Energy experts have urged players in the gas subsector in Nigeria to take advantage of the recent N250 billion intervention fund by the Central Bank of Nigeria (CBN) to halt the importation of Liquefied Petroleum Gas (LPG) into the country.
Despite having over 206 trillion standard cubic feet of natural gas, Nigeria imports more than half of its total consumption, a development that has now been more challenged by the war between Ukraine and Russia.
This has resulted in soaring prices and disruption to gas market globally with its attendant negative impact on the country.
In his intervention, PricewaterhouseCoopers’s Associate Director, Energy, Utilities, and Resources, Habeeb Jaiyeola, advised the government to stop the importation of LPG, stressing that the CBN’s N250 billion intervention remained a critical elixir towards the plan.
According to him, if complemented with existing gas infrastructure investment like the AKK pipeline, the provisions in the Petroleum Industry Act (PIA) and other initiatives, the country stands at an advantage in meeting local demand.
Jaiyeola urged industry players to take advantage of the CBN facility to address the bottlenecks in the domestic gas market, while urging sustainable finance into the gas sector.
“The move by the CBN is laudable and the intent of the fund is also quite comprehensive and seeks to ease funding challenges for all players within the LPG value chain,” Jaiyeola said.
The CBN loan was meant to leapfrog the federal government’s domestic gas expansion programme, which is aimed at encouraging use of gas in place of firewood and charcoal in the country.
The bank had said that that the facility was for the national gas expansion programme aimed at making Compressed Natural Gas (CNG) the fuel of choice for transportation and LPG for domestic cooking as well as make gas available for captive power and small industrial complexes.
It stated that the objectives of the facility being implemented in collaboration with the ministry of petroleum resources were to improve access to finance for private sector investments in the domestic gas value chain as well as stimulate investments in the development of infrastructure to optimise the domestic gas resources for economic development.
The term loan for manufacturers, processors, wholesale distributors, the apex bank had noted will be determined based on activity and will not exceed N10 billion per obligor while working capital is set at a maximum of N500 million per obligor.
Small & Medium Enterprises (SMEs) and Retail Distributors term loans would be determined based on the activity and will not exceed N50 million per obligor with working capital pegged at a maximum of N5 million per obligor.
Also speaking on the efforts to ramp up production, the president, Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), Dr. Billy Gillis-Harry said while the N250 billion funding made available by CBN was a good move, there was need for more investment in the sector.
He posited that a huge gap exists in gas infrastructure in the country, explaining that there was need for the CBN to work with associations in the sector to drive the agenda of domestic gas utilisation. He stressed that the country has everything it takes to stop importation of LPG.
“Nigeria has huge gas resources and should not be importing gas. I think the intervention by the CBN is commendable but more is needed. The infrastructure needed to unlock gas is huge,” Gillis-Harry said.
Also, the African Refiners and Distribution Association (ARDA) and other experts in the LPG space had earlier warned of imminent danger if Africa fails to quickly adopt modern clean energy as over 850 million Africans still depend on solid fuels (biomass) for cooking.
Without strategic efforts towards energy transition, especially for cooking, the experts had said solid fuels might continue to kill over 600,000 Africans yearly due to household air pollution.
Programme Manager, National LPG Expansion Implementation Plan, Dayo Adeshina said the intervention was critical for the sector, noting that there was need to tweak the plan to ensure that players in the sector seamlessly access the loan.
He noted that the objectives of the intervention would be achieved if commercial banks stop treating the loan as commercial loans.