The Federal Government has stated that its N250 billion intervention facility for the national gas expansion programme is targeted at making Compressed Natural Gas (CNG) the fuel of choice for transportation and Liquefied Petroleum Gas (LPG), domestic cooking, captive power and small industrial complexes.
To this end, the Central Bank of Nigeria (CBN) has capped the maximum loan an obligor can access under its N250 billion intervention fund for the gas sector at N10 billion.
The apex bank disclosed this in a guideline titled, “Framework for the implementation of intervention facility for the national gas expansion programme,” that was published recently.
Meanwhile, the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) has expressed optimism that the full deregulation of the downstream sector will aid the growth of ancillary industries in the sector.
According to the CBN, the fund was established to stimulate investment in the gas value chain and deepen growth in the sector.
The apex bank said the weak investment in the sector had resulted in minimal production and utilisation of CNG and LPG as clean alternative sources of domestic energy in Nigeria, noting that failure to harness the nation’s gas resources has negatively affected its productivity, fiscal and social, environmental and economic opportunities.
It listed the objectives of the intervention facility to include improved access to finance for private sector investment and also to enhance investments in the development of infrastructure to optimise the domestic gas resources for economic development.
The apex bank also said it plans to fast-track the adoption of CNG as the fuel of choice for transportation and power generation, as well as push LPG as the fuel of choice for transportation, captive power and cooking.
For manufacturers, processors, and wholesale distributors, the CBN said the amount they can access in terms of “Working capital is a maximum of 500 Million per obligor.”
Some of the eligible activities under the intervention include the establishment of gas processing plants and small-scale petrochemical plants; gas cylinder manufacturing plants; L-CNG regasification modular systems; auto gas conversion kits or components manufacturing plants CNG primary and secondary compression stations.
Others are establishment and manufacturing of LPG retail skid tanks and refilling equipment; development/enhancement of auto gas transportation systems, conversion and distribution infrastructure, and enhancement of domestic cylinder production and distribution by cylinder manufacturing plants and LPG wholesale outlets.
DAPPMAN stated that the significance of deregulation goes beyond price determination, noting that the handling of petroleum products has far reaching effects on the health of the general public and environmental sustainability.
DAPPMAN Chairman, Winifred Akpani, said deregulation will also open up opportunities for other ancillary industries, while deepening economic activities and driving stable demand and supply mechanisms such as product blending facilities, necessary for the continued growth of the industry.
“DAPPMAN sees a future of opportunities for all stakeholders through full deregulation of the downstream sector of the industry and believes that Nigeria is moving in the right direction towards becoming a major hub for warehousing and logistics management across the continent that would compete with major terminals across Europe, America, Asia and the Middle East.
“The critical role of DAPPMAN member companies in storage, distribution and supply infrastructure investment has been instrumental to the growth of the sector. As deregulation opens up the market, all stakeholders can rest assured that DAPPMAN’s role in promoting global standards gives the buying public value for money with a huge premium on transparency and professionalism,” Akpani added.
Akpani said the entry of private warehousing and logistics operators under the aegis of DAPPMAN had over the past two decades made the downstream sector more robust, competitive and efficient.
“DAPPMAN notes that a major part of the success of the oil and gas industry rests with investors in the warehousing and logistics aspect of the value chain as they enable producers, refineries, marketers and distributors to warehouse and transport their products in the short and long-term. This continues to enhance local capacity in the management of strategic and essential storage operations as well as distribution through investments in new and additional pipeline networks. This will certainly position the sector for increased growth upon full deregulation and translate to more value for consumers,” she said.
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