Comparative Economic Analysis Of Compressed Natural Gas And Automotive Gas Oil As Automobile Fuels

ABSTRACT

Comparative economic analysis of the use of compressed natural gas (CNG) and the use of AGO for power generation was presented. The data for costs of constructing and running CNG-powered vehicles were obtained for the study. Separate economic analyses of running the CNG-powered vehicles and running AGO vehicles were performed. The initial capital cost for CNG project amounted to N4.31 million and that for diesel was N3.60 million while the annual operating cost for CNG is N1.47 million and that for diesel is N2.98 million. This difference in the capital costs is basically due to the addition of the extra parts and connections to convert the AGOlpowered vehicle to a bi-fuel-powered vehicle which would be able to use CNG as fuel. The difference in the operating costs is due to the fact that the costs of the two fuels are not the same. The net revenue for CNG is N2.85 million while that for diesel is N1.34 million. This difference in net revenues is resultant from the difference in their gross revenues resultant from the difference in operating costs. Figures in the text were used to determine the pay-out of the projects which is 1.45 years for CNG and 2.7 years for diesel respectively. The NPV and other parameters that make up the project economics were estimated for CNG and diesel. The NPV for CNG at an expected rate of return of 10% is N17.56 million while for AGO, the NPV is N5.86 million. The summary of the result of the calculations of all the parameters examined for both CNG and diesel was also presented. From the whole analysis done it is easily seen that using CNG for powering vehicles is more profitable than using AGOl.