Natural Gas Pricing & Investment Opportunities in Nigeria’s Auto CNG Sector

The MEMAN Competency Centre convened a high-level virtual webinar uniting government, industry, and financial stakeholders to discuss investment opportunities in Nigeria’s Compressed Natural Gas (CNG) transport sector. The focus was on natural gas pricing under the Petroleum Industry Act (PIA), regulatory progress, and strategic initiatives supporting the nationwide adoption of CNG mobility.

Key participants included representatives from the Ministry of Petroleum Resources (Gas), Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Presidential CNG Initiative (PCNGi), Gas Aggregation Company of Nigeria (GACN), Midstream & Downstream Gas Infrastructure Fund (MDGIF), and other industry leaders.

Key Highlights

Safety Briefing
Presented by Engr. Moses Okoh (Operations Manager, MEMAN), participants were reminded to prioritise situational awareness and avoid attending the webinar while driving.

Welcome Address
MEMAN Chairman, Mr. Huub Stokman, emphasised MEMAN’s commitment to accelerating CNG adoption through strong stakeholder collaboration, policy incentives (e.g., tax waivers, concessionary loans, improved FOREX access), and infrastructure development. He highlighted the importance of public education on CNG’s cost savings, environmental benefits, and safety, reaffirming MEMAN’s role in linking policy with market growth.

Opening Remarks
Delivered on behalf of the Honourable Minister of State for Petroleum Resources (Gas), the Minister praised MEMAN’s alignment with the Federal Government’s Decade of Gas agenda. He outlined key enablers for Auto CNG growth: transparent market pricing, public-private partnerships, and innovative funding to address infrastructure gaps. The government commits to working with stakeholders to ensure supply reliability, fair pricing, and a resilient gas economy that supports industrial growth and sustainability.

Regulatory & Pricing Framework – NMDPRA
Following the opening remarks delivered on behalf of the ACE, NMDPRA, by Engr. (Dr.) Lukeman Ayorinde Cardoso (Director/Regional Coordinator, Southwest, NMDPRA), a presentation was made by Engr. Adedayo Oyinlola (Technical Assistant to the ACE). The session reviewed Nigeria’s natural gas pricing framework under the PIA and NMDPRA’s role in setting market-based prices. Highlights included:

• Nigeria’s 210+ TCF proven gas reserves and critical infrastructure projects (AKK and OB3 pipelines)
• 2025 Domestic Base Price (DBP) set at $2.13/MMBtu (12% decrease from 2024)
• Concessionary CNG pricing at $1.57/MMBtu for five years
• Targets to increase daily gas supply from 3.85 to 5 Bcf/d
• Support for NGEP, PCNGi, and development of a Domestic LPG Pricing Framework

NMDPRA reaffirmed its commitment to enabling growth, stability, and investment across the gas value chain.

Regulator’s Response on Gas Pricing

Engr. Steve Ayuba (Director, OACE, NMDPRA), gave the following points:

• Pricing has evolved from fully regulated to a balanced, market-based framework under the PIA 2021.
• Current prices reflect market fundamentals and government policies, supporting gas consumption primarily in the power sector (~70% demand).
• CNG enjoys a concessionary price for 5 years to encourage adoption.
• Distribution tariffs are regulated to be cost-reflective and avoid overpricing.
• The regime balances growth incentives with market viability.

Presidential CNG Initiative (PCNGi)
Led by Engr. Michael Oluwagbemi, PCNGi has driven remarkable growth since October 2023 by establishing a demand-driven, private sector-led model, supported by government facilitation and incentives rather than direct control. Key achievements include:

• 255 operational conversion centres nationwide, converting over 40,000 vehicles to CNG in 18 months
• Attracted $500 million in capital investment
• 40 CNG refuelling stations operational, with 172 under construction and 375 more planned
• Trained over 2,500 technicians and distributed more than 100,000 conversion kits
• $160 million invested so far in 2025, showing sustained monthly growth of 29%

Challenges remain, particularly limited CNG infrastructure coverage (less than 60 stations out of 20,000+ fuel stations), permitting delays, and financing gaps. The initiative calls for accelerated infrastructure expansion, streamlined permits, and innovative funding to meet surging demand, now extending beyond corporate fleets to SMEs and individual vehicle owners.

Gas Aggregation Company of Nigeria (GACN)
Presented by Mr. Chijioke Uzoho, GACN’s evolving mandate under the PIA encompasses full value chain gas supply facilitation, emphasising domestic market growth. Its role includes:

• Facilitating gas delivery from wellhead to end-users with standardised, affordable Gas Supply Agreements (GSAs), cutting negotiation timelines from 2 years to 6–12 months
• Managing over 2.3 billion cubic feet/day of contracted gas volume, covering over 80% of Nigeria’s domestic gas demand
• Supporting major industrial and power users, pioneering virtual gas solutions, and sustained interventions across sectors such as methanol, textiles, and captive power

From 2023–2026, GACN prioritises CNG mobility, collaborating with NMDPRA to develop a Mobility Gas Access Framework, securing an initial 20 million scf/day for transport with a target of 47 million scf/day by 2026. The company aims for transparent, equitable distribution with a commercial rollout slated for mid-2025.

Midstream & Downstream Gas Infrastructure Fund (MDGIF)
On behalf of the ED, MDGIF, Engr. Duruji Elvis outlined the MDGIF as a government equity fund designed to reduce investment risks and bridge financing gaps for midstream/downstream gas infrastructure, including CNG infrastructure, flare gas commercialisation, and vehicle conversion projects. Key features include:

• Equity participation and long-term leasing to lower upfront CAPEX barriers, with a governance model ensuring transparency and private sector alignment
• Investment focus on gas processing plants, commercialisation of flare gas with environmental and employment benefits, storage/terminals for LPG and LNG, transmission pipelines, and retail infrastructure including mother and Autogas stations
• Addressing challenges such as high capital costs and project delays by introducing leasing models and partnerships with OEMs and retail networks

To replace 5% of PMS fuel with CNG, the fund projects infrastructure for 444 CNG mother stations, 307 Autogas stations, and 600,000 vehicle conversions, at an estimated cost of $420 million USD. Vehicle conversion costs currently range between ₦650,000 and ₦800,000 per vehicle. The fund is designed for sustainability by recycling capital into future projects.

The application process is streamlined and moving toward automation, with equity investments capped at about 45% and strong regulatory collaboration to facilitate project approvals.

Closing Remarks
Dr. Adewoye Ayotunde, Chairman, MEMAN Gas Committee, called for the adoption of truly cost-reflective pricing to ensure the viability of the industry. He urged faster permitting processes and temporary regulatory waivers to accelerate the deployment of CNG stations across the country.

He emphasised the importance of collaboration among government bodies, investors, and marketers to foster a liberalised gas economy. Highlighting the urgency, he described the auto gas rollout as an “emergency” that requires immediate acceleration.

Dr. Adewoye supported temporary guideline relaxations, provided they do not compromise safety and quality standards. He recognised the current pricing framework as a balanced middle ground suitable for the early stages of market development.

He praised the critical contributions of the Gas Aggregation Company of Nigeria (GACN) and thanked all panellists, organizers, and participants for a well-run and engaging webinar.