FG Approves Import Duty Waiver on CNG Vehicles, Kits

Date: 2024-05-23

According to a news report from the Nigerian Tribune, the federal government has announced a game-changing initiative to promote cleaner and more cost-effective transportation. In a move aimed at accelerating the adoption of Compressed Natural Gas (CNG) vehicles, Nigeria will be implementing a zero per cent import duty waiver on both CNG vehicles and conversion kits.

This exciting development was unveiled by Engineer Michael Oluwagbemi, the Programme Director and Chief Executive of the Presidential Initiative on Compressed Natural Gas (Pi-CNG), during a stakeholders' engagement meeting in Ilorin. The initiative aims to convert a significant portion of the existing petrol vehicle fleet in Nigeria, with an ambitious target of one million conversions by 2027.

The potential benefits of this program are substantial. Engineer Oluwagbemi estimates that the widespread adoption of CNG vehicles could lead to annual savings of between $2.5 billion and $3.5 billion. Additionally, the switch from petrol could significantly reduce national fuel consumption by nearly 10 million litres per year.

“The Federal Government, in a December 2023 circular approved by Mr. President and issued by the Finance Ministry through the office of the Special Adviser, Energy, had approved an import duty waiver for all CNG auto vehicles as well as kits, including equipment used to manufacture CNG vehicles in Nigeria.

“It’s the standing order of the FG. It’s for those who are manufacturing CNG vehicles in Nigeria as well as those bringing in vehicles. Meanwhile, yes, there’s still a need to comply with regulations by the SON and other regulatory agencies.”.

The stakeholders engagement meeting had in attendance chieftains and members of transport unions from NARTO, TOAN, RTEAN, NURTW, NATA and Union of Tipper and Quarry, as well as affiliate unions in Ekiti, Kwara, Ondo, Kogi, and Osun states.

Engineer Oluwagbemi also explained the advantages of CNG vehicles over petrol vehicles, saying that CNG vehicles run on clear and better energy for a safe environment.

“CNG vehicles run cheaper (40 to 70 percent cheaper than petrol vehicles), safer (18 percent cheaper than petrol/diesel vehicles), and more reliable. With CNG vehicles, you go less to mechanics for either oil change or, as the case may be, than other vehicles”.

Speaking on the cost of converting petrol vehicles to CNG vehicles, the expert said that the cost of conversion is currently between N300,000 and N750,000.

However, he said that “the FG is already working on a conversion incentives programme to be announced on May 29. It will start gradually and get better. We are looking at converting one million vehicles by 2027, saving Nigeria about $2.5 billion and $3.5 billion a year, and getting us almost 10 million litres of petrol from what we’re currently using.

“The reality is that by the time the FG is able to provide CNG kits and CNG conversion, the commercial vehicles that move about 90 percent of the population, there will be no reason for the FG to renege on the promise to remove subsidy and to ensure that Nigerians do not pay for the importation of poverty and the export of jobs that were the order of the day when we used to import petrol rather than export gas and use our gas for the benefit of all Nigerians.”

He said that conversion incentive programme would include access to gradual payment and discounted rates for the CNG conversion.

The Ekiti state commissioner for Transportation, Kehinde Kolawole Ajobiewe, said that the CNG conversion programme would alleviate suffering of the nation’s transporters.

“It’s a way out of problems associated with the use of gasoline as well as an alternative initiative since it’s natural gas. It’s more economical, and the vehicle engine will last longer than before and at a low cost. The federal government means well. So, we need the cooperation and understanding of all Nigerians.

Also, Special Adviser to Ondo state governor on Transport, Olugbega Omole described the programme as a laudable initiative that all should key into.

He said that the Ondo state government planned to have 80 CNG vehicles, adding that the state government had launched five CNG buses for free school transportation due to the high cost of petroleum.

The acting chairman of NURTW in Kwara State, Alhaji Isa Ore, said that the transporters are in support of the CNG conversion programme. He, however, said that the challenge was how to convert the existing cars and vehicles to CNG-compliant vehicles.

He called for reassuarance from government that the conversion would be beneficial to members.

The CEO of Rolling Energy Providers Limited, Umar Mubarak, represented by the chief operations officer (COO), Uzzy Ajeroh, said that the petrol vehicles and CNG vehicles would be operated side by side until the whole conversion was achieved.

He said that the federal government would set up conversion points, adding that modalities would be worked out for the conversion to ensure a smooth transition.

“CNG is a better option and will be beneficial to everyone,” he said, explaining that CNG is different from cooking gas.


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