Nigerian Government Announces Price for CNG Following Subsidy Removal

The Nigerian government has recently fixed the price of Compressed Natural Gas (CNG) at $1.57MMBtu.

This decision comes as part of the government’s efforts to provide a viable alternative to fuel following the removal of the fuel subsidy.

Michael Oluwagbemi, Programme Director/Chief Executive Officer of the Presidential Compressed Natural Gas Initiative (PCNGi), made this announcement in a statement on April 23, 2024.

The pricing for CNG is notably lower compared to the prices set for commercial and power sector players, which are $2.92 and $2.42, respectively.

This categorisation of CNG as a special status under the Nigerian Mainstream and Downstream Petroleum Regulatory Authority (NMPDRA) is a strategic move to encourage the use of CNG in various forms of transportation.

As a subset of Gas to commercial (GTC) purposes, CNG will benefit from Gas Based Industries (GBI) pricing categorisation for an initial period of five years, with the possibility of renewal under the Petroleum Industries Act (PIA) 2021.

The decision to designate CNG as a GBI is part of the government’s broader plan to transition the country towards more sustainable and environmentally friendly energy sources.

By offering a lower price for CNG, the government aims to make it an attractive alternative to traditional fossil fuels, thereby reducing the country’s carbon footprint and dependence on imported oil.

This development follows President Bola Tinubu’s announcement in May last year regarding plans to roll out CNG buses to cushion the impact of fuel subsidy removal.

The government has been working on launching 2,700 CNG buses as part of this initiative. With the recent announcement of the CNG price, the government is now set to launch the project before May 29, 2024.

The Nigerian government’s decision to fix the price of CNG at $1.57MMBtu is a significant step towards promoting the use of Compressed Natural Gas in the country.

By offering a lower price and special status for CNG, the government aims to make it a viable and sustainable alternative to traditional fuel sources, ultimately benefiting both the environment and the economy.