Energy experts have warned that for Compressed Natural Gas (CNG) to achieve widespread adoption across Nigeria and rival petrol and diesel as a transport fuel, retail prices may need to increase to around ₦520 per standard cubic metre (SCM).

The recommendation comes amid concerns that current pricing, though cheaper than petrol and diesel, is not commercially attractive enough to encourage large-scale private investment in fueling stations and distribution networks.

Why Price Adjustment May Be Necessary

Analysts argue that while low CNG prices initially help drivers and fleet operators transition, they undermine the business case for private investors who must commit significant capital to build refueling stations, pipelines, and storage infrastructure.

At ₦520/SCM, CNG would still deliver noticeable cost savings for motorists compared to petrol or diesel, but with the added benefit of ensuring operators in the gas value chain remain profitable, which is crucial for sustainable growth.

Adoption Lagging Behind Expectations

Nearly two years after the Federal Government’s CNG initiative was launched following the removal of petrol subsidies, uptake has been slower than anticipated. Despite efforts to introduce conversion kits and promote gas as a cleaner and cheaper alternative, the absence of reliable refueling infrastructure has limited expansion.

Industry observers note that without stronger investment incentives, the program risks stagnation. Raising the retail price to a more commercially viable level is seen as one of the measures that could unlock funding for infrastructure and create a nationwide network of CNG refueling stations.

Balancing Affordability with Investment

The government faces the challenge of striking a balance between keeping CNG affordable for commuters and ensuring enough profit margin to attract investors.

“Nigeria cannot achieve large-scale CNG adoption if the economics do not work for investors,” one analyst said. “A viable price point ensures the infrastructure can grow, and in the long run, consumers still benefit from cheaper, cleaner, and more reliable fuel options.”

The call for price adjustment comes as part of broader discussions on Nigeria’s energy transition strategy, which aims to diversify fuel sources, reduce dependence on petrol imports, and cut emissions through cleaner energy alternatives.