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FG Begins Implementation of Central Bank’s $600M Gas Expansion Fund

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Nigeria Gas Exports

Nigeria’s federal government has commenced the implementation of the Central Bank of Nigeria’s (CBN) N250 billion intervention fund for the National Gas Expansion Programme (NGEP), which is expected to create about three million direct and indirect jobs.

However, findings revealed that the federal government’s plan to enthrone an alternative energy regime in the country through its autogas policy may be heading for failure owing to apathy now observed among the petroleum products marketers towards the initiative.

The intervention facility for the NGEP, which is targeted at stimulating finance to the critical sector and motivate investment in the gas value chain being funded by the apex bank, the Permanent Secretary, Ministry of Petroleum Resources, Mr. Bitrus Nabasu, disclosed at the weekend that the process of receiving applications from potential beneficiaries to access the facility had commenced.

He stated that the fund was available to finance the establishment of gas processing plants and small-scale petrochemical plants, gas cylinder manufacturing plants, Compressed Natural Gas (CNG) regasification modular systems, automatic conversion kits or components manufacturing plants, CNG primary and secondary compression stations, as well as micro-distribution outlets and service centres of liquefied petroleum gas (LPG) sales.

Nabasu, noted that the intervention fund was designed to meet certain objectives, including improved access to finance for private sector investments in the domestic gas value chain and stimulate investments in the development of infrastructure to optimise domestic gas resources for It also set out to fast-track the adoption of CNG as the fuel of choice for transportation and power generation, as well as LPG as the fuel of choice for domestic cooking, transportation and captive power.

According to Nabasu, the fund would equally provide leverage for additional private sector investments in the domestic gas market, boost employment across the country and fast-track the development of gas-based industries, particularly petrochemical (fertiliser and methanol, among others).

This is with a view to supporting large industries such as agriculture, textile and related industries.

The fund, he added, would serve the development/enhancement of autogas transportation systems, conversion and distribution infrastructure, enhancement of domestic cylinder production and distribution by cylinder manufacturing plants and LPG wholesale outlets, and any other mid to downstream gas value chain-related activity recommended by the Ministry of Petroleum Resources.

The Permanent Secretary said: “It is expected that parties with the capacity to develop and operate any of the afore-listed projects would need to demonstrate project development experience.

“In addition, interested parties will need to demonstrate technical and commercial capacity.”

Nabasu stressed that interested applicants were required to demonstrate evidence of experience and capabilities in their proposed businesses in order to access the fund.

He urged interested applicants to provide at least general information about them, particularly experiences and evidence of technical competence as well as organisational structure.

Giving further details, Brenda Ataga, who is the Senior Technical Assistant on Gas Development and Investment to the Minister of State, Petroleum Resources, Chief Timipre Sylva, said the fund was launched August 2020 by the CBN, adding that since then 27 applications had been recorded on the high capital expenditure portion which has an obligor limit of N10 billion, while 50 applications were received from the small and medium-scale enterprises (SMEs) side.

The SMEs support portion, she disclosed, has a limit of N50 million, broken into start-ups and experienced applicants.

She disclosed that the evaluation of applicants would be based on seven fundamental areas.

“In this regard, our evaluation covers seven fundamental areas which must be evidenced by applicants, and it is very important that this is stated to the applicants because people have sent us all sorts of applications that are not in line with the recommended framework for evaluation.

“The essence is for us in the ministry to support the propagation of gas and also the creation of jobs through access to financing,’’ she said

SMEs, she added, would also follow a similar structure, noting that start-ups would enjoy some leniency in the financial model.

Stating that SMEs will prove that they are registered in Nigeria, pay their taxes, prove affiliation to first-class companies which are already established businesses with good track records within the gas value chain, she pointed out that there was no deadline for filing of applications.

According to her, some preferential treatment would be accorded indigenous companies as well as gender-based considerations for companies in the SMEs’ category.

Ataga noted that one of the positives to be derived from the fund is its potential to support the government’s drive to reduce greenhouse gases by a minimum of 50 percent.

Meanwhile, the federal government’s plan to enthrone an alternative energy regime in the country through its autogas policy may be heading for failure owing to apathy now observed among the petroleum products marketers towards the initiative.

THISDAY gathered that the absence of a sufficient number of cars converted from petrol-powered to either Compressed Natural Gas (CNG) or Liquefied Petroleum Gas (LPG)-powered in the country and the high cost of gas was dampening marketers’ interest in investing in the building and setting up of autogas filling stations.

In addition, the seeming failure of the federal government to convert about one million vehicles between December 2020, when the NGEP and the autogas initiative were launched, to December 2021, has further contributed to the marketers’ disinterest to continue with their investment in the programme.

The Minister of State for Petroleum Resources, Chief Timipre Sylva and the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, had promised that the government was going to assist Nigerians to convert their cars free of charge.

But Sylva’s Technical Adviser on Gas Business and Policy Implementation, Mr. Justice Derefaka, had said the conversion of cars, which he estimated was to cost between N200,000 and N250,000 for one car, was to be borne by each vehicle owner.

However, some of the marketers who spoke to THISDAY over the weekend on conditions of anonymity, said they would not take the risk of borrowing huge sums of money to invest in autogas stations when they were not sure of those to patronize them.

They argued that contrary to what it said, the federal has not been able to convert the one million vehicles they boasted they were going to convert before December 2021, adding that no businessman ventures into a business where there is no market for his goods or services.

One of the marketers who belongs to the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) said though the CBN had given them a repayment term of 10 years for the loan, it was no enough to attract them to go and borrow and invest in autogas facilities.

Sylva announced recently in Kano that the government had immediately reduced the domestic base price of natural gas to power plant producers from $2.50 to $2.18 per standard cubic feet (scf).

However, efforts made to get either the Ministry of Petroleum or the NNPC to react to the issues, particularly the extent reached with the conversion of the car, proved abortive as neither of them took their phone calls or replied to texts sent them.

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Economy

Digital Economy: China Seeks More Partnerships With Nigeria

The Consulate General of the People’s Republic of China in Lagos, Mr. Chu Maoming had advocated for more robust China-Nigeria partnerships in the Digital Economy.

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digital economy - Investors King

The Consulate General of the People’s Republic of China in Lagos, Mr. Chu Maoming had advocated for more robust China-Nigeria partnerships in the Digital Economy.

Investors King learnt that the Chinese Consular General has called for enhanced strategic cooperation between Nigeria and China. The diplomat noted that such a corporation on the digital economy will help to address the challenges confronting Nigeria. 

Speaking in Lagos during the 2022 Africa-China Economic Partnership Agenda Conference, (ACEPAC), Mr Chu Maoming noted that China and Nigeria are the largest economies respectively in Asia and Africa, and both countries are actively developing their digital economies with notable success.

Maoming further stated that Nigeria is one of the most important economies in Africa and Lagos is the economic, financial and technological centre of Nigeria. He, therefore, seeks more collaborations in key digital economic areas of 5G Construction, Mobile Payments Systems and E-Commerce Platform. 

Mr Maoming also noted that digital economy potential lies in the number of mobile internet users in Nigeria which has exceeded 150 million as of June 2022, with an internet penetration rate of nearly 70 percent.

On the other hand, the Director General of the Nigerian Institute of International Affairs, (NIIA) Prof Eghosa Osaghae stated that Nigeria will be open to the new possibilities which the digital economy has to offer. 

Furthermore, the Executive Director of Afri-China Media, Ikenna Emewu described the conference as an important event that will further drive Nigeria towards the digital economy. 

The Executive Director said that Nigeria and Africa cannot afford to lag in adopting digital possibilities to improve their economies.

Meanwhile, Nigerian Minister of Communications and Digital Economy Professor Isa Pantami says the Ministry has completed over 2000 projects within three years to enhance the digital economy across the country. The minister disclosed this during an inspection tour of the National Shared Service Centre in Abuja.

Pantami noted that Nigeria is making progress in the digital economy while the numerous projects which are spread across the country will help to improve the productivity of many Nigerians. 

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MSMEs Critical to Nigeria’s Economic Development- President Buhari

President Muhammadu Buhari has said Small and Medium Enterprises (MSMEs) are critical to Nigeria’s economic growth as they contribute about 48 percent to the nation’s Gross Domestic Product.

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President Muhammadu Buhari has said Small and Medium Enterprises (MSMEs) are critical to Nigeria’s economic growth as they contribute about 48 percent to the nation’s Gross Domestic Product.

President Buhari, who was represented by the Minister of Industry, Trade and Investment, Otunba Richard Adebayo, at the 17th International Trade Fair organised by the Abuja Chamber of Commerce and Industry (ACCI), stated that trade is key to ending poverty and also plays a significant role in the economic growth of any nation.

In his words, “It helps to build wealth and improve foreign reserves. Trade is key to ending poverty across countries, raising standards of living and improving productivity. No economy can thrive without robust trade

“The MSME segment is critical to the stimulation of economic development. Nigeria is estimated to be home to over 40 million MSMEs who, together, contribute about 48 per cent of our GDP. Many of us just see MSMEs as the mamas that fries Akara or the friendly Malam that owns the kiosk on our street.

“That is not the case; some of the fastest growing Fintech start-ups in Africa are in fact MSMEs. This trade fair provides an opportunity to change the narrative of what MSMEs are and demonstrates how innovative they can be.”

“I see enterprises that employ large cross-sections of our youth population. I see enterprises with the capacity to export. I do not see small businesses here, I see future mighty business.”

“The Federal Government is keen to help MSMEs achieve their full potential and has developed strategic policy interventions, enshrined laws and established institutions to create a supportive business environment for entrepreneurs and MSMEs.

“In line with this, the Federal Ministry of Trade and Investment (FMITI) has developed a programme that will enhance access to credit for over 10 million MSMEs at single digit rate.

“Aside from the provision of finance, this project will address key ecosystem issues such as the development of MSME clusters to lower operating costs as well as capacity-building initiatives.

“The Ministry has also commenced the process of adopting a centralised automated platform for the registration of Trademarks, Patents and Designs. The overall objective is to fully digitise existing records and automate the registration process to enable ownership and commercialisation of innovation,” he stated.

It would be recalled that Investors King on October 2, 2022 reported that the federal government has directed the Development Bank of Nigeria (DBN) to step up its efforts to increase its funding for MSMEs.

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Economy

High Interest Rate Will Hurt New Job Creation, Exacerbate Unemployment – Manufacturers Tells FG

The Manufacturers Association of Nigeria (MAN) has said the recently increased interest rate would drag on new job creation and subsequently lead to job loss amid Nigeria’s already worrisome unemployment rate.

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The Manufacturers Association of Nigeria (MAN) has said the recently increased interest rate would drag on new job creation and subsequently lead to job loss amid Nigeria’s already worrisome unemployment rate.

In a statement signed by the Director-General of MAN Segun Ajayi-Kadir, manufacturers disclosed that the increase in the Monetary Policy Rate and the Cash Reserve Ratio portended worrisome negative consequences for the manufacturing sector.

MAN noted that the increase in MPR from 14 percent to 15.5 percent would rub off negatively on other rates and dash the hope for a single-digit lending rate for the productive sector of the economy.

It further said that the recent development would lead to an increase in the cost of borrowing by manufacturers, further beyond the double-digit rate, which would disincentivize new investments in the sector.

The statement read in part, “The observed continuous contractionary monetary policy posture without complementary fiscal support may not effectively reduce the prevailing inflationary pressure on the economy.

“This is not unconnected with the fact that the current increase in consumer price index as reported by NBS is not largely driven by the monetary phenomenon, as self-inflicted weak foreign exchange rate management can be linked to the pressure.”

MAN disclosed that the rate hike would cause increased factor costs which will inflate the price of  products, stating that it was hopeful that the CBN would creatively go beyond the conventional monetary management system because global economic dynamics were changing and conventional measures might no longer be effective.

The statement further read, “It is important that the monetary authority strategically set in motion mechanism for holistic balancing of the real interest rate, which is critical to investment and not just following leading economies to adjust Interest rate without considering domestic peculiarities.”

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