‘How CBN’s N250bn gas expansion fund can rev up LPG consumption'

The N250 billion gas expansion fund set aside by the Central Bank of Nigeria (CBN) to ramp up the production and consumption of Liquefied Petroleum Gas (LPG) is capable of significantly improving the overall industry output, some industry watchers have said.

In the interim, the fund is expected to push consumption in the country to five million metric tonnes (mmt) by the end of next year and reduce the use of high carbon fuels like firewood.

The apex bank introduced the stimulus package under the National Gas Expansion Programme (NGEP) last year to attract investment in the gas value chain and spur its use in transportation as an alternative to fuel-powered cars.

It is also meant to fast-track the adoption of Compressed Natural Gas (CNG) as the fuel of choice for transportation and power generation, as well as LPG as the fuel of choice for domestic cooking, transportation and captive power.

“Failure to harness its gas resources has had negative consequences for the country, economic, environmental, fiscal and social life, particularly as the industry has the potential to engender rapid growth in Nigeria’s non-oil economy,” the bank had said while announcing its plans for the fund.

But some industry stakeholders noted that if Nigerians fully take advantage of the fund, it would make a remarkable difference in LPG production and consumption in the country.
Programme Manager, National LPG Expansion Implementation Plan, Dayo Adeshina noted that five million metric tons was achievable, stating that all the challenges to the effective deployment of the funds were being addressed.

“We are not worried about being able to meet the projection. There are so many projects and so many combination of things that we’re doing on our side. On the government side, national LPG expansion implementation in conjunction with the industry.

“So, hopefully there’ll be improvement as people begin to get back into full operations, There are several initiatives, even on the funding side and the supply side that would help us achieve the five million metric tonnes,” he said.

A PricewaterhouseCoopers’s Associate Director, Energy, Utilities and Resources, Habeeb Jaiyeola, in his comments, noted that financial incentives remains critical to government aspiration of increasing cleaner energy use in the country.

According to him, the fund was intended to ease financing challenges for all players within the LPG value chain, noting that with the availability of the funds, those who are more prone to cutting corners will be encouraged to standardise their processes.

He advised that application of the fund has to be strictly monitored to ensure the most critical sections of the LPG value chain are targeted for maximum impact.

He said: “Safety of LPG for domestic use also remains a concern. This is largely due to shortages of reliable infrastructure and need for standardisation and monitoring to avoid distribution of adulterated products within the retail markets.

“LPG penetration requires relatively high investment, leading to prevalence of unsafe makeshift distribution facilities within the retail channels.”
Also, a Gas Processing & Evaporative Cooling Specialist, Eju Abraham, noted that CBN’s intervention for local investors in the gas sector would stimulate the economy.

“We have enough to do in the domestic gas space. What is happening internationally in the near future should not affect us, because there’s a lot we can do with our resource,” he said.

However, he advised that the process of obtaining the loan must be transparent and seamless while the conditions must not also be too stringent so that people won’t be discouraged to access the fund.