Stakeholders in the oil and gas sector have called for increased investment in the gas sub-sector as part of strategy to save the economy from imminent collapse over soaring fuel subsidy funding currently at N4 trillion.
This followed the National Assembly’s recent approval of the President Muhammadu Buhari’s N4trillion subsidy funding request for 2022 from N3 trillion earlier proposed.
In separate interview with Daily Sun, some industry observers maintained that recent surge in the prices of Automotive Gas Oil (AGO), popularly known as diesel in Nigeria has led to fresh spike in food prices, dashing hopes of returning to a more stable market condition.
The price of diesel has soared by almost 170 per cent in one year to N620-650 per litre from N220-N240 in March last year.
In Nigeria, food producers and retailers are now facing intense pressure from rising energy costs as they have to spend more on diesel to power their factories and logistics, leaving over 35 million Small Medium Enterprises (SMEs) on the verge of collapse.
Majority of the stakeholders told Daily Sun that a switch to natural gas remained the best alternative to the surging price of diesel across the country.
An SME operator and member of the Nigerian Association of Small Medium Enterprises, Mr. Adeniyi Genty, said small businesses can leverage on Compressed Natural Gas(CNG to produce their goods and services.
He explained that on several fronts, CNG is the way to go because it is cheaper and also leads to cheap engine maintenance, low operational cost among others.
“Some Coys have been relying on natural gas as their energy source even before the prices of AGO went up. I know of a five star hotel on Victoria Island that uses gas to power its machines and entire operations for years now with ease .
Although the infrastructure needed to enjoy such benefit abinitio might be high but over time but such cost will be gotten over because the operational cost of CNG is very low compared to the use of Diesel.
Also speaking, Managing Director of Lampak Nigeria Limited, Mr. George Anunobi, said Government must encourage the private sector to invest more in gas development. He said all obstacles discouraging investment in the gas sub-sector must be addressed by Government, saying gas is the way to go.
He faulted the decision of the Federal Government to spend about N4 trillion on fuel subsidy in 2022, saying if industries, trucks and cars run on CNG, that cost would be reduced by over 70 per cent. Anunobi said a company like NIPCO should be given all the necessary support it deserves in order to deepen its investment in the CNG space.
He explained that NIPCO is one of the three firms granted licenses to develop Compressed Natural Gas (CNG) infrastructures and gas dispensing outlets to enable motorists have alternative energy sources apart from white products in 2009. He said that the development resulted in the company’s inauguration of eight CNG stations in Benin, Edo State and Ibafo, Ogun State, and in further putting up of the biggest gas compression plant in West Africa in Ogun State.
He, however said more companies must be supported to play in that space in order to help the industralisation agenda of the country.
In this regard, he said the Ajaokuta-Kaduna-Kano (AKK) gas project will be a game changer to help industries grow through access to gas.
The Nigerian National Petroleum Company Limited(NNPC) and its contractor handling the bulk of the $2.6bn Ajaokuta-Kaduna-Kano gas pipeline project, Oilserv Limited, recently stated that natural gas would be transported through the AKK pipeline in the first quarter of 2023. Both firms stated this during an inspection tour of the construction work on the gas pipeline project in the Abaji end of the facility in Abuja. The 40-inch by 614km AKK pipeline project, which was inaugurated in June 2020, is a section of the Trans-Nigeria Gas Pipeline with a capacity to transport about 2.2 billion cubic feet of gas per day.