FG: Converting to CNG could save Nigeria $2.5 billion annually for every million vehicles

The federal government has announced that Nigeria stands to save approximately $2.5 billion each year for every one million vehicles powered by compressed natural gas (CNG).

This statement was made by Michael Oluwagbemi, the program director and CEO of the Presidential CNG Initiative (P-CNGi), during a stakeholders’ engagement meeting held in Port Harcourt, Rivers State, on May 17.

Oluwagbemi highlighted the significant economic benefits of adopting CNG, including reducing the strain on foreign reserves and enhancing the naira’s value. “By converting one million vehicles from petrol to natural gas, Nigeria can save between $2.5 billion to $3 billion annually.

This shift not only alleviates pressure on our foreign reserves but also boosts the naira’s value, fosters job creation, and promotes technological advancements in the petroleum and clean energy sectors,” Oluwagbemi stated.

In addition to promoting CNG adoption, the initiative aims to address the sector’s funding needs, which are estimated at $2.5 billion over the next three to four years. Oluwagbemi emphasized the need for private sector involvement, noting, “We recognize that the government cannot finance this alone.

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We estimate that less than 20 percent of the required funding will come from the government, with over 80 percent expected from private investors.”

Investing in CNG is expected to enhance energy security and make Nigerian goods and services more competitive by reducing fuel costs. Oluwagbemi pointed out that reliance on CNG would shield Nigeria from external economic shocks, such as global oil price fluctuations, since natural gas prices are regulated domestically.

Reflecting on Nigeria’s historical mismanagement of its oil and gas resources, Oluwagbemi lamented, “For nearly six decades, Nigeria has wasted these valuable resources, resulting in significant physical, health, and fiscal repercussions.

Despite having the largest gas reserves in Africa and being the second-largest gas waster globally, Nigeria exports crude oil while importing petroleum products, contributing to severe energy poverty.”

The push for CNG adoption gained momentum following President Bola Tinubu’s announcement on May 29, 2023, ending the subsidy on premium motor spirit (PMS), commonly known as petrol. The government’s advocacy for CNG aims to leverage Nigeria’s abundant natural gas resources to foster economic stability and growth.