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He believed the preference aimed to enable NIPCO to dominate the CNG business and stifle competition.
Concerns are rising among marketers about the government’s grant of excessive rights to NIPCO, potentially leading to a monopoly in the Compressed Natural Gas (CNG) market.
This worry stems from a recent gas explosion at NIPCO’s CNG station in Benin City, Edo State.
Marketers like Alhaji Atolagbe Adeyemo, a major CNG conversion centre owner in Ibadan, questioned NIPCO’s competence to handle the massive task of dispensing CNG and converting PMS-powered vehicles to CNG.
Adeyemo notes that the government’s favoritism towards NIPCO may undermine efforts to provide relief to Nigerians amid financial challenges.
He believed the preference aimed to enable NIPCO to dominate the CNG business and stifle competition.
Energy sector experts share similar concerns, warning that unchecked rights granted to NIPCO could result in an “unwarranted monopoly” that hinders the government’s goal of poverty alleviation through the CNG initiative.
NIPCO Gas, a joint venture with Nigerian Gas Company Limited (NGC), owns 67 CNG cascades for industrial supply.
Clement Craig, an energy expert and ex-staff of ExxonMobil, notified with fear that giving preference to NIPCO Plc by government may spell undue dominance of the CNG initiative and culminate into a monopoly, such that is presently affecting the Nigeria oil sector.
The recent explosion at NIPCO refilling station, Benin, has caused a lull in patronage to CNG conversions in no small measure, as morales were dampened, particularly around Benin City, many of who were stone-stunned at the sight of the inferno that erupted, ostensibly as a result of laxities on the part of station management.
While another expert in the sector who spoke on condition of anonymity, said government ought to limit the grant of NIPCO to managing gas station alone, he described the concession right given to the Indian company on conversion as unjustifiable.
NIPCO Plc has been enjoying unfettered relationship with the federal government of Nigeria since March 2007, when it made presentation of its CNG project to the Inter-ministerial team of government.
In the same month, the Nigerian government accorded approval for NIPCO to commence the proposed project at Benin City.
NIPCO Gas was formed as Joint Venture Company between NIPCO and Nigerian Gas Company Limited (NGC) to implement the CNG project.
But the company’s stations have been severally accused recently of undertaking risky conversions and failing to inspect vehicles properly.
Whereas the proper conversion of vehicles to be CNG compliant is prerequisite to efficient delivery of the Presidential Compressed Natural Gas Initiative, PCNGI, there are agitations that the federal government should not further becloud NIPCO responsibilities with vehicle conversion.
Opinion is that adding such into NIPCO’s responsibilities may lead to needless monopoly and perceived favouritism.
The Federal Ministry of Finance was said to have been behind NIPCO to be the sole sourcing entity for its new order for PCNGI against better judgements of professionals.
Several professionals said the conversion industry mentioned NIPCO’s poor quality and anti-competitive practices, as the company insists only vehicles it converts will be refilled at its depots.
NIPCO’s attempt at monopoly in the CNG sector extends to the sole sourcing it drives to secure with the Ministry of Finance where it only deals with favoured suppliers to the exclusion of internationally well-established manufacturers that are better than those NIPCO is pushing
Beyond the scandalous sole sourcing ongoing at the Ministry of Finance, in which the procurement director, one Simon Agenyi, reportedly resigned last week, NIPCO is also attempting to corner the gas game.
Several actors within the industry, including the NNPC Retail, have complained that NIPCO retail pump pricing is monopoly driven.
It is reported that NIPCO is deliberately keeping the price of gas low at N230 to fence off other players and monopolize the market; leveraging the pioneer agreement it has with NNPC Gas Marketing Limited, such which Nigeria Gas Marketing Limited (NGML), does not offer the sister company; the NNPC Retail Limited.
This interplay of prices has limited investments in the CNG sector, and even big players like Greenville and Gas Tech have complained that they cannot invest in the sector due to lack of price parity to drive investments.
NGC, which is subsidiary of NNPC owns 55% of equity while NIPCO owns the balance 40% equity.
Currently, NIPCO has established 15 CNG stations in Benin City and plans to construct 15 more. Over 5,600 vehicles have been converted to CNG in Benin City.
These developments raise questions about the balance between promoting CNG adoption and ensuring fair competition in the market.
