The Presidential Initiative on Compressed Natural Gas and Electric Vehicles (Pi-CNG & EVs) has signed a Memorandum of Understanding (MoU) with financing partners to ease CNG vehicle conversion financing and cut transport costs.
Barr. Ismaeel Ahmed, Executive Chairman, Pi-CNG & EV said on Wednesday in Abuja at the official commencement of the strategic partnership that it was designed to ease CNG adoption by reducing the burden of upfront installation costs.
“Financing generally gives flexibility; that is what this partnership will do,” he said.
The News Agency of Nigeria (NAN) reports that the partnership, which kicked off the next phase of Nigeria’s clean mobility rollout, was in response to the growing financial strain on Nigerians due to high energy and transportation costs.
The MoU signing was between the Nigerian Consumer Credit Corporation (CREDICORP), Moniepoint Microfinance Bank Limited (Moniepoint MFB), National Credit Guarantee Company Limited (NCGC) and the Pi-CNG & EV.
The new fund would be repaid with interest of nine to 20 per cent, with the aim of providing affordable credit for Nigerians to obtain CNG conversion kits and repay over a period of six months.
“The financing arrangement, supported by CREDICORP and other financial service providers such as Moniepoint, would allow users to repay installation costs over an agreed period.
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“For example, if the cost of installation and the kit is N100,000, instead of paying N100,000 upfront, which significantly increases your capex, this partnership will enable you to access funds, since we’re talking about last-mile people.
“People using tricycle (keke) and people using all kinds of transportation at the lower level, may not have N100,000 to pay upfront now to be able to convert their kits, even though the subsequent reductions justify whatever it is they spend at the beginning.
“So what CREDITCORP, NCGC and Moneypoint are doing for us is, instead of paying N100,000 upfront, you’re paying it through the course of the next six months.
“So, if you are in business and saving N10,000 weekly instead of spending it on fuel and maintenance, you are not only reducing fuel costs but also cutting maintenance expenses by using CNG,” he said.
He explained that commercial operators who spend heavily on Premium Motor Spirit (PMS) and maintenance stand to gain significantly from switching to CNG, with fuel costs reducing by about 60 to 70 per cent
“A typical operator may spend about N40,000 weekly on fuel and another N10,000 on maintenance. With CNG, its maintenance drops drastically to about N10,000 monthly, saving up to N30,000,” he said.
On rollout, Ahmed disclosed that about 100,000 vehicles were targeted in the initial phase, with room for expansion, based on demand.
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Mr Uzoma Nwagba, Managing Director and CEO, CREDICORP, said the collaboration aligned with the Federal Government’s push to cushion the impact of key policy changes.
”These changes include exchange rate unification and fuel subsidy removal, which target support at low and middle-income citizens.
“While the CNG programme is designed to reduce energy costs, the affordability of conversion kits has remained a major barrier.
“Once a vehicle is converted to CNG, fuel costs can drop by about 75 per cent.
”Someone spending N80,000 weekly on petrol could see that fall to about N20,000,” he said.
To address the upfront cost challenge, Nwagba said the Corporation would enable financial institutions to provide consumer credit at significantly lower interest rates than currently obtainable in the market.
He said that while many Nigerians either fail to access loans or face high borrowing costs, CREDICORP backed facilities offered rates as low as nine per cent, with higher-risk borrowers paying between 20 and 24 per cent.
“This represents a major reduction in borrowing costs and makes life-improving assets like vehicle conversion more accessible,” he added.
He said the initiative also included credit guarantees through the National Credit Guarantee Company to reduce lending risks for participating institutions.
