As the Federal Government of Nigeria takes additional steps to end petrol subsidy payments, indigenous oil and gas firms are taking fresh investment decisions to expand internal gas market. The media’s investigation has revealed that many companies in the downstream sector are targeting investment that will deliver more Liquified Petroleum Gas (LPG) that serves dual purpose as automotive and cooking fuel, and Compressed Natural Gas (CNG) that will serve as alternative to petrol. It has also been gathered that the Nigerian Independent Petroleum Company (NIPCO) Plc has invested over $100 million on gas infrastructure across the country.
The firm’s spokesman, Taofeek Lawal, said that the firm is deepening its investment in the gas sector in line with its aspiration to play a pivotal role there. Though the key challenge here remains dearth of infrastructure, he said that the company sees huge revenue potential in the CNG investment as petrol subsidy withdrawal may push petrol prices up to about N400 per liter. However, CNG presently costs about N120 a liter for vehicles, while industrial users pay just about N130 a liter. Asides the fact that the conversion kit costs about N200,000 to N250,000 for cars, Lawal said that the cost of using CNG is very economical and should be encouraged.
NIPCO’s huge investment to support FG’s “Decade of Gas” initiative.
Compressed Natural Gas and Auto Compressed Natural Gas are bound to be the preferred fuel of choice due to safety, environment, economic and abundant availability reasons in Nigeria. As Nigeria gears up to do away with fuel subsidy, the company has increased market leadership in the country. This is because the company considered the huge investment in order to support the Federal Government’s ambitious “Decade of Gas” initiative. According to the spokesman, the number of vehicles running on Compressed Natural Gas (CNG) in Nigeria has grown to 7,000. He added that the company will not rest in multiplying this number in the distant future.
CNG operations started in 2009 in Benin City with the company’s providing natural gas to industries by way of piped natural gas and compressed natural Gas and to automobiles by way of AutoGas (AutoCNG). NIPCO Gas is the pioneer company in CNG distribution in Nigeria. NIPCO Gas operates 12 CNG stations in Edo, Kogi, Delta, Ogun states, and Abuja. Four CNG stations are under various stages of construction and approval in Oyo, Lagos, Akwa Ibom, and Abuja FCT, Lawal said. These CNG stations cater for Auto Gas requirement of vehicles, providing a cleaner, safer, economical, proven and indigenous fuel. He revealed that NIPCO Gas operates approximately 40 kilometers of pipeline network in Benin city and approximately 50 km pipeline network on Lagos-lbadan expressway
Another firm makes fresh investment in midstream sub-sector.
In the same vein, Hyde Energy Limited, an indigenous oil and gas company, is equally making investments in the midstream sub-sector of the industry, specifically targeting expansion in the liquefied natural gas chain. The company revealed that it has made significant achievements in the LPG market and it is keying into the Federal Government’s “Decade of Gas” initiative. While providing information on the intended investment, the CEO of Hyde Energy, Oladimeji Edwards, said that the firm has made reasonable contributions to the country by assisting local businesses to convert from charcoal to LPG.
It is also expanding its LPG operations to capitalize on massive potentials in the Nigerian market. It has built trusted reputation in the global, regional and national wholesale LPG markets. The company operates across the value chain of the energy industry. The company deals with the importation of petroleum products including Premium Motor Spirit (PMS), Gasoil, Dual Purpose kerosene (DPK), jet fuel, Liquified Petroleum Gas (LPG), automotive lubricants and Naphtha. Oladimeji said that the company is poised to penetrate the Lagos and south West markets with its quality products and brands, having made inroads in some other zones of the country.
No doubt about FG’s planned removal of fuel subsidy.
Oladimeji said that fuel subsidy removal has been a 20-year-old conversation. Right now, there are no ifs, buts or maybes on its removal. He lamented the missed several opportunities in which subsidies would have been removed and where the cushion on the increased price would have been easy on Nigerians. Meanwhile, according to anonymous sources in the energy sector, asides from the two companies aforementioned, a couple of other indigenous oil and gas firms are mapping out plans to increase investment in gas as they see LPG and CPG as the fuel of the future.