The Nigerian Content Development and Monitoring Board (NCDMB) has started working with Nigerian National Petroleum Corporation (NNPC), Oando Group, Sahara Energy and other firms to promote local manufacturing of gas cylinders
NCDMB and its stakeholders in the Liquefied Petroleum Gas (LPG) or cooking gas downstream sector recently set up a committee that will develop a strategy to drive the manufacturing of cylinders, deepen the utilisation of gas and address challenges that may hinder the process.
Ernest Nwapa, executive secretary at NCDMB, said that President Goodluck Jonathan’s administration has been promoting manufacturing particularly in the oil and gas industry because of the potentialities of creating thousands of jobs, retaining spend in-country and developing technology.
He described gas cylinder manufacturing as a quick win, noting that local service companies now fabricate complex structures for the oil and gas industry and several companies were investing millions of dollars in setting up facilities and acquiring assets.
“Once key members in leadership on the government and industry side agree on the framework, it will work. Today, investors have put down their funds on assets that depend on long term contracts. Gas cylinders are tied directly to a huge market; the opportunities are there, even across the Gulf of Guinea,” Nwapa added.
According to the executive secretary, once local manufacturing of gas cylinders began, the government would ban the import of gas cylinders and insist that LPG producers like NLNG and ExxonMobil deliver gas only to facilities that comply with its policies.
The push for local manufacturing of gas cylinder is reported to be integrated into President Jonathan’s Gas Revolution agenda and complement government’s drive to get all Nigerians to adopt gas as the preferred fuel for cooking.
Nwapa suggested that NCDMB may use a part of the Nigerian Content Development Fund (NCDF) to support companies that are committed to manufacture gas cylinders.
Tony Ogbuigwe, managing consultant of PEJAD Nigeria Limited, said that NCDMB’s gas cylinder manufacturing scheme is supported by Section 53 of the Nigerian Content Act, which prohibits the importation of welded steel products. He informed that only five per cent of the 26mn Nigerian families currently use LPG as their cooking fuel.
He explained that about 2.5mn cylinders were estimated to be in the country and if 10 per cent of the 26mn families in Nigeria were to use gas, with each owning two cylinders, the demand for gas cylinders will grow to five million.
Managing director of NNPC Retail Chris Osarumwense said that the corporation’s was committed to promoting local manufacture of gas cylinders and that gas usage must also be grown reasonably before it can support local manufacturing on a cost-effective basis, suggesting that the price of gas and cylinders must be reduced significantly.
“Most countries that have successfully launched LPG scheme have a domestic price for the product. NNPC has one of the lowest prices for LPG, but the pace with which we sell is much slower than we thought.We need to get the Nigerian Liquefied Natural Gas (NLNG) Company and the federal government to develop a domestic prize for LPG. Also kerosene should no longer be subsidised,” Osarumwense added.