How Nigeria Will Save $2 6B Annually With Transition To New Automotive Fuel- Derefaka 

Justice Derefaka is the Technical Adviser, Gas Business & Policy Implementation, to Minister of State, Petroleum Resources.

In this interview with Yemisi Izuora, he spoke extensively on what the country stands to gain with petrol subsidy removal.

Does Government have any implementable policy to cushion effect of rising cost of petrol? 

Certainly yes. We have the Autogas and Natural Gas Vehicles, NGVs and there are two strands to using gas for vehicle and other prime movers. The Autogas vehicles are powered by liquefied petroleum gas (LPG) and Natural Gas Vehicles (NGVs) – an alternative fuel vehicle that uses compressed natural gas (CNG) or liquefied natural gas (LNG)].

So, I will like to call them Autogas (i.e. AutoLPG, AutoCNG and AutoLNG) as an alternative fuel in Nigeria.

Autogas used as an engine fuel is the most commonly used and accepted alternative fuel in the world today.

Why are we adopting this strategy?

Global consumption of LPG as engine fuel, primarily Autogas, has been rising rapidly in recent years, reaching 26.7 million tonnes in 2016 an increase of 5.5 million tonnes (Mt), or 25 per cent, over the 2009 level.

So as you can see, Nigeria need to do catch up with the rest of the world and that is what the federal government is doing with the National Gas Expansion Programme, NGEP, Autogas scheme.

Is it a component of the deregulation policy?

First let me start by saying that as you are aware, federal government’s decision to deregulate the downstream petroleum industry was announced in March 19, 2020 and complete deregulation of the downstream sector is an enabler for private sector investment.

Government lost billions of Naira every day to subsidy payment which could have been used in improving the wellbeing of ordinary Nigerians and rebuilding the economy to generate more employment.

So, we expect to save as much as one trillion naira ($2.6 billion) a year after abolition of subsidies.

Fuel subsidies have over the years undermined private and public investment in the downstream sector.

The Downstream liberalization will also promote significant investments to raise the standards along the supply chain, from improving the refining capacity, pipelines, trucks, depots and filling stations to supporting the ancillary & derivative industries that will emerge from an improved downstream sector.

Federal government’s decision  and stakeholder’s engagement continue with a view to creating a win-win situation for Nigerians, the government, stakeholders, and the industry.

Federal government will continue to play its traditional role of regulation; to ensure that this strategic commodity is not priced arbitrarily by private sector suppliers.

Deregulation will provide employment directly and indirectly to millions of Nigerians across the value chain. This will enable Nigeria to optimize the inherent benefits of African Continental Free Trade Agreement, AfCFTA  to which Nigeria is a signatory.

Federal government  has made available a finance scheme of 250 billion Naira for gas penetration under the National Gas Expansion Programme (NGEP).

So, in terms of how Autogas in filling station across the country means for businesses in the gas sector since the government is gradually shifting attention to gas business and implications to the overall economy.

You will recall that as part of the federal government of Nigeria’s, strategy to reposition the oil and gas industry, the Ministry of Petroleum Resources, has commenced the implementation of carefully conceived initiatives to foster efficiency and attract investments along the gas value chain as embedded in federal government’s policy aspirations for the Gas sector and encapsulated in the National Gas Policy (‘The Gas Policy 2017”) and indeed aligning with the Ministry’s 2019-2023 nine  priority project deliverables vis-à-vis clusters for gas resource, rapid growth of the LPG/CNG/LNG market; development of supporting infrastructure, investment, and domestic growth.

It also includes the promotion of natural gas usage in Nigeria thereby creating alternative fuel choices for Nigerians.

It is expected that this will stimulate economic growth, further improve our energy mix, drive investments and provide jobs in Nigeria. The policy on Autogas (AutoLPG, AutoCNG and AutoLNG) is encapsulated in the National Gas Policy approved by the Federal Executive council in June 2017.

What are government strategies to actualize this objective?

To hasten the switch to Autogas, within Q4, 2020, 9000 stations are up for co-location of Autogas nationwide.

From the government side, 46 NNPC owned stations will be co-located by Q4 2020.

The federal government is leading by example and Chief Timipre Sylva, Minister of State for Petroleum Resources has this to say “I have surrendered my vehicles to the NGEP to convert all to dual fuel with use of either AutoLPG or AutoCNG.” “I now have the moral backing to direct that all CEOs and their able lieutenants do same by converting all their official vehicles to run on Autogas as a demonstration to the Nigerian people that indeed government meant it when we declare this year “The Year of Gas”.

How affordable is the product? 

It is cheap, available, affordable and accessible. Autogas as engine fuel is a green, clean burning alternative. It is less expensive than gasoline or diesel in many countries. It is available everywhere. It is intrinsically safer than many other fuels. It is reliable. It is an alternative energy source that is ready now

What is the cost of putting up CNG filling station

How many of such outlets exist today in the country? & What are the challenges deploying CNG infrastructure in the country?

Agreed there are barriers to Autogas Scheme Deployment and as a Government we have explored viable Solutions. No doubt refueling Infrastructure is sparse and there is paucity of Natural Gas fueling stations in the country.

As a way to address that, we have about 1 million conversion kits for trucks and smaller vehicles to be be deployed nationwide in Q4, 2020.

And we have 50 conversion centers currently upgrading for mass conversion and trainings. Auto assemblers already producing fit-for-purpose dual fuel vehicles in-country.

Now here is the thing, it will interest you to know that over 30,000 vehicles already running on dual fuels in Nigeria. And there has never  been any explosion. And the scheme will generate 2 million jobs per annum.

By 2021, our projection is that 600 NNPC leased and affiliate fuel stations will co-locate by Q2 2021. About 1 million conversion kits for trucks and smaller vehicles will be deployed and 1 million vehicles expected to run on Autogas. To reiterate, don’t forget that Autogas to lower transportation cost nationwide low operating costs & longer life of prime movers.

What is the cost implication of converting vehicles to CNG?

Cost implication differs. The cost ranges from between N190,000 to N250,000 and that depends on the vehicle. This cost is for a 4-cylinder. And this could go a little higher for a 6-cylinder. The good thing is that it makes car owner save running cost by up to 40 per cent  to 45 per cent than that of Petrol.

How much can a commercial vehicle save using kilometer coverage when using CNG?

When we ran the simulation and use available data, the Cost Benefit of Auto Gas as Alternative fuel is huge. For petrol at N161, you’ll have Autogas at a range of N75-80. And Monthly Savings for 100 km daily shuttle is around N46,000. Monthly Savings for 50 km daily shuttle is circa N23,000.

How do we break apathy of the public towards converting to CNG?

Like I said earlier, the Minister of state for petroleum resources has demonstrated leadership by handing all his cars and generators to run on gas. And so, we are working towards ensuring that all tiers of Government (Federal, State and Local) can promote Autogas uptake by educating consumers; and leading by example by converting their fleets.

Continues Consumer Awareness is key as Consumers lack of awareness of the benefits (Social, Economic, Health and Environment) of the use of gas is to a great extent limited.

So, we believe the general public need to know certain fundamentals.

For instance, Autogas has been used as a transportation fuel for more than 75 years and is the most widely used and most accessible alternative fuel.

In the developed world, Taxicab companies, government agencies, and school districts often use Autogas instead of gasoline to fuel their fleets mostly in fleets.

For fleet vehicles, the cost of using Autogas is 5 to 30 per cent less than for gasoline.

There are some interesting characteristics about Autogas that make it an ideal engine fuel.

Autogas is cleaner burning than gasoline. It leaves no lead, varnish, or carbon deposits that cause the premature wearing of pistons, rings, valves, and spark plugs. The engine stays clean, free of carbon and sludge. This means less maintenance and an extended engine life. Some fleets report 2-3 years longer service life and extended maintenance intervals.

What are the inherent risks using CNG?

Very valid question. Just so you know, there are millions of cars running on Autogas worldwide.

The chances of one being involved in a road accident are no longer so small, that it can be disregarded. Unsafe practices in the past have led to a certain preconception about Autogas inducing a higher level of risk. So, we ask ourselves the question: are Autogas cars safe? Are they bombs on wheels? How dangerous, really, is such an Autogas tank? How does the fuel system behave when your car is rear-ended? Will the tank take the stresses?

I’d like you to know that like with all cars, safety is a major concern. A crash with ensuing fire is the worst of nightmares, unfortunately not that uncommon. Are Autogas cars safe enough? To answer your questions, you need to know that the Autogas tank and fuel pipes are fitted with numerous safety devices. The gas flow will automatically stop if the pipes are damaged or the engine is not running. If the vehicle catches fire, the gas tank pressure is controlled via safely venting excess pressure which will prevent the tank from rupturing and causing further damage. Tanks are made of thick steel.

From a regulatory viewpoint, Autogas tanks are designed according to requirements laid down in specific regulations in which equipment, material properties, fabrication processes of the tank shell itself and testing procedures are defined.

The Department of Petroleum Resources (DPR) and Standards Organization of Nigeria (SON) have representatives in the NGEP and they head the Safety, health and environment subcommittee of the NGEP looking at quality control and assurances (QA/QC) issues and other regulatory plus standard best practice issues.  And so, for Government, guaranteeing a high level of safety during normal operation and also in the case of accidents.

Especially the latter enables rescue units to safely approach an Autogas car, even in case of fire.

The choice of the correct tank and its equipment according to the regulation are very important element in maintaining the high level of safety associated with this fuel.

Let me also add here that one area Nigerians always want some comfort with the use of gas is safety. Using Autogas as fuel has an excellent safety record throughout the world, both in terms of its storage, transportation and use.

Extensive safety tests have been undertaken with respect to its use and the conclusions reached are that it is substantially safer than petrol due to its more robust fuel tank, being more resistant to impact damage.

The electronic solenoid valves trip in case of an impact not allowing fuel to go beyond the circuit to the engine. All tanks are fitted with relief valves that provide an escape for the gas should the tank come in contact with extreme heat.

What strategies should be needed to help private sector break even in that space?

That is simple, they need to brace up and join forces with Government (most of them are already aligned with co-location of gas) and do a cost benefit analysis and see where the market trend will tilt towards when Nigerians begin to see that gas is cheaper and readily available.

How does gas pricing affect development of CNG initiative?

We have more gas in this country than crude oil and with the drive of the minister, we are looking to flood the space with all stranded molecules to make the commodity cheap.

There are other initiatives to make Autogas price cheap and ensure a deeper penetration of the scheme.

The resuscitation of the Warri Refinery and Petrochemical WRPC LPG production facility and 7 km pipeline is part of the strategy.

The additional volumes will ensure uninterrupted supply of LPG based on anticipated increase following our demand trigger initiatives.

Engagement of NLNG for additional 250,000 MT currently exported for the domestic market will also boost supply and the Nigerian Gas Flare Commercialization Program (NGFCP) to produce 600,000 MT of LPG per year.

The Oredo Integrated Gas Handling Facilities (IGHF) in NPDC which will reduce gas flaring substantially is completed; while the 110,000 MTPA LPG loading facilities are being prepared for commissioning in October this year.

The established NNPC LPG Unit in the downstream ABU will drive the LPG business  domestic LPG Penetration, Auto LPG.

So, you can see that the NGEP offers a Unique opportunity, unlocking all gas molecules as “a favorable combination of solution”

Autogas Is a cleaner fuel for a greener Nigeria and eco-friendly option

Autogas is a weapon against climate change and available clean alternative to PMS

It is part of a more secure Nigerian energy mix and serves as an economic alternative

and seen as part of Nigeria’s socio-economic fabric Autogas in Nigeria is a wealth of untapped potential and a demonstrated benefits for citizens and society as a whole

We at the NGEP believe that as an environmentally friendly and economical fuel, Autogas can help keep Nigerians moving while minimizing the impact of transport on human health and the natural environment. This contribution of attributes makes it an obvious alternative as part of a diverse and sustainable energy mix.

Never before have the qualities of Autogas been so closely aligned with the needs of Nigerians and policy-makers. In order to meet the diverse challenges associated with pursuing sustainability, security and competitiveness, we will need to rely on a wide range of energy solutions and make intelligent use of resources by employing each available energy where it is most effective. Autogas, automatically produced during production of natural gas and oil, is a readily available resource that can and should be used to help Nigeria cushion the impact of deregulation and meet its energy needs.

In this context, it is essential to move the passenger car fuel sector beyond the conventional dichotomy of diesel or petrol, towards a more diverse and flexible alternative – Autogas.

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