Business

Nigeria’s Energy Transition: Cooking Gas Stakeholders Propose N800bn Intervention to Drive Autogas Deployment

The Nigeria Liquefied Petroleum Gas Association (NLPGA), an umbrella body of cooking gas producers and marketers, has proposed an N800 billion federal government funding intervention to help accelerate Autogas deployment in the country.

The industry players explained that such intervention was necessary as it would serve the dual purpose of helping to cushion the impact of high energy cost exacerbated by the petrol subsidy removal and a boost to the country’s current push to transition to cleaner and more sustainable energy sources.

The NLPGA, however, disclosed that the LPG industry in Nigeria recorded an impressive turnover of over N1 trillion in 2022, owing to some aggressive policies embarked on by the federal government between 2007 and 2022 to accelerate the production and utilisation of cooking gas domestically.

Speaking in Lagos, at a press conference to herald the association’s 13th annual International Conference and Exhibition, slated to hold between November 7 and 8, 2023, in Abuja, the Second Vice President of NLPGA, Mr. Ladi Falola, said the current scenario playing out in the LPG industry had remained their focus over the last few years.

Falola, stated that the conference, which would centre around the theme: “LPG -Bridging the Energy Transition,” would make recommendations for the government’s Autogas policy and rollout in the country.

Estimating that the total value of the proposed palliative would cost about N800 billion, he stressed the need for the government to tap into the use of gas as a cheaper and better alternative fuel choice for transportation by augmenting the conversion of at least one million vehicles, two million tricycles, and five million generators over the next three months.

Falola pointed out that seven out of the largest 10 car manufacturers produce LPG-run vehicles and that more than 27 million vehicles globally run on it, with a growth rate of 40 per cent in the last decade.

He stated, “For the Autogas in Nigeria, we have developed proposed palliatives that cover petrol vehicles, tricycles (four stroke engine only), petrol generators (four stroke engine only) and vans and lories.

“Under this scheme, if the government targets one million petrol vehicles, two million tricycles, five million petrol generators and all lories, incentives will range from N200,000, N100,000, N50,000 and a duty levy and Value-Added Tax (VAT) waiver for 36 months’ window for vans and lorries respectively.

“Then interested investors will now look for the differentials to cover the typical conversion cost which ranges from N300,000 to N400,000 for Petrol Vehicles, N100,000 to N200,000; N90,000 for petrol generators and N18 million (this is the cost differentials between a gas engine truck and a diesel engine truck).”

Describing gas as the fastest growing segment of the petroleum industry globally, Falola noted that with energy transition unfolding in Nigeria, NLPGA would continue to share the huge potentials and opportunities that lay with the usage of LPG.

He advocated that the federal government should create an opportunity to further allow foreign importation of technology and equipment, adding that the government should consider intervening urgently with necessary policies that would help set the foundation for the looming industry in the next two years.

“We know that we don’t have all the resources to manufacture all the necessary equipment needed. So it will be better if the government starts negotiating with Original Equipment Manufacturers (OEMs) to see how they will come down here to assemble those parts needed for the industry, as this will save us some FX. We know the situation with Ajaokuta Steel”, Falola added.

In his remarks, the President of NLPGA, Mr. Felix Ekundayo, said the opportunities created by the petrol subsidy removal would provide further growth impetus for the industry since LPG remains the most available alternative fuel in the automotive and industrial sector.

Ekundayo, disclosed that the LPG industry in Nigeria recorded an impressive turnover of over N1 trillion in 2022, owing to some aggressive policies embarked on by the federal government between 2007 and 2022 to accelerate the production and utilisation of cooking gas domestically.

“In Nigeria, LPG utilisation has grown over 2000 percent between 2007 when the federal government led a purpose driven intervention by domestic LPG producers and 2022.

“The LPG industry’s annual turnover in 2022 was over one trillion naira. The industry is expected to continue growing strongly given the federal government’s Decade of Gas policy, announced in 2021” he stated.

He maintained that the unification of the naira with the new federal government’s foreign exchange policy would in the long run also help the gas industry with increased Foreign Direct Investments (FDIs) from investors, who would be willing to exploit the opportunities available in the sector, with the full confidence of being able to repatriate their profits.

“The need to further explore the usage of LPG other than for cooking will further be thrown open with the rising cost of old fuels like diesel and petrol; alongside the rapidly increasing traditional form of energy generation through electricity, as Service Based Tariffs for electricity guided by the Nigerian Electricity Regulatory Commission (NERC) is expected to increase from reports based on reactions from floating of the naira and a spike in inflation,” Ekundayo explained.

Peter Uzoho and Oluchi Chibuzor