A Review of the Nigerian Energy Industry

Govt approves local manufacturing of gas cylinders

cooking gas19 August 2014, Abuja – In a bid to consolidate the gains recorded in the implementation of the Nigerian Oil and Gas Industry Content Act (NOGIC) Act 2010, the federal government has approved the utilisation of part of the $350 million Nigerian Content Fund (NCF) to encourage local manufacturing of gas cylinders in the country.

The decision by government to encourage local manufacturing of cylinders had prompted the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, to cancel a recent plan by the Retail Department of the Nigerian National Petroleum Corporation (NNPC) to launch cooking gas cylinders in the country.

The minister, it was learnt, cancelled the NNPC’s proposal, insisting that the corporation should not launch imported cylinders but should encourage efforts to manufacture it locally, in line with the Nigerian Content Act.

Executive Secretary of Nigerian Content Development and Monitoring Board (NCDMB), Mr. Ernest Nwapa, also confirmed at the weekend that the minister has directed the agency to issue a public notice to encourage local and foreign operators willing to invest in local manufacturing of cylinders.

Nwapa stated that contrary to the impression being created in some quarters, the NCF is not meant to be given out to indigenous operators that want to execute projects locally but to give comfort for banks to fund the activities of indigenous operators that will promote Nigerian Content in the oil and gas industry.

According to him, many of the banks that are currently funding operations are doing so because of the existence of the NCF.

“The funds are sitting there in many banks and the banks are linking the loans they are giving to stakeholders to that fund. But it will never be a fund that people will treat as a grant,” he said.

“If you look at the newspapers in the next few days, you will see that the minister has approved for us to go for local manufacturing of gas cylinders. So, if you come today and say you want to push for gas cylinder manufacturing, we will write to the banks to support you with the Nigerian Content Fund because it is a new area.

“We want Nigerians to cook with gas but we do not want them to continue to import cylinders. We can say that if any bank wants to fund a gas cylinder plant we are willing to take let us say $50 million and put in the special fund to underpin that transaction. But we are not going to give somebody $50 million to go and start manufacturing. It is the role of the banks to fund projects,” Nwapa explained.

Nwapa said he was finalising the public notice, adding that the government would not want people to flood the country with imported cylinders.
He stated that facilities to manufacture gas cylinders locally were available in the country, stressing that this would also create employment opportunities for Nigerians.

The NCDMB scribe reiterated that the role of the government was to provide enabling environment for the local manufacturing of equipment used in the oil and gas industry.

“The government will create the environment and keep encouraging people. The government on its own will not start doing these things. What we are asking people is to step up and identify these opportunities and put their feet behind it and the government will do the rest,” Nwakpa said.

He added: “The fund is there and it is accessible but it is not supposed to be given to local operators. It is supposed to facilitate funding agencies to give out the money. That is how the fund is designed as this phase. The fund came in as a zero fund but it has grown to over $300 million. We designed it such that in the first five years, it will only be a fund that funding agencies will see as a guarantee.”


– This Day

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