The alternative to reduce the impacts of removal of petrol subsidy is the Compressed Natural Gas (CNG). In this interview with JOHN OFIKHENUA, Chief Executive Officer, Presidential Compressed Natural Gas Initiative (P-CNGI), Engr. Michael Oluwagbemi, speaks on how the Federal Government has accelerated the deployment of the gas to crash transport fares owing to the soaring prices of petrol.
With the recent increase in the pump price of the PMS, so many Nigerians are looking forward to the alternative, which is the compressed natural gas (CNG). What can you do to accelerate the development of CNG in Nigeria?
Definitely, we recognise and we feel the pains of Nigerians. Mr. President himself understands that any reform comes with substantial pain. And he is determined to ensure that the pain that Nigerians feel at the pump is reduced by helping us to lead this transition to a cheaper, cleaner, safer, more reliable fuel in compressed natural gas. And to do that, we also know that even though there are realistic challenges, for example, we know that it takes time to roll out CNG vehicles. What we did on our side was that CNG vehicles will have taken 15 to 18 months to manufacture from abroad, bring to Nigeria logistics delivery. The routes are blocked as a result of geo-political crisis like the one between Israelis and Palestinians and Hezbollah in the Strait of Hormuz and Suez Canal. We recognise those things and limit delivery of those buses to Nigeria. So what we did was we partnered with local manufacturers in order to accelerate the delivery period. Now they are being delivered in nine months instead of having to wait for 18, maybe even 24 months to have them delivered because they are not made off the shelf.
So we are taking steps already to accelerate delivery in the way we design the programme and in the manner our approach to programme delivery. Another thing is the area of conversion centres. This time last year the country had just seven conversion centres and we promised that we were going to deliver at least 100 of them this year. So already we have well over 125. The president himself at the beginning of this programme and more recently has said that his aim is to have one million Nigerians converted to CNG for free. If they are commercial vehicles or they are ride shares.These vehicles are responsible for 90 per cent of conveyance of passengers in Nigeria every day. Mr. President has committed to the programme and is funding the programme. Naturally, any new technology takes time for it to take off. An average conversion centre in Nigeria today does maybe one conversion every two days. As they get used to it, we are introducing training. We are partnering with these conversion centres as new ones open up so that they can learn how to do the conversion in a more seamless way.The availability of gas is still a challenge, especially at the conversion centre because once they convert, they need to top up with gas in order to calibrate. We are working with the private sector to come up with innovative solutions like the mobile refueling units, working with NMDPRA to get permits around this on their technical adaptation process. So these are many steps that we are taking to accelerate the adoption of the programme.
It seems even though we understand that the pain is immediate and of course, people want the solution now, there are technical bottlenecks. There are realistic bottlenecks that you cannot but solve. You have to solve them in order to get this acceleration. But we are throwing our minds at it. We are putting our hands to work. We are mobilising our teams. We are working with the private sector. We are mobilising investments. The gas issue has to be an investment matter.The Federal Government cannot be the one investing in gas. It is the private sector. And more and more of them are coming into the picture and they are putting their money where their mouth is. So this is one of many things that we are doing.
At the last count, you said over $175 million investment has been attracted. What is it at now?
Yes, so we typically do our survey every month. So that was the survey at the end of September. We will do another survey at the end of October in terms of what the additional investment has been. I can tell you in the last 10 days of October that we have been in this office, investors are coming in every day. We just had a meeting with Westport Fuel Systems that are bringing in conversion kits. We had a meeting this morning with Greenville that are investing in CNG LNG stations. So these are one of many opportunities and investments that have been made in the country.
How many states have keyed into this CNG initiative?
So far, we have 10 states that are activated. We hope to have an additional two states in the next week. And then we should have at least an additional three before the end of the month. By the end of the year, we should have 18 states active in the CNG programme.
For the states that have not keyed into it, what is delaying them?
Well, primarily it is the availability of gas infrastructure. We are talking primarily the far northern states, northwest and northeast, where there is no pipeline infrastructure for gas distribution.That is the main impediment to adoption. Of course we are working with those states as well to identify, for example, the AKK project is going to land gas in Kano by the middle of next year. So we are having an AKK opportunity summit at the end of this year where we are mobilising the states to be able to see what they need to do to quickly to link up to AKK pipeline to bring gas to their states. So we are doing something, not as if we are sitting on our hands for those states.
We are also opening up those states beyond the gas availability where we can train technicians and conversion technicians. We are doing so in readiness for the way they will have gas next year.
Which states have keyed into it and those that are yet to key into it ?
Yes, so if you are talking about states that have keyed in to it in the sense of states that are mobilising resources for CNG, I would say almost every state has keyed in to it in that sense. But when you are talking about states where CNG has been activated.
Yes, where has it been activated?
So in terms of states that it has been activated, we have Lagos, we have Ogun, we have Oyo, we have of course Ekiti, we have Kogi, we have Edo, we have Delta, we have Nasarawa, we have FCT and we have Kaduna.
In the next two weeks, we are going to activate Kwara, Niger and River states. And thereafter we are going to activate Cross River, Oyo, Abia and Enugu. This is what we are looking at to activate before the end of the year as well as Kano, making it 18.
Which ones are the ones that are difficult to activate?
Yes, so the most difficult ones are the Northeastern states.You guys can imagine all of these, I have not mentioned a single Northeastern state. You have Borno, Adamawa, Taraba, Bauchi, Gombe and Yobe. I have not mentioned any of the six Northeastern states. But the President has a plan for them. If you remember the President last week launched the Northeastern Development Commission the solar and EV programme for the Northeastern region. So it is to say, okay fine, they might not be able to immediately utilise CNG, but they can utilise EV. So we are working with the Northeastern Development Commission to make that and deliver that to the Northeastern. North-West also, the five North-West states, Kebbi, Sokoto, Zamfara, Katsina and Jigawa. Katsina we will get as soon as we activate the LCAG station, which Greenville is building in Kano. And NNPC is also building one in Kano. Once the LCAG station in Kano is activated, we will be able to deliver gas to Katsina. But it might take a little while for it to extend to Jigawa, Sokoto, Zamfara and Kebbi.
About 10 days ago, the Nigerian Midstream and Downstream Gas Infrastructure Fund signed an agreement with six companies. And it is worth about N122 billion. What is the role of the PCNGI in this?
Well, if you recall, one of our key work is to facilitate investment. And this investment will come not just from the private sector, but also the public sector. The MDGIF is one of the funds that is available under the Federal Government. There is also the Nigerian Content Fund, for example.There are also several funds under the Bank of Industry. For the MDGIF, because it is a gas infrastructure fund, this is one of our mandates to facilitate investment into that sector. We helped the process. At least three, or even maybe four of the companies that are involved that got that award are going to be focusing on CNG because of our endorsement of the process. So I think this has been positive. The Minister of State for Petroleum Resources (Gas) Honourable Ekperike, has been very supportive of our programme, working hand-in-hand with us to deliver these opportunities for the CNG sector. It is a big boost for Mr. President. This, by itself, even if I count that investment, we have gone up by at least N80 billion in the last one week. So you say, what is the update? I’m adding that N80 billion to the $175 million of September. And the calculation is yours. That’s almost another extra, what, $60 million that we’ll be adding to the $175.
So far, what is the cherry news you are getting from the field of the CNG?
We are seeing massive demand. Every day, we are feeling the pulse of the market. Transport unions are keying into this. Just yesterday, we signed with an airport union here in Abuja that has about 300 vehicles that will be converted. And they are dropping their price by 30 per cent. So we are seeing that even the transporters themselves are willing. Because they are seeing, of course, the alternative to entering a vehicle is walking. And they are losing customers because the prices are just high. So they are saying that, look, this is a way to save our business.We are losing customers because people cannot afford transportation. But they are keying into it in such a rapid pace. We are struggling.
Our conversion centres are struggling to keep up. And that is why I am saying that it is a learning curve. Conversion centres, most of them opened in the last four weeks of September. That is when most of them opened their doors. They were building, training their technicians in the last nine months. Now they have opened their doors upon accreditation by us. Now, their first four weeks of operation is what we just saw. Those four weeks, they are learning the ropes. It is taking them three days, two days to convert one vehicle. But what we are also seeing is that there is demand of almost like 10, 12 a day at those centres.
So we have a waiting list now at almost all the centres that we have opened already. So that is good. It is a good problem. We are solving for it. We are hoping that in a very short period of time, our conversion centres are going to increase. Like I said, just at the beginning of this week, we had 70 conversion centres signed up. But as of yesterday, I had 77. At the end of this week, I am going to have close to 85.That is good. We are seeing investments coming to the sector. We are seeing the private sector lead. Greenville has just given us good news in the last couple of days that they have opened new stations in Kano, in Kaduna, in Katsina. They are looking at smaller site-type stations in those days. So that is good news for Nigeria.They are opening in Enugu. Enugu governor has actually bought 200 buses.
Those are examples of states that are already doing things in order to be ready for the execution of this programme. So I think that the biggest success of this program is that we have elevated the level of awareness. We have also elevated the level of adoption. We have also accelerated the level of investment. And that has created jobs. More than 20,000 jobs easily have been created by this program. If you think about the number of conversion centers we activated already, about 77 conversion centers. Each conversion centre has up to 10 staff. To build those conversion centers, you need to mobilise at least 15 to 20 people. We opened seven conversion centres over the weekend in Ekiti. Ekiti of all places has seven conversion centres. Refueling stations have been installed. BOVAS is installing eight, as you speak. NNPC is installing 46. NIPCO is installing 32. Matrix is installing five. Greenville is doing 11 out of 17. Six are already installed. So we are seeing this level of activity that we are seeing means that investment is coming into CNG. Motor stations have been built.
We have seen the number of motor station permits jump up almost 400 percent at NMDPRA from last year to this moment. So all of this is enabling investment into the sector. Engineers have been employed, same goes for technicians and marketers. Business development experts, executives, new companies are being created. I have young men who are coming back from the United States. They can come to this office from Canada, from UK. They are putting in $200,000, $100,000, building conversion centres, building refueling stations. That, I think, is a good thing for Nigeria. And of course, it is a positive testament to the President’s belief that the entrepreneurial spirit of Nigeria is going to overcome our current difficult condition. And the reality also is that the role we are playing as catalysts is very important. The President is saying, look, the PI CNG programme cannot replace the private sector. Do not take on what the private sector should be doing. Rather, do and add value and enable private sector to enter. And that is what we are here to do. And as a result of this strategy, we have designed various incentives programme, including incentives that were signed by Mr. President, like the import duty exemption waiver, like the VAT waiver as well. Even the one announced by the President that now requires all MDAs to acquire and purchase CNG vehicles.
