MOFI, CrediCorp partner to provide N10bn loan for CNG conversion kits

The Ministry of Finance Incorporated (MOFI) and stakeholders have partnered to provide N10 billion credit to Nigerians for compressed natural gas (CNG) conversions.

The stakeholders include the Nigerian Consumer Credit Corporation (CREDICORP) and the presidential initiative on compressed natural gas (Pi-CNG).

Signing a memorandum of understanding (MoU) on Wednesday in Abuja, the partners launched the N10 billion credit access for light and mobility (CALM) fund, in response to growing financial strain on Nigerians, due to high energy and transportation costs.

The new fund is expected to enable Nigerians to obtain loans for CNG conversion kits and energy-saving solutions through participating financial institutions (PFIs), providing a pathway to sustainable energy without the financial burden of upfront costs.

Speaking at the signing event, Uzoma Nwagba, managing director and chief executive officer (CEO) of CREDICORP, said MOFI would aggregate and expand the consortium fund, collaborating with private and institutional investors to grow the initial N10 billion fund.

Nwagba said the CREDICORP would act as a fund manager, using its expertise in consumer credit to manage loan disbursements and offer credit guarantees.

“We are setting aside a fund that will allow Nigerians specifically access credits to convert their vehicles to CNG with one to three years repayment duration,” he said.

“CREDICORP will seed the CALM Fund with N2.5 billion, ensuring that Nigerians can access affordable financing at 15 to 20 percent interest rate, through Participating Financial Institutions (PFIs).

“People are charged different interest rates depending on their institutions and credit worthiness, financial behaviour, earnings and diligence with paying back previously.”

He said the Pi-CNG would serve as a service provider, facilitating the conversion of vehicles to CNG through authorised centres and offering discounted conversion packages for consumers using CALM loans.

On his part, Michael Oluwagbemi, chief executive officer of Pi-CNG, said the scheme could attract the investment that would enable the conversion kits to be manufactured domestically.

He added that another programme is being coordinated with MOFI, “on domestic manufacturing capacity for the CNG sector”.

The Pi-CNG boss explained that the development would allow civil servants or workers in the organised private sector whose salaries or income could be tracked and verified by a financial institution to benefit from the fund.

This, he said, would naturally trickle down to other sectors of the economy because the civil servants and organised private sector workers could leverage their vehicles at low cost for the economic benefit.

Armstrong Takang, managing director and chief executive officer (MOFI), said the fund would address the unintended consequences arising from oil subsidy reforms.

He said one of the unintended consequences was the soaring cost of transportation over the last several months, creating several challenges for many families.