The Independent Petroleum Marketers Association of Nigeria (IPMAN) has announced that it is nearing completion of its plans to introduce compressed natural gas (CNG) as a cost-effective alternative to petrol. Chinedu Okoronkwo, the national president of IPMAN, revealed that the association is 90% ready to roll out CNG by the end of June at a price range of N100 to N110 per litre. Okoronkwo emphasized that CNG would help alleviate the rising cost of energy in Nigeria.
The removal of fuel subsidies has increased transportation fares, higher vehicle fueling costs, and a gradual rise in living expenses. However, IPMAN believes that introducing CNG will provide relief to families and offer various benefits, including powering vehicles, generators, and cooking appliances.
One of the advantages of CNG is its potential to reduce Nigeria’s reliance on fuel imports, as natural gas would be utilized instead. PwC’s report on Evaluating Nigeria’s Gas Value Chain highlights the country’s significant untapped proven gas reserves of 202 trillion cubic feet (tcf) and an estimated recoverable gas of 139.4 tcf.
According to Okoronkwo, CNG-powered vehicles have gained traction due to the growing awareness of their efficiency and affordability compared to traditional fuels like diesel and petrol. IPMAN is optimistic about the market potential for CNG and has garnered support from international companies. However, the association urges the government to create a conducive market and emphasizes that the demand for CNG already exists.
In terms of the impact on the value chain, Okoronkwo mentioned the use of liquefied petroleum gas (LPG) by owners of small generators, with LPG priced at around N700 per kilogram. In contrast, CNG would cost under N100 to N110 per kilogram. The reduced cost of CNG will lead to savings in various sectors, such as transportation of food from rural to urban areas. For example, truck drivers from Kano spend approximately N1.2 million on diesel, but with CNG, the cost would be significantly lower at about N150,000 to N200,000. These savings are expected to translate into cheaper food prices and stimulate other businesses.
Shuaibu Bello, the Director of Gas Analytics and Solutions Limited, supported the introduction of CNG, calling it a game-changer for Nigerians. He emphasized that CNG, priced at N110 per litre, offers a substantial reduction compared to the current price of petrol, which is around N540 per litre.
In April 2023, IPMAN requested a N250 billion intervention fund from the Ministry of Finance to implement the National Gas Expansion Programme (NGEP). The association plans to collaborate with Gas Analytics & Solutions Limited to install natural gas dispensers at their network of over 30,000 filling stations in Nigeria. IPMAN, controlling more than 80% of the downstream oil sector, aims to reduce the need for constructing new filling stations through this co-location model.
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