CEM REPORT, ECONOMY| Nigeria’s government is making a significant push towards Compressed Natural Gas (CNG) adoption, aiming to convert one million vehicles by 2027. This initiative is expected to save the country billions of dollars annually while reducing reliance on imported petrol and promoting a cleaner environment.
In a stakeholder meeting held in Ilorin, Kwara State, the Programme Director/Chief Executive of the Presidential Initiative on Compressed Natural Gas (Pi-CNG), Michael Oluwagbemi, announced a crucial incentive for CNG adoption.
A federal government circular approved by President Bola Ahmed Tinubu and issued by the Ministry of Finance grants duty waivers for all imported CNG vehicles, conversion kits, and equipment used to manufacture CNG vehicles domestically.
“This is a standing order of the Federal Government,” emphasized Oluwagbemi.
“It applies to both those who are already manufacturing CNG vehicles in Nigeria and those who are bringing them in. However, compliance with regulations set by SON and other relevant agencies is still mandatory.”
This duty waiver is a significant step towards making CNG vehicles more affordable and accessible in Nigeria. By removing import duties, the government aims to stimulate the CNG market, encouraging both domestic production and imports.
CNG: A Cheaper, Cleaner, and More Reliable Fuel Option
Oluwagbemi highlighted the numerous advantages of CNG vehicles compared to their petrol counterparts.
“CNG vehicles offer a cleaner and better fuel source, leading to a safer environment,” he explained.
“They are also significantly cheaper to run, with costs being 40 to 70 percent lower than petrol vehicles. Additionally, CNG vehicles offer better reliability, requiring fewer trips to the mechanic for maintenance like oil changes.”
Nigeria boasts vast natural gas reserves, making CNG a more sustainable and cost-effective domestic fuel alternative compared to imported petrol.
Conversion Incentives
While the current conversion cost for petrol vehicles to CNG falls between ₦300,000 and ₦750,000, Oluwagbemi assured that the government is actively working on a conversion incentive program. This program, set to be announced on May 29th, 2024, aims to make CNG conversion more accessible.
“The program will start gradually and improve over time,” he stated. “Our goal is to convert one million vehicles by 2027, saving the nation $2.5 billion to $3.5 billion annually and reducing our petrol consumption by nearly 10 million liters.”
The conversion incentive program is expected to offer benefits like access to gradual payment options and discounted conversion rates. This will significantly reduce the upfront cost barrier for Nigerians looking to switch to CNG vehicles.
The government’s commitment to CNG adoption extends beyond cost savings. Oluwagbemi emphasized the environmental and economic benefits of this initiative.
“Once the government provides CNG kits and conversion options for commercial vehicles, which transport roughly 90% of the population, there will be no justification for reneging on the subsidy removal promise,” he declared.
“This transition will ensure Nigerians don’t subsidize imported poverty and job exports associated with petrol dependence. Instead, we can export our natural gas resources and utilize them for the benefit of all Nigerians.”
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If You Ask Me
By promoting CNG adoption, Nigeria is paving the way for a cleaner, more sustainable, and economically robust future. The duty waivers, conversion incentives, and environmental benefits make CNG a compelling fuel option for both individual and commercial vehicle owners.
