Nigeria’s CNG initiative attracts over $175 million in private investment amid energy sector reforms

The federal government said the Presidential Compressed Natural Gas Initiative (P-CNGI) had already attracted over $175 million in private investments, in addition to government financing, in the energy sector. Special Adviser to the President on Energy, Mrs. Olu Verghegen, disclosed this in Lagos, on Monday, at the ongoing Oil Trading and Logistics (OTL) Africa Downstream Week Expo 2024.

Chief Executive Officer of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Mr. Farouk Ahmed, revealed at the conference that Nigeria’s daily petrol consumption currently ranged between 45 million to 50 million litres.

In the same vein, Chief Executive Officer of National Petroleum Authority of Ghana, Dr. Hammid Mustapha, told the occasion that importing petroleum products from the nearby 650,000 (barrels per day (bpd) Dangote refinery, rather than from Rotterdam, will massively crash fuel prices in the country and significantly reduce prices of other goods and services in the West African nation.

Represented by her personal assistant, Mrs. Eriye Onagoruwa, Verghegen also said government’s incentives to deepen the penetration of CNG, Liquefied Petroleum Gas (LPG), and Liquefied Natural Gas (LNG) had attracted over $500 million investments from January till date.

She said the number of electric vehicle conversion facilities in the country had risen to more than 125, up from seven as of 2023.

The presidential aide stated that all the positive outcomes resulted from the unprecedented incentives put in place by the government to attract new investment and promote diversification of Nigeria’s energy portfolio.

She listed the incentives as waivers on import duties and Value-Added Tax (VATs), VATs on the sale and distribution of LNG, CNG and LPG, as well as associated equipment.

Verghegen maintained that the government had also introduced a more transparent regulatory environment, stable regulatory environment. She explained that a clear delineation of agency roles was a vital first point of reform, making the Nigerian business environment more transparent, efficient and competitive.

The presidential aide pointed out that the government recorded the achievements by clarifying the regulatory scope of the Nigeria Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to ensure a stable and predictable regulatory environment for investors.

She stated, “We have launched the Presidential CNG initiative specifically to create a CNG ecosystem capable of achieving Nigeria’s objective of transiting to cleaner transportation fuels and easing the impact of the removal of fuel subsidies in Nigeria.

“The CNG initiative has so far attracted over $75 million in private investments, in addition to government financing. And today, Nigeria has more than 125 vehicle conversion facilities, up from seven in 2023.”

Verghegen stated that Nigeria and Africa had significant reserves of energy and renewables, arguing, however, that potential and reality are different things.

She regretted that Nigeria boasted an impressive history of over 80 years in oil and gas production, but its current oil output and investment levels did not reflect its true or actual capacity.

She said Nigeria’s oil production had stagnated below two million bpd for many years, despite the potential to easily double that figure.

Likewise, in spite of the country holding 38 per cent of Africa’s hydrocarbon reserves, Verghegen said Nigeria had been able to capture just four per cent of oil and gas investment in the continent since 2016.

Verghegen maintained that the downstream segment had not been immune to the challenges facing the industry, as over the years, it had equally suffered from limited investments, with the added complication of significant fiscal burdens, especially from a long history of petroleum product subsidies.

In recognition of the historical challenges in the petroleum sector, Verghegen said the Tinubu administration set out with a bold reform programme to address the critical issues and reposition Nigeria as a more desirable global investment destination for energy projects.

The presidential adviser stressed that one of the most significant developments in Nigeria’s downstream energy sector in the last couple of decades was the start-up of the 650,000 bpd Dangote refinery.

Speaking to journalists on the side-lines of the conference, Chief Executive Officer of NMDPRA revealed that Nigeria’s daily petrol consumption currently was between 45 million to 50 million litres.

He stated, “The current truck-out, which is the volume that goes out to the market, is ranging between 45 million to 50 million litres per day. However, we see that a lot of activities are going on now because it is the fourth quarter leading to the yuletide.

“But after that, we can possibly see the consumption go down just because of the pricing.”

Ahmed said, “Another thing is that we are hoping that this price adjustment or liberalisation of the industry will now discourage cross border smuggling because there will be less incentive to go cross border, and that means that the product will remain within the country and then we can see now the real supply and actual demand in the market.”

Meanwhile, speaking during a panel session at the OTL event, Chief Executive Officer of the National Petroleum Authority of Ghana, Dr. Hammid Mustapha, stated that importing petroleum products from Dangote refinery will massively crash fuel pump prices in his country and significantly reduce prices of other goods and services.

Responding to a question from the moderator and Chief Executive Officer of Northwest Petroleum, Winnifred Akpani, Mustapha said he had read the interview granted to Nigerian media by Africa’s richest man and President of Dangote Industries Limited, Alhaji Aliko, where he assured that fuel from his $20 billion refinery will meet the 50 parts per million (ppm) sulphur spec. 

The Ghanaian official said he was more excited to hear that assurance by Dangote because his country was going to take advantage of the excess output from the refinery and import from Nigeria, rather than Rotterdam.

He revealed that Ghana spent about $400 million every month on importation of petroleum products from abroad.

Mustapha stated, “I actually read the interview that Dangote himself granted to some media houses in Nigeria where he assured that fuel from Dangote refinery will meet the 50ppm spec.

“I was even the more excited about it because certainly, what he is going to produce, if indeed they hit the 650,000 barrels per day, I’m not sure all of that can be consumed in the Nigerian market.

“So, in that sense, there will be need for export. Instead of us importing right now as we do from Rotterdam, it will be much easier for us to import from Nigeria, and I believe that that will bring down our prices. And you know that petroleum prices impact everything else.”

Mustapha added, “My brother, Farouk, was talking about food security and all types of securities. Petroleum products prices are the drivers of the prices of all other goods and services. And so, if Ghana is importing the bulk of its petroleum from Nigeria, rather than from Rotterdam, that will mean that we will be able to significantly reduce the prices of our petroleum products and, therefore, make food and other goods and services cheaper for the Ghanaian people.”