Nigeria’s state-oil firm is not backing down from the fight to end subsidy because it is cutting to the bones, but this situation is signalling opportunities for discerning investors in the gas-powered vehicle market.
The end of petrol subsidy is imminent and could see petrol prices rise above N250 per litre at the pump, offering Natural Gas Vehicles (NGVs) a chance to gain deeper traction.
Industry operators see opportunities in skill acquisition for converting petrol-powered cars to run on gas, building and retooling gas stations, sale of conversion kits, transportation of Compressed Natural Gas (CNG), gas sales, storage facilities, and safety and maintenance operations.
The Federal Government is encouraging more use of gas and wants to set up 2,000 CNG filling stations in the next six months to provide a cheaper and cleaner alternative for vehicle users.
In line with this direction, the Central Bank of Nigeria (CBN) has set up a N200-billion infrastructure fund to support auto-gas facility roll-out by marketers.
Last year, the government initially said it would bear the conversion cost estimated at between N200,000 and N250,000 for cars but backtracked.
The government said it was targeting the conversion of one million petrol-powered vehicles – mostly passenger and haulage vehicles that run on Nigerian roads – to start using gas instead of petrol or diesel by the end of this year.
According to Gabriel Ogbechie, group managing director, Rainoil Limited, Nigeria requires about $6 billion worth of investment to fully adopt gas-powered vehicles in the country.
“Investment can be made in areas such as Liquefied Petroleum Gas (LPG) bulk storage, LPG trucks, LPG filling plants, LPG skids and gas cylinder manufacturing, Liquefied Natural Gas (LNG) plants,” he said.