Post-subsidy palliative: Oil marketers write FG, seek funding for proposed gas dispensers

Oil marketers have proposed to the federal government that natural gas dispensers be co-located on their network of gas stations, numbering about 30,000, in order to mitigate the effects of petrol subsidy removal.

The federal government had said it would halt subsidy in June 2023, budgeting only N3.35 trillion for the half year payment.

Last week, Zainab Ahmed, minister of finance, budget and national planning, disclosed that the federal government had secured the sum of $800 million from the World Bank, as part of its post-subsidy palliative plans.

In a letter dated April 3, 2023, addressed to Ahmed, the Independent Petroleum Marketers Association of Nigeria (IPMAN) presented ‘a palliative solution’ to cushion the impact of the removal of the energy subsidy.

In the letter, signed by Chinedu Okonkwo, IPMAN’s national president, the association said it has an existing agreement with Gas Analytics and Solutions Ltd, to install the natural gas dispensers.

“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 for vehicles,” the letter reads.

“We believe that this platform will provide a cushion to Nigerians from the shock of high petrol price once subsidy is removed and significantly reduce the need for foreign exchange to import petrol.

“Furthermore, CNG emits 30 to 60 percent less green house gases than petrol and diesel, making it more appealing to attracting additional financing from international and regional developmental finance institutions that are disposed to supporting natural gas utilisation projects compared to petrol refineries.”

PROVIDE ACCESS TO GAS EXPANSION FUND

IPMAN also highlighted the need for the CBN to release the intervention fund for the national gas expansion programme (NGEP) as loans to vehicle owners to acquire gas conversion kits.

“The Nigeria Midstream Downstream Petroleum Regulatory Authority (NMDPRA) and the Gas Aggregation Company of Nigeria (GACN) set up a joint working committee to provide the permits, approvals, and natural gas feedstock as required,” the group said.

The association said what is left is the support of the Central Bank of Nigeria (CBN) to provide access to the gas expansion fund for “vehicle, keke, and truck owners to access loans to finance the acquisition of natural gas conversion kits”.

“We have applied to the CBN through the NIRSAL Microfinance Bank for a partnership to develop a finance scheme for qualified Nigerians to access the gas expansion facility to convert their vehicles and need the support of the federal ministry to conclude with CBN NIRSAL Microfinance Bank,” IPMAN said.

“The gas expansion fund is envisaged to support the increased utilisation of national (sic) gas in Nigeria, and access to the funds by qualified vehicle owners will support and justify IPMAN members making the required investment along the Natural Gas value chain to deliver Gas to Vehicles. 

“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.”