The Central Bank of Nigeria (CBN) has also raised a financial facility worth N250 billion to support Nigeria’s plan to make gas the first-choice fuel for its domestic economy; powering mostly the transport and manufacturing industries.
A circular titled ‘Framework for the Implementation of Intervention Facility for the National Gas Expansion Programme’ obtained by THISDAY yesterday, contained how the bank will fund the federal government’s new gas utilisation plan.
Amongst its intentions is to see Nigeria leverages the National Gas Expansion Programme (NGEP) to quickly switch to Compressed Natural Gas (CNG) as fuel for transportation and advance the use of gas for home cooking.
The NGEP was launched recently by the Minister of State for Petroleum Resources, Mr. Timipre Sylva.
The CBN’s intervention will support the growth of domestic gas-based industries such as fertiliser for agriculture and methanol for industrial purposes.
In the circular, the CBN explained that parts of the N250 billion will be administered through the Power and Airlines Intervention Fund (PAIF) for large-scale projects in the value-chain, in line with existing guidelines regulating the PAIF.
Its subsidiary, Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) Microfinance Bank (NMFB) and other Participating Financial Institution (PFI) under its Agribusiness/Small and Medium and Medium Enterprises Investment Scheme (AgSMEIS) will administer other aspects of the fund, mostly for small-scale operators and retail distributors within the gas value-chain.
The circular said: “With proven gas reserves of 188 trillion cubic feet (tcf) of gas, the natural gas industry presents an opportunity to diversify the economy through domestic commercial utilisation of its (Nigeria) natural gas.
“Historical non-viability of domestic commercial production and utilisation of gas continues to severely constrain private investments in the industry. Consequently, the low level of investment in the industry has resulted in the minimal production and utilisation of Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG) as clean alternative sources of domestic energy in Nigeria.
“Failure to harness its gas resources has had negative consequences for the country– economic, environmental, fiscal and social, particularly as the industry has the potential to engender rapid growth in Nigeria’s non-oil economy.
“To this end, the National Gas Expansion Programme (NGEP) was introduced to make CNG the fuel of choice for transportation and LPG, the fuel of choice for domestic cooking, captive power and small industrial complexes. Equally, gas-based industries, most especially the petrochemical, are to be enabled to support large industries, such as agriculture, industrial applications, textile and so on.
“Therefore, as part of its efforts at stimulating finance to critical sectors of the economy, the Central Bank of Nigeria (CBN) introduces the N250 billion intervention facility to help stimulate investment in the gas value chain.”
According to CBN, the fund will be administered in collaboration with the Ministry of Petroleum Resources.
It expressed optimism that its implementation will improve access to finance for private sector investments in the domestic gas value chain; stimulate investments in the development of infrastructure to optimise the domestic gas resources for economic development and fast-track the adoption of CNG and LPG as the fuel of choice in Nigeria’s domestic economy.
It explained that the fund will support the establishment of gas processing plants and small-scale petrochemical plants, gas cylinder manufacturing plants, Liquid to Compressed Natural Gas (L-CNG) regasification modular systems and autogas conversion kits or components manufacturing plants.
It will also fund the establishment of CNG primary and secondary compression stations, manufacturing of LPG retail skid tanks and refilling equipment as well as enhancement of autogas transportation systems, conversion and distribution infrastructure, domestic cylinder production and distribution by cylinder manufacturing plants and LPG wholesale outlets.
According to the CBN, micro-distribution outlets and service centres for LPG sales, domestic cylinder injection and exchange will also be funded by the fund to boost LPG adoption, while gas aggregators, manufacturers, processors and wholesale distributors will be eligible to apply to the fund for up to N10 billion per obligor through the PAIF.