The Federal Government has urged on state governments to actively participate in the country’s energy transition efforts, with particular focus on the development of Compressed Natural Gas infrastructure.
This appeal was made by the Programme Director of the Presidential Compressed Natural Gas Initiative, Michael Oluwagbemi, during a press conference in Abuja on Saturday, 14 September, 2024.
Oluwagbemi, who emphasised the critical role states must play in realising President Bola Tinubu’s energy transition agenda, explained that state governments, being direct beneficiaries of revenue from improved transportation and energy policies, should lead by example in investing in CNG infrastructure.
“I cannot emphasise enough the role of states in the energy transition programme of Mr. President. Ultimately, states own transportation policies, and the Federal Government can only encourage states to switch to energy-efficient vehicles and invest in infrastructure like pipelines,” Oluwagbemi said.
He also pointed out that states control most of the regulations surrounding transportation activities, and by investing in energy transition initiatives, they stand to gain from increased revenue distributions.
“When it comes to the regulation of transportation activities, it is the responsibility of states, and state governments are the number one beneficiaries of an increase in the distribution of revenue. Since they are the most significant beneficiaries, they should invest in it,” he said.
Oluwagbemi urged states to encourage private individuals, including civil servants, to convert their petrol-powered vehicles to CNG and to make direct investments in the dispensing of the product.
“States should encourage private individuals, including their civil servants, to convert their vehicles to CNG. They can also have direct investments in dispensing the product,” he added.
Oluwagbemi detailed the government’s deliberate efforts to strategically expand CNG infrastructure across major transit corridors, ensuring that the energy switch benefits the majority of Nigerians.
He highlighted three key routes—Calabar to Benin, Lagos to Kano, and Lagos to Benin via Lokoja—as critical zones for the rollout of CNG infrastructure.
“We are making sure that the investment is going to the corridor with the most users. Ninety per cent of Nigerians ply three major transit corridors: The Calabar to Benin transit corridor; the Lagos to Kano transit corridor; and the Lagos-Benin-Lokoja corridor,” Oluwagbemi noted.
He also explained that providing CNG refuelling stations along these corridors would significantly reduce transportation costs and the overall cost of goods, especially food.
“When we do that, there will be a reduction in the cost of food,” he said.
Oluwagbemi also addressed concerns raised by independent petroleum marketers and station operators regarding the high cost of installing add-ons for CNG dispensing.
He pointed to the Petroleum Industry Act, which allows members of the Independent Petroleum Marketers Association of Nigeria and the Major Oil Marketers Association of Nigeria to access the Downstream Gas Infrastructure Fund through the Nigerian Midstream and Downstream Petroleum Regulatory Authority.
“IPMAN members and MEMAN members can apply through the NMDPRA to access necessary funding for what we call add-ons. We are hoping that the MDGIF will partner with us to look at this issue more proactively to ensure that there is an easy template for add-ons,” he stated.
Oluwagbemi further revealed that a study by the NMDPRA identified about 14,000 potential CNG add-on possibilities in Nigeria, signalling a significant opportunity to broaden CNG availability nationwide.
As part of the initiative, Oluwagbemi disclosed that the Federal Government has reached agreements with various transportation unions, including the National Association of Road Transport Owners, Road Transport Employers Association of Nigeria, and the National Union of Road Transport Workers, to ensure cost-reflective pricing for CNG-powered vehicles.
“In terms of cost-reflective pricing by the commercial vehicle owners who are beneficiaries, we already have agreements with NARTO, RETREAN, and NURTW to this effect,” he said, adding that CNG vehicles would be labelled to make them easily identifiable and to encourage passengers to demand reduced fares from operators using CNG.
Despite the push for CNG, Oluwagbemi acknowledged that some vehicles are still running on petrol, and full price reductions may not be immediate. However, he expressed optimism that as more CNG vehicles come into use, market competition will drive down transportation costs. “As we use more CNG, the smart marketer will reduce prices to gain more customers,” he stated.
