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The Future of Compressed Natural Gas in Nigeria’s Transportation

By Yemi Olakitan

Compressed natural gas (CNG) is a cleaner and cheaper alternative to gasoline for automobiles anywhere in the world and it is time for the Federal Government and the Nigeria automobile sector to begin preparing infrastructure for a change that must come.

This is because CNG can transform the automobile sector in Nigeria by reducing pollution, saving costs, creating jobs, and enhancing energy security. The benefits CNG are innumerable and it proves that CNG is the future of automobile in Nigeria and the world.

CNG emits less carbon dioxide, nitrogen oxides, and particulate matter than gasoline, which can improve air quality and mitigate climate change. Nigeria is one of the largest gas flaring countries in the world, which contributes to greenhouse gas emissions and environmental degradation. By capturing and utilizing the flared gas for CNG production, Nigeria can reduce its flaring and its associated negative impacts on the environment.

CNG is cheaper than gasoline in Nigeria, as the latter is heavily subsidized by the government. The subsidy on gasoline costs Nigeria about N1.2 trillion annually, which could be better spent on other sectors such as health and education, although that is set to have been removed recently.

By switching to CNG, Nigeria can save money on fuel imports and subsidies, and pass the savings to consumers and the economy. The projected cost of CNG is expected to be approximately N250 per litre, compared to N162 per litre for gasoline.

CNG can create new opportunities for employment and income generation in Nigeria, especially in the gas sector. The government estimates that CNG can create 300,000 jobs, produce 600,000 MT of LPG per year, and generate 2.5 GW of power from new and existing IPPs². CNG can also stimulate the development of local industries and services, such as CNG refuelling stations, conversion kits, and maintenance facilities.

CNG can enhance Nigeria’s energy security by diversifying its fuel mix and reducing its dependence on gasoline imports. Nigeria has abundant natural gas reserves, estimated at 203 trillion cubic feet, which can last for over 100 years at the current rate of utilization, according to reports.

By using its own gas resources for CNG production, Nigeria can reduce its exposure to external shocks and volatility in the global oil market.

However, there are also some challenges and barriers to the adoption of CNG as an alternative fuel for automobiles in Nigeria, such as:

Nigeria lacks adequate infrastructure to support the widespread use of CNG, such as gas pipelines, distribution networks, refuelling stations, and conversion facilities. The government needs to invest in developing and expanding the gas infrastructure, as well as providing incentives and subsidies for private sector participation.

Many Nigerians are unaware of the benefits and availability of CNG, or are reluctant to switch from gasoline due to perceived risks and inconveniences. The government needs to increase public awareness and education on CNG, as well as provide guarantees and assurances on the safety, quality, and reliability of CNG.

Nigeria faces some policy and regulatory challenges in promoting CNG, such as the lack of a clear and consistent framework, the multiplicity of agencies and stakeholders, the uncertainty of gas pricing and taxation, and the resistance from vested interests.

The government needs to harmonize and streamline the policies and regulations on CNG, as well as engage and collaborate with all relevant actors, including the oil and gas industry, the automobile sector, the civil society, and the consumers.

CNG can transform the automobile sector in Nigeria by providing a cleaner, cheaper, and more secure alternative to gasoline. However, to achieve this goal, the government and other stakeholders need to address the challenges and barriers that hinder the adoption of CNG, and implement the necessary measures and actions to encourage and facilitate the transition to CNG.

The Bola Ahmed Tinubu administration has taken several steps to promote the adoption of compressed natural gas (CNG) as an alternative fuel for transportation in Nigeria. Some of the initiatives include the
establishment of the Presidential CNG Initiative (Pi-CNG), which aims to provide relief on the cost of living and reduce dependence on fossil fuel by deploying CNG-enabled vehicles and conversion kits across the country.

President Tinubu also approved the establishment of a nationwide network of workshops, local assembly and job creation to support the smooth transition to CNG-fuelled vehicles and targetes states and local governments to roll out CNG buses as part of their intrastate mass transit systems, with incentives for investors and operators while enhancing the in-country manufacturing and automotive capabilities by stimulating the production of CNG-enabled vehicles within Nigeria.

In the private sector the FG is partnering to ensure the transformation to CNG.
Recently, the Chief Executive Officer, 11 Plc, Mr Adetunji Oyebanji recently announced that his company has commenced exploration of Compressed Natural Gas (CNG) market with the construction of facilities in Ibadan and Lagos respectively.

Oyebanji, who disclosed this in an on Thursday, December 28, 2023, in Lagos, said that feat was part of the company’s commitment to intensifying the usage of the product and support for the new administration to further boost the economy.

“We have continued to see improvement in all the investments that have been made in the last few years by upgrading the company to higher pedestal.

He reiterated that the future of Liquefied Petroleum Gas (LPG), could not be emphasised in the growth and development of global economy, Nigeria inclusive.

The industry, according to him, is ready to collaborate with the Bola Tinubu administration to uplift the country’s economy to an enviable height.

Explaining the essence of the oil and gas industry to national economy, Oyebanji said his company, as a model, had invested massively on installations of LPG in 40 retail outlets nationwide.

Oyebanji said: “In terms of investment, we have done a lot as far as LPG installations is concerned.

“In several stations now, we are moving to close to 40 stations nationwide in our LPG installations, and we will continue to do this because we believe that LPG is the way forward.

“We have also invested in new gas station at the toll gate, lbadan, the Oyo State capitaland the station is now operational.

“With its massive investments in LPG storage and distribution infrastructure, 11 Plc. Gas is well-positioned to maintain a dominant presence in the country’s LPG industry for a long time.”

Oyebanji said that the company had expanded its filling plants across the country, noting that it had already expanded storage capacity to 8,000 metric tonnes.

He added that the company had already started exploring CNG market with the construction of facilities in Ibadan and Lagos.

“We continue to see improvement and all the investment that has been made in the last few years have been to upgrade the company and bring out more value.

“We are one of the six major petroleum products marketers in the country. Currently, we have over 250 retail outlets located in all 36 states of Nigeria.

“We are also respected in the industry for our high ethical standards and adherence to safety, health and environmental standards while playing a leading role in the promotion and sharing of best practices in the downstream sector of Nigeria’s oil and gas industry,” he said.

According to him, the firm has its fuel facility and an ultra-modern lube oil plant in Apapa Lagos, with a capacity of 300,000 barrels per annum and we are proud to be regarded as one of the most sophisticated in Africa.

Oyebanji said that millions of dollars had been invested in the company, resulting in significant improvements in all areas of its operations.

ExxonMobil sold its 60 per cent stake in former Mobil Oil Nigeria Ltd. to NIPCO Plc, the parent company of 11 Plc, on April 1, 2017.

Since then, 11 Plc has made significant investments in its facilities to increase productivity and meet market demands.

The future of Nigeria’s CNG industry looks promising, despite the current production levels and limited infrastructure. The government has launched several initiatives to promote CNG as a key transport fuel, such as the National Gas Expansion Programme (NGEP) and the Presidential CNG Initiative.

These initiatives aim to convert millions of vehicles from gasoline to CNG, create jobs, reduce greenhouse gas emissions, and save foreign exchange.

 

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