Autogás: Natural Gas for Vehicles to Replace Conventional Fuels

Interview with João das Neves, General Director of Autogás

Can you give us an overview of the natural gas sector and what is the role of your company in it?

Basically, Mozambique is a big producer of natural gas and with even more gas resources being discovered recently, we now have a great reserve of natural gas to be used in the country and also to export. Mozambique is currently importing most of its energy (diesel, petrol, etc.) and this poses a very difficult situation for the country, as importation costs are high and this is a slippery market, for people cannot really predict what will happen in the future. So, if we have our own source of natural gas, it only makes sense to use it as energy. In the case of our company, we use this energy for transportation, replacing the imported petrol and diesel. This is where Autogás is placing all its efforts. We started in 2008 and from that moment up to now we managed to have around 1800 vehicles, which is not many, but we are growing fast and now the biggest challenge is to expand the number of filling stations, as we currently have 7 filling stations supplying 1800 vehicles.

Why would an investor be interested in investing in this field? Is it a safe investment or a risky one? Is there the possibility of a high revenue and support from the government, or not?

First of, the economy growth in Mozambique is worth of notice, also the country is politically stable, and the opportunity to invest in this energy is one of those occasions that happen once in a generation. An investor can finance anything, but this is one of the industries that is most favorable, now and in the future. The energy sector is, currently, under pressure and if we can find a good solution and investment to develop it, the results would be easy to predict and the possibility of investment failure would be smaller than in other niches.

We started in 2008 and from that moment up to now we managed to have around 1800 vehicles, which is not many, but we are growing fast and now the biggest challenge is to expand the number of filling stations, as we currently have 7 filling stations supplying 1800 vehicles.

What is the current return on investment?

The use of natural gas in vehicles is a well-known industry and the techniques used have been studied for more than 50 years. It’s a proven technique, having around 20 million vehicles running on natural gas worldwide, and increasing at a rate of 12% per year. Moreover, the trend shows that in the next year its use will increase. In Mozambique, apart from the economy, it makes sense to use natural gas, and the government supports the initiative. Furthermore, it’s environmentally friendly. Investors should be interested in financing, not only because it is a new energy source, but because there is a huge potential for growth.

Are you the only company providing this service, do you have partnerships with other companies?

We have been allocated in concessions by the government, this means that the gas is available by means of the government, being used in the domestic industry, with a lower cost than the older energies. Also, we are the only licensed company to provide natural gas to vehicles and the likelihood on the country is to expand, which means 100 or 150 stations providing natural gas. Having begun with 7 filling stations, that proved to be financially feasible, it is now a matter of replicating the experience, at the same time the market grows. Investments are required. I don’t see any reason not to invest in this market.

Where do you see the company in the next 2 years?

Right now the company is growing gradually, dependent on profits. We are structuring the company for bigger investment projects in the next 5 years, and with this, we would be able to expand the network of filling stations rapidly, increasing the number of clients and the business volume. In 2018-2020, the natural gas from the north of Mozambique will also become available and this will allow us to transport it to more remote areas at a cheaper price. By then, natural gas will be a great way to fill vehicles, because this resource is very cheap and easy to transport to distant regions.

Is there a rivalry between you, oil and other resources?

The main constrain is related to imports, so if the currency of the country becomes very strong, the petrol becomes cheaper and this may lead to a challenge, but it is not a big issue, based on the history, nonetheless, if it happens, it can be a challenge. The biggest challenge is the fact that petrol and diesel filling stations have been placed in the country a few decades ago and it will take some time for us to create the infrastructures. Moreover, at the beginning, investments might not generate enough revenue to set up these stations, but I have no doubt that in time this will be a good opportunity for investors.