the OEMs to put their system in place in Nigeria by installing dispensing stations and convert the stations.
Mr Olumide Adeosun, Chief Executive Officer, Ardova Plc. and Chairman, Major Oil Marketers Association of Nigeria (MOMAN), commended the decision to use CNG cars as a remedy towards escalating cost of fuel and to soften impact of deregulation on Nigerian citizens.
Adeosun explained that so far it 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.
He noted that generally, part of what needed to make the investment case were some of the core infrastructural pieces around the supply infrastructure for the CNG, we are willing to come in on a co-participation models.
Mr Tunji Oyebanji, CEO, 11 Plc., also expressed regret that since CNG has already began in Benin, Edo state, it ought to have been replicated across the country.
Oyebanji, who noted that though it has not proven to be a profitable venture even with significant infrastructure put in place, however, sought for additional government support to actualise the auto gas transition.
Mr Clement Isong, CEO, MOMAN who underscored the need for consistency in government communication, added that the marketers are ready and committed towards actualisation of the project and always aligned with government policy.
Mr Igwe Christian, representative of DAPMAN and CEO, Mainland Oil and Gas, thanked the minister on the laudable project and appealed for lower interest rate in the downstream and subsidised equipment for easy construction of conversion centre.
The highlight of the event was the presentation of the implementation strategy of the transition programme by Technical Assistant, Gas, of the ministry, Brenda Ataga.