Experts task govt on inherent challenges in CBN backed gas policies

Story from Sunday OGWUCHE, Abuja

Energy experts have urged the federal government to address inherent challenges as it banks on the intervention by the Central Bank of Nigeria (CBN) to implement the National Gas Expansion Programme and National Autogas Roll-out Initiative.

CBN had presented an N250 billion intervention fund under the National Gas Expansion Programme, even as Minister of State for Petroleum Resources, Timipre Sylva, disclosed that the government would work with the CBN to ensure full implementation of the AutoGas Policy.

“We are working right now with the Central Bank of Nigeria to ensure that we are able to bring in conversion kits for a critical mass of vehicles and at the same time give soft loans to downstream operators to fix their filling stations so that when we fit the two together, it will work,” Sylva had said.

Having noted that a low level of investment was hindering domestic gas consumption, CBN had maintained that the gas policy framework would stimulate production and utilisation of Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG) as clean alternative sources of energy.
Commending the move, an energy expert, Habeeb Jaiyeola of PricewaterCooper (PWC) said across the world, government interventions are being used to catalyse economic development.

“In many cases, government interventions are quite critical in controlling the cost of borrowing in developing sectors. The CBN intervention remains a positive tool for the development of the domestic gas sector.

“However, the payback has to be enforced to ensure the fund remains available for further critical interventions, Jaiyeola noted.
According to him, further sensitisation on the autogas initiative would be needed for its acceptability.

“This is a highly technical area where safety is of high importance, especially where a mechanical item is made to run on fuel feedstock different from its original design. Its global acceptability needs to be obtained, especially from the original manufacturers.

“Possible negative impact needs to be identified as well to enable informed decision prior to implementation, and appropriate pricing system must be instituted to enable the forces of demand and supply to determine the price and guarantee adequate returns on investment,” he said.

Another expert, Michael Faniran, noted that one of the imperatives of the autogas policy remained the need for people to convert their vehicles so that they could use both petrol and gas.

“This is an additional cost to the vehicle owners. As such, government needs to create incentives aimed at vehicle owners, in the form of loans or tax credits, to offset part or all of the cost of conversion of vehicles and even for retail outlets to build dispensing units for CNG.

“The intervention by the CBN is a welcome idea as it will jumpstart the adoption of the autogas by vehicle owners and retail outlets, and also build critical market mass. However, this is not sustainable,” Faniran noted.

He insisted that there was the need for public-private partnership (PPP) type of funding for vehicle and retail outlets conversion kits to guarantee sustainability, adding that CBN could disburse the funds through a special purpose vehicle with private sector players.

Faniran maintained that for the private sector to come in, there must be a very clear enabling policy and the government must have a well thought out and bankable plan to attract the private sector.