The finance minister has said that CNG costs are half of petrol costs in Nigeria. He said this during the November 14 launch of the Nigerian Banking Sector report by Afrinvest in Lagos.
The country’s Finance Minister, Wale Edun, was represented by Dr. Armstrong Takang, the Managing Director of the Ministry of Finance Incorporated (MoFI).
According to him, increasing the adoption of CNG in Nigeria will reduce the cost of production for businesses and households, while noting that the country needs a ramp-up in investments to aid the full implementation of the CNG plan.
He said:
- “I do not know if any of you have been watching the campaign on the substitution of premium motor spirit (PMS) for CNG. It is an early step that we are taking. When you look at the price of CNG versus PMS, it ranges from half of it and sometimes it comes down to a quarter of what it costs to run on PMS.
- “We believe that given that we are a gas nation and gas is cleaner than PMS, if we aggressively move in that direction, it can have a significant impact on the cost of not only fueling our vehicles, but mass transit, as well as factories that run on fuel and diesel.
- “We are taking steps in that direction. You will be seeing some announcements in due course in terms of steps that are being taken to trigger a demand in that value chain. There is a lot of investment that has to be done in terms of conversion kits, refuelling stations, and in terms of midstream in terms of transportation of infrastructure and upstream.
- “A lot of investment needs to go into that. We believe that it provides an opportunity for the private sector to partner.”
The Tinubu-led administration is focused on the adoption of compressed natural gas (CNG) as a cheaper alternative (N213 per standard cubic meter as of August 2023) to the use of PMS (petrol) in the country due to the removal of subsidies which have impacted petrol pump prices (now at N640 per liter in Abuja and over N685 in Kano, Sokoto states).
In August 2023, the Nigerian National Petroleum Company Limited went into an agreement with Nipco Gas Limited to develop mother-daughter stations across the country from 2024 to provide CNG to Nigerians at a cheaper rate than petrol.
However, before such a plan can be implemented, there needs to be mass conversion of vehicles and other large equipment to run on CNG.
According to the NNPCL, under the strategic partnership with Nipco, 35 state-of-the-art CNG stations will be constructed nationwide, including three (3) Mother stations.
Once fully operational, the stations can service over 200,000 vehicles daily, thereby significantly reducing the cost of automobile fuel for Nigerians and the cost of transportation.
The project will be rolled out in phases. The first phase, comprising 21 CNG stations, will support intra-city transportation and be ready by the first quarter of 2024; while the second phase, comprising 35 CNG stations, will support inter-city transformation and will be ready by late 2024.
This will be further complemented by an additional 56 stations to be deployed by NNPC Retail across the country.
… yes, half the price for now. And I wonder what’d prevent it from doubling in the near future like everything else around here, perhaps even nullifying the projected long term savings from the high initial cost of converting vehicles in the first place.