FG makes another move to help filling stations begin sale of fuel priced at N200

The federal government will consider assisting independent fuel marketers financially in installing Compressed Natural Gas (CNG) pumps at filling stations.

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) had earlier ordered all filling stations to commence selling CNG.

The order is part of President Bola Tinubu administration's broader plan to accelerate the adoption of CNG across Nigeria.

CNG and price

CNG is a fuel gas under pressure that remains clear, odourless and non-corrosive. It is an alternative to petrol.

According to Nagendra Verma, the managing director of NIPCO Gas said AutoGas for cars, taxis and tricycles is being sold at about N200 per standard cubic foot, while for heavy commercial vehicles, CNG is sold at N260 per standard cubic meter (SCM).

CNG fuel at filling stations

Punch reports that following the directive, the Independent Petroleum Marketers Association of Nigeria (IPMAN) complained that installing CNG pumps was too expensive.

They cited the current high cost of borrowing from banks as one reason it will be challenging to help achieve the government's objectives.

Chinedu Ukadike, quoted in the report, noted that IPMAN members support the federal government move but lack the funds to install CNG pumps in filling stations across the country.

He said:

"In our last meeting with the Nigerian Midstream and Downstream Petroleum Regulatory Authority, we were advised to install pumps and tanks as add-ons to our stations. We raised concerns about licensing and the conversion centre for CNG vehicles. Despite the government's agreement to use some of our stations as conversion points, we are still unclear about the next steps to integrate independent marketers into the CNG programme.

"Regarding financing, some banks have approached us, but we believe a government-established microfinance bank, or an energy/petroleum bank is necessary for marketers to obtain loans without high interest rates.

"The current commercial bank interest rates are unsustainable, and we need government assistance for fresh capital. We are already incurring significant costs in distributing petroleum products.

"We would, however, also appreciate having an energy bank to enable us obtain loans at a better rate than the current one. I will also state clearly that marketers can distribute CNG. We control over 80 per cent of the distribution outlets scattered across the nooks and crannies of the nation.”

FG ready to help marketers install CNG pumps

In response, Michael Oluwagbemi, the programme director/chief executive officer of the Presidential Compressed Natural Gas Initiative, said the government would consider assisting the marketers if they needed funding to install CNG pumps at their filling stations.

He, however, noted that the marketers already have access to a number of government interventions. Michael Oluwagbemi added:

"If a coordinated response is needed, such as creating a special sub-fund within these existing funds, we’ll certainly consider that possibility. However, it is feasible to finance it. We've assessed the return on investment for gas, and it's significantly higher than that of petrol, gasoline, and diesel.

"Therefore, even with a financial or commercial loan, they can break even within 18 to 24 months if they have a solid business proposition."