The federal government yesterday backtracked on its policy to bear the cost of converting vehicles from running on fuel to running on gas.
Contrary to the earlier promise by Minister of State for Petroleum Resources, Chief Timipre Sylva, in September that the conversion will be done free of charge for all Nigerians to cushion the effect of the hike in the pump price of petrol, the government yesterday fixed the conversion cost, to be borne by each vehicle owner, to between N200,000 and N250,000 for cars. However, the cost for Sport Utility Vehicles (SUVs), would be higher, Sylva’s Technical Adviser on Gas Business and Policy Implementation, Mr. Justice Derefaka, told interviewers on a breakfast programme on a Lagos-based television yesterday.
Under the policy, launched by President Muhammadu Buhari on Tuesday, the federal government is targeting to convert no fewer than one million vehicles – mostly passenger and haulage vehicles that run on Nigerian roads to start using gas instead of petrol or diesel by the end of 2021.
The policy is aimed enthroning gas as a preferred fuel for the domestic economy because it’s cheaper. While a litre of petrol, under extant price regime, goes for between N163 and N169 per litre, the federal government put the cost of same measure of autogas at N97 per litre.
The federal government had expressed optimism that the N250 billion financial facility recently earmarked by the Central Bank of Nigeria (CBN) to fund the autogas programme, amongst other gas initiatives in its National Gas Expansion Programme (NGEP), would help fast-track vehicle conversion and deployment of required infrastructure for the initiative.
Also at the launch of the autogas scheme on Tuesday, Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Mr. Mele Kyari, who spoke on the financing, had said: “You bring your car to a location and then we fit in the things you need to call the gas and also to receive the gas into your car.
“All the one million cars that we promised will be done through a structure that the Ministry of Petroleum Resources will put in place to ensure that any Nigerian who has to convert his car will get it done for free.”
However, Derefaka sang a different tune yesterday, saying owners of the vehicles will bear the cost of the conversion.
But he added that the federal government is working out a financing scheme to ease the burden of the conversion cost on vehicles’ owners.
According to him, vehicles’ owners can partner with their banks to choose a convenient payment plan or go for a different approach.
“The owner of the car basically will decide to say I want to run on autogas or CNG or LNG and like the honourable minister had mentioned before, conversion has basic strands; you can partner with your bank and the bank will now agree with the conversion centre to convert your vehicle, not for free entirely.
“The installer will now put some form of mechanism that each time you buy the gas; a certain amount will be deducted to pay for the conversion kit. Some people will say it is too expensive but I don’t think it is because within a period of five to seven months, you’ve already paid off the cost.”
He stated that the cost of the conversion varies according to the cylinder of the vehicle, adding that autogas is cost- effective compared to petrol.
“The cost varies. So, in terms of cost implication, it depends on the cylinder of the vehicle and of course, for a typical SUV cylinder, it is a bit higher but on the average, it is around N200,000 to N250,000 and this is for a four-cylinder vehicle but it becomes a little bit higher for a six-cylinder SUV vehicle,” he added.