We have attracted N686bn private investment to CNG programme — CEO PCNGi

Engineer Michael Oluwagbemi is the Project Director and CEO of Presidential Compressed Natural Gas Initiative (PCNGi). In this interview, he highlights how efforts by the government have attracted over $400m ( N686.5 billion) investment into the CNG programme. Excerpts:   What has been the progress and achievement in the adoption of CNG in the country? […]

Engineer Michael Oluwagbemi is the Project Director and CEO of Presidential Compressed Natural Gas Initiative (PCNGi). In this interview, he highlights how efforts by the government have attracted over $400m ( N686.5 billion) investment into the CNG programme. Excerpts:

 

What has been the progress and achievement in the adoption of CNG in the country?

Prior to 2024, Nigeria was stuck on petrol and diesel as fuel for driving our vehicles. We had less than 3,000 compressed natural gas vehicles. In 2023, there was a need for Mr President, to move us towards a more sustainable energy mix and away from the ridiculous expenditure of fuel subsidy in the absence of Nigerians even producing our own petrol.

Three things happened in 2023. The president ultimately implemented the removal of that fuel subsidy. The elimination of that fuel subsidy also meant that Mr. President also now invested in this alternative, which is compressed natural gas to ensure that the common man can begin to enjoy the benefits of Nigeria’s enormous energy resources without paying through the nose.

Part of that was the constitution in late 2023 of the presidential CNG initiative. The third thing this administration did was to also focus on the domestic production of more crude oil derivatives products, including petrol and diesel. We started with zero refineries producing any form of petrol, kerosene, or diesel.

By the end of 2024, there are some modular refineries that are producing diesel, including EGTL. But when it came to petrol, at the beginning of last year, there was no refinery in Nigeria that was producing any. By the end of the year, as of December 31, we had three refineries. We had the Dangote refinery; we had the Port Harcourt refinery and the Warri refinery now producing petrol. Nigeria is now going to become an exporter of that product.

These three critical energy steps were taken by the administration to put Nigeria on the path of energy security, which is very necessary for the overall growth of the economy.

In the area of the CNG, when we started the year, there were just seven conversion centres. We ended the year with 193 centres.

That means we added 186 new centres, not with government money, but by working with the private sector to invest in that sector.

Those centres allow us to take vehicles that are currently running on petrol to be able to run on CNG and petrol. Beyond that, we were able to attract over $440m of investment into motor stations, to data stations, some of which are already in development and already being commissioned.

We have about 86 data stations on that development. We actually got another six commissioned last week in Lagos by NNPCL, in addition to several that are now in development. We have over 50 motor stations that are now in development as well, four of them got commissioned last year.

We have several mini-LNG projects that extend the reach of CNG across Nigeria, also now under development. We expect at least two of them to be commissioned this year in and around the Ajaokuta area. In addition to all of this, the federal government through the Federal Ministry of Finance acquired over 5,900 Electric Vehicles (EV) and CNG platforms, and these platforms are now being distributed.

In December, those platforms, that’s buses and tricycles, supported the Federal Ministry of Transportation’s free transportation programme that would go in between cities, inter-city between Ibadan  and Lagos, Ibadan and Ilorin, Lagos and Ilorin, Abuja to Kaduna, Abuja to the east, to Edo, Edo to Abia, and even all the way to Port Harcourt during the Christmas period for free. These were CNG buses that were deployed on those routes.

In addition to those CNG buses, there were those 15 high-capacity buses that were deployed through NURTW and NARTO, here in Federal Capital Territory, to all the suburb areas, conveying our people free again since the month of November.

All of these are progress that are being made. In addition to these, there are several of these buses that were distributed to our unions, to the TUC and the NLC as part of the federal government negotiations with them, to ensure that we are able to make the lives of our workers and our people better.

In all of these, the biggest achievement we’ve done as a country is not just raising the human capacity development for the sector, because if you have a sector that is still driven by importation and foreigners, then you cannot sustain it. Over 1,115 new conversion technicians and engineers were trained through the efforts of the PCMGI last year.

In addition to these, our training institutes are now four. We have a partnership with the Nigerian Institute of Transport Technology. We have a partnership with NASENI, SMEDAN, and the Nigerian Automotive Design and Development Council. These are very critical partnerships as we try to also create new standards that were also unleashed last year, and the creation of the Nigerian Gas Vehicle Monitoring System to make the entire ecosystem safer and better for all. These are one of many achievements that we achieved last year.

Chief of all, we attracted investment and we created jobs. We created jobs indeed, which is very important.

You have a target of 1,000 conversion centres but now 193, what is the spread and how can Nigerians access some of these locations?

When we set out in 2024, we set a goal of 100 for ourselves. We achieved 193, so we beat our own goal by 93%. We’ve raised that goal higher for this year. We want to hit 500 by the end of this year.

But the 193, specifically to your question, are located in 17 states. There were only seven states in Nigeria that had any conversion centre when we started our bus programme. Today, we have them in 17 states in the South-South, South-West, North-Central, some in South-East, and as well we as Kaduna and Kano are also covered in the North-West. We hope that this year we’ll extend that footprint to the North-East and even hinterlands of the North-West.

What about the number of buses that you have on the road?

Today,  we have about 431 or thereabouts on the road and these are located in Oyo, Lagos, Kwara, FCT and Kaduna states. We also have a few of them in Port Harcourt in River State, as well as in Anambra and Abia states.

The footprint of course is limited because of refueling and we want to make sure that these buses are located where they can get fuel. We’ve also distributed some through TUC and NLC and they have a much broader distribution as well as NANS as part of the agreement that the federal government had with those unions.

We’re able to raise what we’re expecting to about 807 from 500, so, I believe by the end of this quarter, Abuja will be closer to 600.

What about the private CNG vehicles, how many can you estimate that we have?

We have estimated that already because we’ve got some state governments that also brought in quite a number. Niger State brought in 200, Enugu State brought in about 500 taxis, Lagos State brought in more than 100, so we estimate at least 3,000 buses. We saw that FAAN, if you go to Lagos Airport now, have five CNG buses that are running in the Lagos Airport.

We see that both MDAs as well as the state government and private sector are buying into it. Taraba State, even though they don’t have ready gas infrastructure, they are also investing in CNG buses. Borno State as well.

How much has the private sector invested into the scheme?

The federal government has invested about N170 million, which would put us at about $100m. The private sector investment that we have tracked is $440m (N686.5 billion). That’s a ratio of four to one. So, I would say the private sector has 85% investment.

 Tell us about maintenance costs and kits’ unavailability?

Cost of maintenance goes down with CNG because it is a cleaner fuel. So, you don’t have to change your oil as often as you have to do a petrol vehicle or a diesel vehicle, which is quite dirty. Your cost of maintenance goes down dramatically and your frequency of maintenance also reduces.

Of course, you need specialised knowledge, that is the reason for training those technicians. The over 1,100 technicians I spoke about are important because if you take your car for maintenance, then you have to make sure the technician has the knowledge of CNG so that they don’t mess with your existing system. But maintenance costs as well as frequency goes down. Now, in terms of kits’ availability, it is a new area and everybody’s trying to get it, there’s always a measure of scarcity in the market.

But the federal government is in front of it. It is taking a lead in it. We acquired an additional 70,000 kits again through the Federal Ministry of Finance late last year. We’re expecting them to land any moment from now to ease that supply constraint in what we call the conversion incentive programme for the commercial market. But the reality is that today there are sufficient kits for the moment, but we know that there’s demand.

But the bottleneck is not the kits. The bottleneck is still your conversion centres because for every conversion centre, there’s not so many conversions they can do in a day. And these are new conversion centres that just have new technicians. They are still slow in terms of speed. As they get better at it, they will be able to do two, three, four conversions a day. But maybe they will start with one.

So, if you do the maths and you see an average of two conversions a day in 193 conversions, that means we are doing barely 400 conversions a day in Nigeria. It’s a lot, but that’s a significant constraint in terms of the number of vehicles that want to convert. We have in the country over 1.5 million commercial vehicles. So, if you’re doing just 400 a day, you can imagine there will be a feeling of scarcity.