PCNGI flags off implementation pricing framework for Auto CNG

The Presidential Compressed Natural Gas Initiative (PCNGI) on Tuesday launched the implementation of a concessionary pricing framework for Compressed Natural Gas (CNG) in the automotive sector.

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Speaking at the mobility CNG supply framework kick-off event in Abuja, on Tuesday, the Programme Director/Chief Executive of PCNGI, Michael Oluwagbemi, said the concessionary pricing structure for autogas CNG approved by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), last year allows autogas CNG to be priced as a strategic industry, much lower than gas for power or industries.

“What we are doing here today is to flag off the implementation of that concessionary pricing framework, because it was necessary, as you can imagine, that in an economy where gas is being used for various purposes, that it’s possible for someone to say, ‘I want to make demands of gas for auto CNG since it’s priced lower, and I’m going to use it for power’.

“So there’s a potential opportunity for arbitrage. So we needed to do it in an organised fashion, create the proper market for autogas CNG, and also then develop the marketplace where people can actually make demand, pay for it, get their gas, and use it and sell it into the auto CNG market,” Mr Oluwagbemi said.

He explained that the market for CNG has been growing tremendously in the last year, adding that the framework lays the foundation for a regulated and efficient marketplace, ensuring that stakeholders across the value chain from gas suppliers to station operators and vehicle owners can participate transparently and sustainably.

“We went from just 20 daughter stations in the country to over 65 as of this morning. We opened two new ones yesterday in Ibadan with Bovis, and we have 27-28 new ones coming up in the next four to five weeks. So there is a growing market.

“We just got the announcement by Mr Dangote that he’s also adding another 100 daughter stations to the 175 that we have under construction. So you can imagine that we need to get this going in an organised way, and that’s what we’re doing here today. So we are launching the framework. We are launching the marketplace for auto CNG, for the utilisation of engines,” he added.

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Also speaking at the event, the Managing Director of Gas Aggregation Company of Nigeria, Chijioke Uzoho, noted that the pricing framework would enforce regulatory and commercial discipline in the CNG market.

“It will ensure that every molecule of gas supplied under the framework is accounted for, and the pricing structure is adhered to across the value chain,” he said.

In her remarks, the Business Development and Strategy Coordinator for PCNGi, Omolara Ogunleye, revealed that the initiative had attracted over $500 million in private investment and trained more than 2,500 technicians to support vehicle conversion.

READ ALSO: PCNGI announces 40% fare reduction on CNG commercial vehicles

She noted that the CNG footprint is now active in 21 states, with 10 more expected to join in the coming months.

“This expansion is not just reducing transport costs but also lowering the cost of governance and boosting state revenues through domestic gas utilisation,” she said.

In August 2023, President Bola Tinubu approved the establishment of the PCNGI. The government said it intended to make sure that about a million vehicles run on CNG.