Panic reaction of possible adjustment in the pump price of Premium Motor Spirit, PMS, also referred to as Petrol has lengthened queues at some filling stations in Lagos.
The queues which became noticeable at the twilight of the inauguration of the 650,000 a barrel Dangote refinery in Lagos by immediate past president Muhammadu Buhari escalated on Monday evening after president Bola Tinubu during his inaugural speech declared end to fuel subsidy regime.
Tinubu stated in his inauguration speech on Monday, May 29th that the controversial fuel subsidy was not budgeted for by the Buhari administration and as such it will be removed.
This is as the Nigerian National Petroleum Company Limited, NNPCL, commended the decision by the Federal Government to remove subsidy on Petrol.
After an emergency meeting, in Abuja,the Group Chief Executive Officer, GCEO of NNPC Limited, Mallam Mele Kyari, noted that the removal of the subsidy which has been a burden on NNPCL cash flow will free up funds to enable optimal operations in the company. Reacting to scarcity already being experienced , he assured Nigerians of sufficient supply of the product.
He said the NNPCL also monitoring all its distribution networks to ensure compliance.
But reacting to the announcement general secretary of Petroleum Dealers Association of Nigeria, PEDAN, Ibrahim Yahaya, said that petrol may go up to as much as N700 per liter.
He noted that though the President’s subsidy removal announcement was still not well spent out, the truth is that pump price of petrol will certainly go up.
Yahaya, said marketers would begin to engage with authorities to fully understand the aspect of the subsidy being removed.
Presently, he said the government pays equalisation cost which covers internal movement of petrol distribution and landing cost.
For example he said from unverified data, landing cost is about N500 a liter while cost of bridging from Lagos to Abuja is N48 per liter.
” Now when you add these costs together and marketers margins it will go as high as N700 a liter.
However, until government makes it’s statement clear then the actual cost of petrol will be determined” he said.
Oriental News Nigeria, recalls that key players in the downstream oil industry have been outspoken on the need to urgently reform the sector.
Though, they have supported the need to exit Subsidy regime they have also urged for a phased exit initiative.
For the Chief Executive of Hyde Energy, Olademeji Edwards said, “Subsidy removal has been a 20-year-old conversation. Unfortunately, we missed several opportunities in which subsidies would have been removed and where the cushion on the increased price would have been easy on Nigerians. That has come and gone especially during the pandemic when the crude oil prices were low and we would have enjoyed a period of low petrol prices. It is inevitable.
“The challenges the country has are the absolute price of oil and the exchange rate. As long as you have high oil prices and a weak naira, the price of petrol pump price will be relatively high. But as investments are happening in the country and there is an increase in the Naira, we expect the value of the naira to go up and ultimately, that should ultimately affect the price.
He said phased subsidy withdrawal should be attended to by the new administration.
President of Petroleum Outlets Owners Association of Nigeria, PETROAN, Billy Gillis-Harry, agreed that hasty removal of the subsidy will bring more hardship to Nigerians.
According to Gillis-Harry, stakeholders expects the new administration to call for all engaging meetings to exchange ideas and make positive projections on investment opportunities, share data on gaps before actions are taken.
On his part, Chinedu Okoronkwo national president of the Independent Petroleum Marketers Association of Nigeria, IPMAN, said the Government should exert energy on attracting investment in the Compressed Natural Gas, CNG, space to provide alternative to petrol in the event of subsidy withdrawal.
He said the IPMAN has written to the previous administration seeking for access to the N250 billion intervention fund for the National Gas Expansion Programme.
IPMAN, in a letter dated April 3, 2023, requested that the government should urge the Central Bank of Nigeria (CBN) to release the N250 billion as loans to vehicle owners.
The oil marketers body said the N250 billion can be used by car, tricycle and truck owners to convert to gas due to the projected hike in Premium Motor Spirit (PMS) after the proposed subsidy removal.
Okoronkwo noted that the proposed removal of subsidy has been projected to raise the cost of petrol, significantly above the current pump price.
Okoronkwo, said that aside from the N250 billion intervention fund request to help cushion the impact of removing the subsidy, the IPMAN, has entered into partnership with Gas Analytics & Solutions Ltd to locate natural gas dispensers at over 30,000 filling stations in Nigeria.
He said, “Our partners, Gas Analytics & Solutions Ltd, have an agreement with the independent Petroleum Marketers Association of Nigeria to co-locate natural gas dispensers on our network of over 30,000 filling stations in Nigeria.
“This collaboration with IPMAN presents the most economic and expedient platform to deploy the necessary infrastructure to support a fast national roll-out of CNG (Compressed Natural Gas) for vehicles,”
“What is left is the support of the Central Bank of Nigeria to provide access to the Gas Expansion Fund for vehicles, Keke, and truck owners to access loans to finance the acquisition of natural gas conversion kits.” Okoronkwo said.
The conversion to gas will increase demands that will enable oil marketers to set up more Compressed Natural Gas across filling stations.
He explained that: “Without a large pool of CNG customers, IPMAN will not be able to raise the funds required to set up CNG filling stations.
“We believe that with the support of the Ministry of Finance, IPMAN’s partnership with Gas Analytics will provide a platform that can in a matter of a few months cushion the impact of petrol subsidy removal and significantly reduce the need for foreign exchange to import petrol.”
He said the new Government should urgently address the requests to galvanize the industry.
Nigeria’s industry is rising to the twin challenge of decarbonisation and energy security
Wale Yusuff, the Managing Director of Wärtsilä in Nigeria, explains how businesses operating in energy-intensive industries like cement or steel are investing in flexible engine technologies to secure reliable and efficient power while also setting the perfect stage to make good on their decarbonisation objectives.
Nigeria is a major industrial hub. It is home to energy-intensive manufacturing businesses whose operations, and growth potential, are constrained by the weakness of the country’s electricity supply. To mitigate this, industrial companies have been building their own power generation capabilities, but the result has often been the reliance on expensive and polluting diesel generators. As such, the industrial sector represents one of the country’s largest sources of greenhouse gas emissions.
In most places in Africa, the development of renewable energy capacity is a very competitive solution that industrials can adopt to lower their environmental impact and energy costs. But things aren’t as clear-cut in Nigeria. Most of its industrial activity is in the south, a region where wind and solar resources are often not available in the right quantity to make renewables competitive at today’s equipment prices.
It leaves industrials with a twin challenge to meet. First and foremost, they need to secure their own reliable and affordable power capacity either by buying electricity from an independent power producer or by building their own “captive” plant.
Second, they need to integrate decarbonisation into their overall energy strategy. Both objectives are not contradictory. By making smart technology choices, forward-looking businesses like BUA Cement, African Foundries, Lafarge, Wempco, Nestle and Flour Mills have found a way to hit these two birds with one stone. Here is how.
Securing a reliable supply of electricity
Mitigating power generation risk is critical to Nigeria’s industrial growth. As one of the world’s largest producers of liquified natural gas (LNG), Nigeria has a strong interest to develop its utilization to power local industries.
That’s why flexible engine power plants have emerged as the technology of choice for Nigeria’s industries. Fuel-flexible engine technology provides a great hedge against fuel supply risk as it can operate on multiple types of fuels, from Gas to heavy or light fuel oil, and switch between fuels while operating. This fuel-flexibility is also a key enabler to the decarbonisation strategy of industrials, as engine power plants can be converted to run on sustainable fuels like biofuels and green hydrogen, ammonia, or methanol when these become available.
Thanks to their modular design, Wärtsilä engine power plants are easy to construct, fully scalable and can be deployed in phases. They have the flexibility to be ramped up or down quickly to adjust to demand, they have a high operating efficiency even at partial load and are designed to cope with regular stops and starts.
This very high operating flexibility is also what is needed for the future integration of intermittent renewable energy capacity into the power mix. What is more, they require much less water to function than competing power technologies, which is an important water conservation consideration in view of Nigeria’s long dry seasons.
With all these attributes, flexible engine power plants offer a cost-effective solution to meet energy demand in the short term, and environmental objectives in the longer term.
BUA Cement PLC, one of Nigeria’s largest cement producers, is one example of an energy-intensive industrial company which has invested to secure its own flexible and reliable power supply and decrease its carbon footprint. As the demand for cement is increasing every year, BUA has taken advantage of the modularity of engine technology to increase its power capacity in stages.
The company is currently installing a 70MW power plant for the line 4 in its Sokoto cement plant, NW Nigeria. This is in addition to a 50MW power plant commissioned two years earlier for the line 3 of the same cement plant. Future expansion plans include another 70MW for its OBU line 3 cement plant in Edo State SW by the end of 2023.
The plants feature Wärtsilä 34 DF dual-fuel engines operating primarily with LNG and PNG, but with the flexibility to switch to an alternative fuel should there be interruptions to the gas supply, quality, or pressure. What is more, the operational flexibility of the Wärtsilä engines provides future-proofing advantages by enabling the potential integration of renewable energy further down the line.
Paving the way for renewables
Nigeria’s long-term energy strategy has defined the rapid deployment of renewables and strengthening the power transmission network as key objectives. But it must also overcome the specific challenges of the tropical monsoon climate in the industrialized south of the country where the solar and wind potential is respectively 30% and 40% lower than in the hot and semi-arid conditions in the north.
By investing in gas engine power plants, energy-intensive industries will not only decrease their carbon footprint, but they will also free up resources for the government to expand the transmission network enabling the entire country to benefit from the natural gas reserves located in the south and renewable resources in the north.
Paras Energy sets an example of how this can work. Since installing a 132MW Wärtsilä gas engine power plant in Ikorodu in Lagos State and Ogijo in Ogun State, Paras Energy is supplying the company’s steel production needs as well as providing power to the Nigerian grid to support over 20,000 homes annually. The company is now commissioning a 10MW solar power plant in Suleja and a 5MW solar rooftop system for commercial and industrial customers is under development.
Flexible engine power plants represent a smart and future-proof investment for Nigeria’s energy-intensive industries. They offer the efficient power capabilities needed to offset the shortcomings of the national power grid, strengthen their global competitiveness, and reduce their GHG emissions today and tomorrow. By working towards the country’s decarbonisation targets, the smart energy investments made by industry will benefit the whole country.- Source- Power Engineering International