Even not as expected, but compressed natural gas (CNG) is becoming a popular among commercial vehicle's owners, as well as private owned - as an alternative to petrol and diesel in Nigeria. With the government pushing for gas adoption under the “Decade of Gas” plan, many entrepreneurs are now looking at small CNG stations as a business opportunity. But how much does it really cost to build one? Let’s break it down
What is a Small CNG Station?
A small CNG station is a filling station designed to supply compressed natural gas to vehicles. Unlike large stations that serve fleets and industries, a small station can operate on a community or city level, serving fewer vehicles but still making steady profit.
Key Costs of Building a Small CNG Station
1. Land/Space
Location is very important. You need enough space for CNG storage tanks, compressors, and dispensing pumps.
Land cost depends on the city, but on average in Nigeria, budget between ₦5 million – ₦20 million depending on size and location.
> Compressors: Used to compress natural gas into CNG.
> Dispensers & Nozzles: Just like fuel pumps, but for CNG.
> Storage Tanks (Cylinders): To store the gas safely.
> Piping & Safety Systems: Fire prevention, leak detection, and emergency controls.
Cost of equipment can range from ₦50 million – ₦150 million, depending on capacity.
3. Construction & Installation
> Civil works (foundation, fencing, canopy, driveways).
> Installation of equipment, piping, and safety systems.
Budget between ₦30 million – ₦60 million.
4. Licensing & Approvals
You will need approvals from regulatory bodies such as:
> Department of Petroleum Resources (DPR/NMDPRA)
> Standards Organisation of Nigeria (SON)
> Fire Service & Environmental Agencies
Licensing fees may cost ₦2 million – ₦5 million.
Total Estimated Cost
For a small CNG station in Nigeria, expect to spend:
> ₦150 million depending on location, equipment brand, and station capacity.
Profit Potential of a Small CNG Station
CNG is currently 30% – 40% cheaper than petrol, making it attractive to car owners and businesses.
A small station serving 100 – 200 vehicles daily can earn ₦500,000 – ₦1.5 million daily gross revenue (depending on pump price and demand).
Investors can expect to recover costs within 2 – 4 years, depending on scale and demand.
Challenges to Consider
1. High initial cost of equipment.
2. Need for stable CNG supply from pipelines or mother stations.
3. Regulatory approvals can take time.
4. Awareness and adoption among car owners is still growing.
My advice - and the truth is that, the demand for CNG have not increase as much expected - even thou it is cheaper than petrol and diesel. But investors who start now will enjoy first-mover advantage in many Nigerian cities.