More vehicle owners and transport companies are converting their engines to run on CNG. This new demand has created a good business opportunity for people interested in building small CNG filling stations.
But how much does it cost to construct a small CNG station in Nigeria?
What is a CNG Station?
A CNG station is a fueling point where cars, buses, and trucks that use CNG can refill. It works just like a petrol or gas station but with equipment designed to compress and supply natural gas.
There are two main types of CNG stations:
1. Mother Station – Large, connected directly to the gas pipeline, supplies CNG to daughter stations.
2. Daughter Station – Smaller, depends on supply from mother stations through trucks and cylinders.
For beginners, a small daughter CNG station is more affordable.
Cost of Constructing a Small CNG Station in Nigeria
The total cost depends on location, equipment size, and setup type. On average, the cost to build a small CNG station in Nigeria ranges from ₦100 million to ₦200 million
Here’s a breakdown:
1. Land/Space
Location matters. And urban areas cost more than outskirts.
2. Compression and Storage Equipment
> From CNG compressor, Cascade storage cylinders (for storing gas), dispensers (fueling nozzles) and the rest. This can cost high, because these equipment are mostly imported, and fx plays a lot of factors in pricing.
3. Civil Construction Works
> Site preparation
> Concrete base, fencing, canopy, drainage
> Installation of pipelines and safety systems
This labour work can cost more if your space is more wide....and covers a lot of land areas.
4. Power Supply
You budget for a standby generator or solar backup for station operation.
5. Licenses and Approvals
Most important part of the startup process.....you need license and documentation from:
> DPR (NUPRC) license
> SON, NMDPRA, local government permits
Other Expenses
> Staff recruitment and training
> Safety kits and firefighting equipment
> Branding and signage
Total Estimated Cost
• Minimum cost: ₦150 million
• Maximum cost: ₦300 million
This is cheaper compared to a large CNG mother station, which can cost over ₦1 billion - if purchasing of land space is added.
Profit Potential of a Small CNG Station in Nigeria
CNG is 40–60% cheaper than petrol, so demand is growing fast.
> Daily sales of 1,000kg of CNG at ₦350/kg = ₦350,000 revenue daily
> Monthly (30 days) = ₦10.5 million revenue
= Net profit margin: 15 - 25% (₦1.5m – ₦2.5m monthly)
Return on investment (ROI) can happen within 2–3 years, depending on location and demand.
Challenges of CNG Stations in Nigeria
1. High startup capital. This is one issue, and it seems that only the rich individuals or high rank companies in Nigeria oil and gas industry like Nipco, NNPC are the ones really into this
2. Limited pipeline infrastructure (more in Lagos, Abuja, Ogun, Rivers).
3. Need for trained technical staff
4. Awareness among motorists still growing. Even at that, conversion is kinda of expensive....for some Nigerians.
Why Invest in CNG Stations Now?
> Government is promoting CNG as a cheaper fuel alternative.
> Transport companies are converting fleets to CNG. Dangote is a frontier for this. Kudos to the man. Over 4,000 fleets of CNG trucks.
> More private vehicle owners are embracing CNG due to fuel subsidy removal. Well, it is cheap and can travel high miles compared to petrol or diesel on the same quantity.
Early investors will dominate the market before competition grows.
If you check, building a small CNG station in Nigeria is capital-intensive but very profitable. And with ₦150 million - ₦300 million, you can set up a daughter CNG station and start earning steady income. As fuel prices remain high, more Nigerians will turn to CNG, making this business a strong investment opportunity - in the future I guess.