Despite being Africa’s largest natural gas reserve holder with over 200 trillion cubic feet of proven reserves, Nigeria has barely scratched the surface of its CNG potential.
In July, the federal government approved N36billion to convert 30,000 vehicles to CNG-run ones.
For entrepreneurs eyeing this sector, here’s what you need to know:
Who produces CNG currently in Nigeria and where is the production facility?
- Primary CNG processing occurs at facilities operated by the Nigerian Gas Company (NGC)
- Major facilities are located in Delta State (Warri), Rivers State (Port Harcourt), and Lagos State
- Shell, Total, and Chevron are key upstream producers working with NNPC
What type of transportation facility is used to evacuate it from the facility?
- Virtual pipeline systems using specialised tube trailers
- Limited pipeline network primarily in the South-South and Southwest regions
- Mother-Daughter station setup where CNG is compressed at mother stations and distributed to daughter stations
Where are the storage facility currently located?
- NIPCO operates major storage facilities in Lagos, Port Harcourt, and Benin City
- Green Gas Limited (NIPCO-NNPC JV) maintains storage infrastructure in Ibadan and Benin City
- Limited storage capacity remains a significant challenge
What companies currently stores and distributes CNG in Nigeria?
- NIPCO Plc (market leader)
- Green Gas Limited
- Shell Nigeria Gas (SNG)
- Total Nigeria
- Axxela Limited (formerly Oando Gas & Power)
What are the market entry points for investors?
- CNG conversion center operations
- CNG retail station establishment
- Fleet conversion services
- Transportation and logistics services
- Equipment supply and maintenance
How many vehicles are currently running on CNG in Nigeria?
- The market is growing with over 7,000 vehicles converted to CNG as of 2024
- Major adoption by commercial fleets and government vehicles
- Increasing interest from private vehicle owners What are the trading opportunities in CNG?
- Bulk purchase and retail distribution
- Equipment importation and sales
- Technical services provision
- Training and certification services
- Why are we being encouraged to use CNG, in spite of safety concerns?
- CNG is the safest for vehicles, fake fabrication and installation lead to accidents
- Environmental concerns and climate commitments
- Reduction in fuel subsidy burden
- Foreign exchange conservation
- Job creation potential
What immediate opportunities exist for its monetisation?
Immediate opportunities include:
- Setting up conversion centers
- CNG equipment supply
- Fleet management services
- Training and certification programs
- Retail station franchising
What are the other key considerations?
- High initial capital requirements
- Need for technical expertise
- Regulatory compliance requirements
- Safety considerations
- Infrastructure limitations
Way Forward
The CNG sector in Nigeria represents more than just an alternative fuel source, it is a frontier for entrepreneurial innovation and sustainable development.
With the government’s renewed focus on gas utilisation and increasing environmental consciousness, early movers in this space stand to benefit significantly. However, success requires careful planning, technical knowledge, and strategic partnerships.
For entrepreneurs ready to take the plunge, the CNG sector offers multiple entry points across the value chain. The key is to identify where your capabilities align with market needs and regulatory requirements.
While challenges exist, particularly in infrastructure and initial capital requirements, the potential returns and positive environmental impact make CNG an attractive investment proposition for forward-thinking business leaders.
