Why investors are reluctant to invest in CNG


Investors in the energy sector are not taking advantage of the National Gas Expansion Programme (NGEP) and the Presidential Compressed Natural Gas (CNG) because investment in CNG is capital intensive.

President, Petroleum Retail Outlet Owners of Nigeria (PETROAN), Mr. Billy Harry, explained that to fix one modest CNG station cost between $380,000 and $500,000.

He noted that from operation, purchase and to installation of CNG in one filling station could cost about $1 million.

Analysing the reasons for apathy for the business, he said: “One, because even during President Muhammadu Buhari ‘s tenure, to fix one CNG modest station, would be between $380,000 and $500,000.

“And you will do the same for another station. So, at any point in time,  you are looking at operation, purchases,  installation and all of that, you are looking for $1 million in account for just one filling station.”

Harry added that the conditionality for accessing the Central Bank of Nigeria (CBN) loan for the NEGP was too stringent.

He said the NGEP failed owing to the fact that the Federal Ministry of Finance and the CBN refused to consider economic realities but rather based the policy on armchair financial statistics.

“To have a daughter station and a modest station and, off course, if you have served multiple stations that price  was never accessible by the CBN loan that was programed for the NGEP.

“That made the programme to fail. It means that the CBN, the government and the Ministry of Finance did not work out through reality of the business.

“It did not just work out because the policy was based on armchair financial statistics. It doesn’t work that way,” Harry said.

On the Presidential Initiative on CNG, the PETROAN boss was concerned that committee does not consist of the industry operators such as the marketers, transport owners, retail outlets owners and depot owners.

He noted that on the other hand, the committee is headed by non – professionals instead of those who can practically  table and tackle the challenges.

Harry said, “In President Bola Tinubu regime, it has now become a Presidential Committee on CNG, headed by the Chief of Staff. The concern we should express here is that we need to get this business done by professionalism and get it done by professionals. Retail outlets owners, depot owners, major marketers, the National Association of Road Transport Owners, these are directly impacted people.