Nigeria needs integrated gas distribution strategy as CNG demand grows, expert says

Nigeria's expanding use of compressed natural gas (CNG) as a vehicle fuel requires a comprehensive distribution strategy, according to expert Omid Hamidkhani. The country's success depends on reliable supply, efficient distribution, and strict safety oversight. President Bola Tinubu aims to reduce transportation costs for more Nigerians starting October 1 under the National Affordable CNG Transit Programme.

Hamidkhani emphasizes the need for a well-coordinated value chain, including sufficient gas supply, financial incentives, qualified suppliers, and trained conversion centers. He points out that Nigeria has abundant natural gas resources and a large transportation sector seeking more economical fuel options, but this alone is not enough.

The expert highlights that building a CNG station is costly, creating a first-mover problem where investors require demand and vehicle owners need stations. Government incentives, such as tax benefits, import-duty relief, low-cost financing, and land support, can help overcome this challenge. Iran's early CNG adoption strategy, which provided free equipment to investors for suitable locations, successfully attracted drivers to convert their vehicles.

However, Hamidkhani stresses that government support should be temporary, aiming to accelerate the market rather than permanently replace commercial viability. He proposes a mixed distribution strategy: prioritize pipeline gas in regions where it's feasible, use CNG trucking in areas close to existing infrastructure, and consider L-CNG for remote regions where pipeline development isn't economically viable. He also acknowledges the economic feasibility of including less remote areas in the nationwide CNG network.