The Federal Government has introduced a concessionary gas pricing scheme for Compressed Natural Gas (CNG) used in mobility, according to Michael Oluwagbemi, Director/Chief Executive Officer of the Presidential Compressed Natural Gas Initiative (PCNGI).
Oluwagbemi disclosed this in a statement on Tuesday, stating that the initiative had secured discounted pricing from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). This concession was outlined in a letter dated April 20, sent by NMDPRA’s Chief Executive Officer, Farouk Ahmed.
According to Oluwagbemi, NMDPRA has designated mobility CNG as a special status, which falls under the gas-to-commercial (GTC) category. This designation grants access for CNG to Gas-Based Industry (GBI) pricing categorization for an initial period of five years, renewable for another five years, in line with the provisions of the Petroleum Industry Act (PIA) 2021.
Under this concession, the GBI pricing for mobility CNG is set at $1.57 per one million thermal units (MMBtu), significantly lower than the ordinary $2.42 and $2.92 for Power and Commercial buyers, respectively.
“The Presidential Committee on Compressed Natural Gas led by Zacch Adedeji had initially requested for strategic gas allocation for Mobility-focused Compressed Natural Gas projects, in a form of pricing concession,” Oluwagbemi stated.
He emphasized that this concession marks a significant achievement resulting from collaborative efforts between PCNGI and NMDPRA, aimed at promoting investor confidence and commercial activities in the emerging market while aligning with government policy aspirations for the sector.
“The PCNGI calls on all stakeholders in the sector to take full advantage of this concessionary pricing model for Mobility CNG, and recommit themselves to the future of a gas-driven transportation sector that lowers food and energy inflation, while ensuring a cleaner, cheaper, safer and more reliable energy for powering the economy forward in line with the vision of President Bola Ahmed Tinubu,” Oluwagbemi added.
The announcement follows President Bola Tinubu’s plan, revealed in May last year, to introduce CNG buses to mitigate the impact of fuel subsidy removal. After months of planning to roll out 2,700 CNG buses, the government has announced that the project will be launched before May 29, 2024.
