News in brief: Nigeria’s Dangote Cement is turning to Compressed Natural Gas (CNG) and alternative fuels as rising diesel prices and a lack of power supply increase its costs of production. The cement giant has seen a 7.9% increase in selling and distribution costs year-on-year due to the effect of diesel price hikes.
Rising energy costs has left Nigeria’s cement giant, Dangote Cement, seeking alternatives. The company is opting for Compressed Natural Gas (CNG) in its trucks and using alternative fuel in its plant operations for efficiency and improving the energy mix.
It is resorting to these measures because of the effect diesel price hike is having on its cost of production. As Nairametrics mentioned in a news report, Dangote Cement spend 7.9% more on selling and distributing its products year on year because of it.
In its first quarter report for 2023, the company said it consumed 4.8% less raw materials during production. Yet, its manufacturing costs were up by 6.2% when compared to the same period in the past year.
Rising energy costs in Nigeria
Since the country’s refineries are under rehabilitation, the bulk of diesel used within is imported. Diesel, fuel, and other oil products, accounted for â¦â10.1 trillion of the total imports in 2022, which is about 39.45%.
The epileptic power supply has made many factories rely on providing their own power despite the higher cost. A summary of the electricity report for Q3 and Q4 2022 showed that less and less Nigerians are depending on the national grid because it is unreliable. Electricity supply declining by 8.53% is enough reason for this lack of faith.
With the diesel option becoming less feasible, it makes sense for key manufacturers to look for better options.
CNG, mentioned in the beginning, is actually cheaper than the regular petrol used in powering trucks. However, the challenge is that most combustion engine vehicles have to be modified to use it effectively. It is not clear if the Dangote Cement trucks used in the company’s haulage and distribution services are being modified or the modifications already exists.
The fuel gas is not new and already in use in many parts of the world, especially because of its lesser emission. Iran, Pakistan, Argentina, Brazil and China boast of the highest number of vehicles running on CNG, according to a NGV America report.
Meanwhile, the options for alternative fuels in running factory operations are limitless. From hydrogen to bio-diesel and bio-alcohol, it is not yet clear which one the cement maker has its sights on. We also heard that its competitor, BUA Cement, is looking at alternatives to diesel.
