How to Start CNG Business in Nigeria

How to Start CNG Business in Nigeria

In Nigeria, Compressed Natural Gas (CNG) is fast gaining popularity among vehicle owners. It currently fuels over 12 million vehicles globally. It has been proven to be cleaner, more environmentally friendly, and affordable compared to petroland diesel. These factors have contributed to the high demand for CNG thereby causing more stations to be opened to meet up with this demand.

In order to set up a Compressed Natural Gas station in Nigeria one of the first things needed to be done is to create a business plan. The business plan should provide information on the advantages(long term and short term) it possesses over petrol and diesel, it should also outline the importance of setting up a CNG station. The expectation of every investor is a venture that is profitable over consecutive number of years. Since the sector is still expanding, continuous profitability by the investor over a long period of time is possible.

CNG business

Product Description

Methane (CH4) is one of the components of Compressed Natural gas, and this is produced from the compression of natural gas to 1% of the standard atmospheric volume. Thus, Compressed Natural gas, can be substituted for petrol, LPG as well as diesel used in cars and other kinds of vehicles. The storage pressure of CNG is usually 200 to 248 bars, in hard cylindrical containers.

Benefits of CNG over Other Fuel Options

CNG possesses several benefits over petrol and diesel. These are:

  1. CNG is stored in safer and stronger tanks which prevents easy leakages. If at all it leaks, the fuel evaporates into the air instead of being absorbed by the ground, hence, reducing the risk of fire outbreak and ground/floor contamination.
  2. It has less knocking, does not lock vapor and has better starting, no matter the weather condition.
  3. It possesses a lower carbon content than petrol, which makes it less pollutant and environmentally cleaner.
  4. It reduces the maintenance cost of your vehicle because it does not contain lead and extends the life span of the engine of your vehicle.
  5. It saves cost, you can save up to 50% of petrol price when you use CNG.
  6. Vehicles that use CNG produce less emission than petrol powered vehicles.

The Development of CNG Business in Nigeria

The Federal Government of Nigeria recently launched a plan to promote the use of CNG and LPG by all vehicles due to the benefits they possess over petrol and diesel. The initiative is called The GAS MASTER PLAN. The Nigerian Independent Petroleum Marketing Company (NIPMC) has also established the first CNG station in Benin city,Edo State. In the GAS MASTER PLAN, the Federal government intends to focus on the following cities; Ota, Abeokuta, PH, Oyo, Ibadan, Lokoja, Enugu, Aba, PH and Calabar at the moment.

At present, many vehicles now utilize CNG which has placed a high demand on the gas. It is expected that more vehicle ownera will key into this thereby increasing demand.

What You Stand to Gain from this Report

This article helps you to:

  1. Evaluate the Strengths, Weaknesses, Opportunities and Threats (SWOT) of the business.
  2. Gain a comprehensive insight over the CNG market.
  3. Know and understand the legal requirements of setting up a CNG station in Nigeria.
  4. Understand how to carry out financial analysis of the business, so as to ascertain the profitability of the business over a life span.
  5. Understand how to source for human capital required to set up the business.
  6. Understand the important success factors in the CNG market.

Procedures to follow in establishing your own CNG business in Nigeria

Draft a Business Plan

One of the first things you need to do is to draft a convincing business plan that will guide your decisions and strategies. A business plan is also necessary if you want to secure the loan to finance your business.

A professional can be hired to do this in the event that you are unable to do it yourself besides writing a business plan is not one of those tasks you may derive pleasure in. Although, this article will also help you to weite a good business plan, you can also view samples online.

Evaluate Your Competitors

Starting out in an area where there are already pacesetters indicates the presence of competitors and it is important that you know them. How many are they? How easy can you penetrate the market? Be sure that you have an edge in the market before you start up.

Talk to people who are already in the business

Contact fore runners in the business, you can get contacts online, set up meetings. Bear in mind that this may nit be as easy as it sounds because you have become a competitor. The best approach is to source for information outside your business locality, business owners are more willing to provide information when they don’t consider you a threat.

Best Options for Setting up Your Own CNG Business

Starting a CNG business in Nigeria is no easy task. Two options are available which are; Purchasing and existing business or purchasing a franchise.

Purchasing an existing CNG business:

Often times Investors are advised to purchase an existing business instead of setting up a new business. However, there are underlying challenges encountered when purchasing a CNG business.

Hiring a business broker is one of the first steps to take, the business broker will source for a CNG business that has high prospects for profitability and opportunities. The business broker will also inform you on the guidelines on the process to avoid making mistakes.

Buying a Franchise:

Purchasing a franchise has higher probabilities of your business success and growth. Enquiries should be made so as to find a good franchise that provides opportunities and requires less stress to manage. .