Olufola Wusu

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It was reported in the news that lawmakers at the House of Representatives are determined to legislate against gas flaring as well as tap the economic dividends of utilizing Nigeria’s gas for transportation.

This initiative is sequel to the passage for second reading a Bill seeking to amend the National Automotive Council Act, to allow for the introduction of new alternative vehicular transportation to make use of Nigerian gas, by Hon. Igariwe Iduma.

While debating on the general principles of the Bill on the floor of the House on Thursday, February 1, 2018, Hon. Iduma asserted that the Bill seeks to empower both heavy and light trucks via gas utilization and boost the economy as well. The lawmaker decried the extent of environmental hazards posed by gas flaring, especially when it could be converted to serve purposes that would be of economic benefit to the nation. He urged other members to support the quick passage of the proposed law so that gas flaring could become a major source of revenue to the government.

“This bill seeks to amend the National Automotive Council Act by providing a framework to encourage Nigerian entrepreneurs and vehicle manufacturers to invest in natural gas refuelling infrastructure as well as the production and purchase of natural gas-powered vehicles and trucks.”

My Thoughts
This Bill is timely and will help monetize Nigeria’s abundant gas resources.
Nigeria occasionally experiences shortage of refined petroleum products regardless of the fact that Nigeria is a major exporter of oil and gas. Nigeria should be looking at reducing its dependency on crude oil, reducing carbon emissions, improving air quality and reducing noise from transport which is a big issue in cosmopolitan states like Lagos.

Nigeria plans to achieve zero gas flaring by 2020. We are delighted to provide support for Justice O. Derefaka the program coordinator of the Nigeria Gas Flare Commercialization Program, as he works towards the actualization of this notable objective.

The gas Nigeria currently flares can be used as a fuel for transport among other uses.

There are 3 critical factors which influence the use of LNG/CNG/LPG as a transport fuel:

1. A low level of consumer acceptance
2. The lack of LNG/CNG/LPG refueling stations
3. The high cost of vehicles or conversion kits.

Where these 3 factors are not addressed, the level of adoption of LNG/CNG/LPG as a transport fuel may be low. Clear government regulation is what causes businessmen and women to invest in a particular sector, regulatory uncertainty as regards Nigeria’s stand on the use of natural gas as a fuel may have discouraged many a possible investor.

In a recent publication NatrualGasglobal.com mentioned Eight critical factors which were identified for the successful adoption of CNG as an automotive fuel they are as follows:
i. Clarity of the strategic intent or main drivers for the use of CNG as an automotive fuel;

ii. Provision of legal backing, including legislation, regulation, policies and operational guidelines to guide and drive the CNG programme;

iii. Learning and adaptation, which are reflected in the processes adopted by the country in conceptualization and execution of its natural gas (NG) programme;

iv. Assignment of responsibilities to specific entities for various elements of the NGV market development;

v. Application of financial incentives to promote NGV market development;

vi. A sufficient price gap between NG and conventional fuels;

vii. The building of consumer and market confidence deliberately; and

viii. Development of domestic NG pipelines and other NG refuelling infrastructure.

The National Gas Policy at page 73 recognizes the fact that NGVs really take off when there is a determined government push behind the initiative. NGVs started to take off in London (UK) for example when the Mayor announced that taxis that were not converted to at least dual fuel would not have their licenses renewed.

Where government enacts regulations that imposes a carbon tax, sets clear environmental standards or directly mandates the use of Natural Gas, this creates demand for the use of natural gas, the markets will respond by providing the needed infrastructure for consumers to access natural gas for their transportation needs to comply with government policy.

The Times of India has reported that India has published regulations to pave the way for LNG refueling stations. The establishment of LNG refueling stations will help establish a storage and supply chain for LNG stations through ‘daughter trucks’, just like for CNG stations in cities.

In the latter part of 2017, LNG spot prices jumped due to China’s rising demand for natural gas, as homes and offices had been mandated by government policy to switch from coal to natural gas.

LNG Blue Corridor in Europe
From as far back as 2013, an Europe-wide project has been driving the use of LNG by heavy duty vehicles in a bid to significantly reduce the emissions of heavy duty vehicles: this is done through the creation of the so-called “LNG Blue Corridors”, a well-developed network of LNG filling stations.
There are Four LNG corridors in Europe, in which LNG operated Heavy Duty Vehicles can drive with security of supplies. The aim by 2025 is for there to be at least one LNG filling station every 400 kilometers along the main European traffic routes.

LNG Blue Corridor in Nigeria?
We should be talking about establishing an LNG blue corridor for Nigeria then Africa.

The National Gas Policy for Nigeria already provides for Domestic uses of LNG.Possible Domestic uses of LNG: http://olufolawusu.com/national-gas-policy-2017-7-domestic-downstream-applications-of-lng-every-discerning-investor-should-note/

What we need now is clear Legal backing in the form of: Establishment and enforcement of sound guidelines, codes and standards, as well as the use of legislative, regulatory and/or judicial mandates, to mandate the use of natural gas as a transport fuel. In this light, the Bill seeking to amend the National Automotive Council Act, to allow vehicles and trucks to make use of Nigerian gas, is a bold step in the right direction.

Olufola Wusu is a Commercial/Oil and Gas and I.P. Lawyer with Megathos Law Practice based in Lagos.

Olufola Wusu Esq. © 2018

Olufola Wusu is noted for his “dynamic practice” and “commercial acumen”. He is praised for his “first-rate skills” in assisting clients…