How to Start CNG Business

Filed in Business Idea, Top Ideas by on December 20, 2021 0 Comments

How to Start CNG Business

How to Start CNG Business in Nigeria: The compressed natural Gas (CNG) is gradually becoming a preferred option to petrol for all vehicular movements. It is readily available and currently powers over 12 million vehicles in the world today. It has been proven to be a lot cleaner and more environmental friendly and easily affordable than petrol, diesel and LNG. As such, there is an increasing demand for CNG and more stations are opening up to meet the increasing demand.

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To set up a Compressed Natural gas station in Nigeria as a business venture, there is need to create a business plan that highlights the importance of setting up a CNG station, giving adequate explanation of both the long and short term advantages it has over other fuelling options. The lender expects to see a profitable venture over a consecutive number of years. As a business that has fewer or no investors in the sector, the business is sure to make continuous profit to the investor over a long period of time.

Product Description

Compressed Natural gas is another source of fuel that contains methane (CH4), which is made when natural gas is compressed to 1% of the standard volume of the atmosphere. It can serve as a substitute to petrol, LPG and diesel in any vehicle. CNG is usually stored at a pressure of 200 to 248 bars, in hard cylindrical containers.

Benefits of CNG over Other Fuel Options

There are a good number of benefits CNG has over petrol and diesel. These are:

  1. It has a lower carbon content than petrol, and such less pollutant and environmentally cleaner
  2. You can save up to 50% of petrol price when you use CNG
  3. You can reduce the maintenance cost of your vehicle as it does not contain lead and extends the life span of the engine of your vehicle
  4. It has less knocking, does not lock vapor and has better starting, no matter the weather condition.
  5. Vehicles that use CNG produce less emission than petrol powered vehicles.
  6. CNG is stored in stronger and safer tanks, and as such does not lick off easily. When it leaks, it goes off to the air instead of the ground, thereby reducing the risk of fire and contamination of the ground.

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The Development of CNG Business in Nigeria

Based on the large benefits of CNG over petrol and diesel, The Federal Government of Nigeria has currently launched a plan to promote the use of CNG and LPG by all vehicles. This plan is called The GAS MASTER PLAN. The Nigerian Independent Petroleum Marketing Company (NIPMC) has also established the first CNG station in Benin city. In the GAS MASTER PLAN, the Federal government intends to concentrate on the following cities; Ota, Abeokuta, PH, Oyo, Ibadan, Lokoja, Enugu, Aba, PH and Calabar axis for now.

Currently, a large number of vehicles are already run by CNG and more vehicles are already on demand for CNG.  If more CNG selling stations would be established, this increasing demand will be met and more vehicles are likely to convert their vehicles to use CNG.

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What You Stand to Gain from this Report

This article helps you to:

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

Procedures to follow in establishing your own CNG business in Nigeria

Draft a Business Plan

First and foremost, draft a convincing, and attractive business plan, on which to guide you in making the right decisions and execute your strategic plans. A business plan will also help you in securing the loan you need to finance your business.

Writing a business plan can be quite depressing; nonetheless, this article highlights some important points that will guide you in writing a good business plan. You may also take a look at some samples online.

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Evaluate Your Competitors

Regardless of the kind of business you intend to start, it is imperative for you to know and evaluate your competitors before you set up your own. How many are your competitors and how easy is it for you to enter the market and grow your business.

You have to be really certain that you have an edge in this market before you can start up..

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Talk to people who are already in the business

The next thing to do after evaluating your competitors is to talk to people who were in the business before you.

It is not easy to get information from your competitors, as they see you as a threat. What you can do is to go outside your locality and make your enquiries. Since you are not setting up your CNG business within their locality, they will be willing to give the information you seek. You have to talk to as many people as possible to make your own estimates and give you better understanding of how the business works.

You can find many investors of CNG online. Make your contacts to them.

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Best Options for Setting up Your Own CNG Business

It is not easy starting a new CNG business in Nigeria. There are two options to consider in getting your own CNG business. You can consider purchasing an existing business or you can consider buying a franchise.

  1. Purchasing an existing CNG business: It is often advised to buying an existing business rather than setting up a new business. All the same, there are challenges to face in buying an existing CNG business.

The first thing to do is often to contract a business broker. A business broker will help you find compressed natural gas business that has better opportunities and very profitable. They will also provide you with guidelines on the process you will take to avoid making common mistakes new comers usually make in the business.

  1. Buying a Franchise: There are higher probabilities of your business doing well when you buy a franchise. You should make inquiries to find a good franchise that has better opportunities and less stressful to run. If you need a complete business plan, please let us know. Or, you want us to help you set up this business, kindly contact us. Otherwise, Please check out these other business ideas you can do 

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