10th April 2023
Okechukwu Nnodim and Anozie Egole
•Gas stations to cushion subsidy removal effect as PMS may sell for N750/litre
•NARTO wants end to subsidy, NLC to meet incoming govt over removal date
Oil marketers have written to the Federal Government over their proposal to build about 30,000 gas stations to cushion the effects of the proposed subsidy removal on Premium Motor Spirit, popularly called petrol.
Nigerians are currently counting down to the June 2023 projected date for subsidy removal, as the call for palliatives to ameliorate the impact of the halt in subsidy is gaining momentum.
There are also projections that petrol may sell for about N750/litre if the Federal Government removes subsidy by June this year.
To help cushion this, oil marketers, in a letter to the Federal Ministry of Finance, also asked the Federal Government to make the Central Bank of Nigeria release the N250bn intervention fund for the National Gas Expansion Programme as loans to vehicle owner to acquire gas conversion kit.
This came as the organised labour stated that it was considering a meeting with the incoming government on subsidy removal date.
In the letter by the oil marketers, dated April 3, 2023, and received by the Federal Ministry of Finance on the same day, the marketer stated that they were ready to deploy gas dispensers to 30,000 filling stations nationwide to cushion the impact of fuel subsidy removal.
The letter, which was signed by the National President, Independent Petroleum Marketers Association of Nigeria, Chinedu Okonkwo, and addressed to the finance minister, read in part, “We are writing to request an audience with you to present a palliative solution to cushion the impact of the removal of the unsustainable petrol subsidy.
“Our partners, Gas Analytics & Solutions Ltd, have an agreement with the independent Petroleum Marketers Association of Nigeria to co-locate natural gas dispensers on our network of over 30,000 filling stations in Nigeria.
“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 (Compressed Natural Gas) for vehicles.”
IPMAN expressed belief that this platform would provide a cushion to Nigerians from the shock of high petrol price once subsidy is removed and would significantly reduce the need for foreign exchange to import petrol.
“Furthermore, CNG emits 30 to 60 per cent 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.
In addition, the Nigeria Midstream Downstream Petroleum Regulatory Authority and the Gas Aggregation Company of Nigeria have set up a joint working committee to provide the permits, approvals, and natural gas feedstock as required.
“What is left is the support of the Central Bank of Nigeria to provide access to the Gas Expansion Fund for vehicles, Keke, and truck owners to access loans to finance the acquisition of natural gas conversion kits,” the oil marketers stated.
IPMAN said it had applied to 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.
It said the Gas Expansion Fund was envisaged to support the increased utilisation of natural gas in Nigeria, and access to the funds by qualified vehicle owners would 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 setup 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.
“We request an audience with you to discuss this further and present our proposal. We looking forward to hearing from you soon. Thank you for your time and consideration,” the oil dealers stated through their umbrella association.
In August 2021, the Federal Government claimed to have commenced the implementation of the CBN N250bn intervention fund for the National Gas Expansion Programme.
The then Permanent Secretary, Federal Ministry of Petroleum Resources, Bitrus Nabasu, had stated that the process of receiving applications from potential beneficiaries to access the facility had commenced.
The intervention facility for the NGEP is targeted at stimulating finance to the critical sector and to motivate investment in the gas value chain, and is being funded by the CBN.
Nabasu had stated that the fund was available to finance the establishment of gas processing plants and small-scale petrochemical plants, gas cylinder manufacturing plants, CNG regasification modular systems, automatic conversion kits or components manufacturing plants, CNG primary and secondary compression stations, as well as micro distribution outlets and service centres of liquefied petroleum gas sales.
Labour, FG to meet
Meanwhile, the Nigerian Labour Congress said it would be engaging the incoming administration after its inauguration to discuss the way forward with respect to the fuel subsidy regime.
The Vice President, NLC, Adewale Adeyanju, in a telephone conversation with the PUNCH in Lagos on Monday, said that the union was yet to come out with any position as regards the subsidy removal.
He added that the union was waiting for the Bola Tinubu-led administration to be sworn in before engaging the government.