Firms turn to natural gas as alternative energy for power generation

Compressed Natural Gas (CNG) appears the alternative energy source for industries amid the growing challenges in energy generation in Nigeria.

With industries expending over 40 percent of its total operational costs on energy generation, which in turn has resulted in rising price of goods and services, industry experts believe CNG is the way to go.

Nigeria ranks among the 10 top countries with a rich natural gas deposit, which experts believe should serve the country’s domestic demand effectively.

They observe that CNG is primarily used for power generation and industrial process in Nigeria, although the potential as an automobile fuel is also huge. Natural gas vehicles are widely used in Europe, North America, India and many other developing nations given the expensive prices of petrol and diesel, and efforts to reduce carbon emissions.

Deepak Khilnani, CEO of Powergas Africa Limited, says besides simply the financial savings of operating natural gas instead of diesel, gas combustion emits approximately just one-tenth the amount of nitrogen oxides as diesel, having a very positive environmental impact.

Khilnani observes that natural gas is domestically sourced, boosting local employment, economic growth and reducing strain on the foreign exchange market for dollars, saying that in contrast, despite the vast crude oil reserves in Nigeria, diesel is refined in foreign markets and imported into Nigeria.

He opines that Powergas as a company is heavily committed to providing industries with a cheaper, cleaner and more efficient fuel through our Gas on Wheels solution.

He further informs that Powergas was the pioneer in the Nigerian CNG market, delivering an innovative ‘gas on wheels’ solution to customers across the country. CNG is a popular alternative fuel source to diesel globally as it is easy and safe to transport directly to remote areas via high-pressure skids.

“I think the entire concept of the CNG utilisation is laudable. This partly underscores the fact that Nigeria is extremely rich in natural gas reserves, and the main thrust appears to be the delivery of gas in sufficient volumes that would boost Nigeria’s power generation capacity for industrial and domestic use,” says Rolake Akinkugbe, head, Energy and Natural Resources, FBNQuest.

Akinkugbe opines that this new business decision by Nigeria industries in the area of level of gas production is quite achievable, but it’s going to require significant capital investment and a strong and watertight regulatory framework to drive.

On his part, Kareem Jubril Adedayo, an energy expert, observes that there are some levels of improvement among local gas producers who may serve as major driver of local CNG market.

According to Adedayo, “producers with high gas production are likely to begin commercialisation to cushion the effect of revenue drop from crude oil production. I also expect a push for higher gas price among producers supplying power plants, although I believe export and non-commercialised gas are still going to dominate the industry.”

The majority of private industries in Nigeria today operate on diesel generators for their power requirements due the unavailability of natural gas. However, the rate of switching to natural gas generators is very fast as both the pipeline infrastructure widens and awareness of CNG grows in Nigeria.

Analysts forecast that natural gas fired generation is likely to dominate the market given the clear financial savings.

“The Federal Government of Nigeria is committed to increasing domestic natural gas utilisation rather than importing expensive and polluting diesel. The government’s investment and support in the power and natural gas industry is very good for Nigeria’s long-term growth,” Khilnani said.