President Bola Tinubu has expressed optimism that Nigerians will experience measurable reductions in transportation costs from October 1, driven principally by Compressed Natural Gas (CNG) and alternative-energy public transportation. This announcement comes as petrol prices continue to rise, eating deep into Nigerians' pockets. With petrol selling for around N1,400 per litre in many places, and diesel prices also rising sharply, the need for alternative energy sources has become increasingly pressing. CNG is natural gas compressed for use as vehicle fuel, and Nigeria, with its enormous gas resources, is well-positioned to leverage this energy source.
According to the Presidency, Nigeria now has more than 120,000 CNG-converted vehicles, over 400 certified conversion centres, and more than 90 refuelling stations. Tinubu has also directed the deployment of an additional 500 CNG stations, ultimately taking the planned expansion to 1,000. The government's position is that if more vehicles switch from expensive petrol to cheaper CNG, transporters will spend less on fuel, and this will translate into lower fares for commuters. This logic appears sound, but the reality is that cheaper fuel does not automatically lead to cheaper fares.
There is evidence that CNG can reduce fares. In Borno, CNG/electric public transport reportedly charges between N50 and N100 on routes where conventional operators charge between N300 and N600. In Oyo, CNG buses reportedly helped reduce the Lagos-Ibadan fare from about N8,000 to N3,200 during the initial deployment. Numerous other instances were cited, suggesting that CNG has the potential to significantly reduce transport costs. However, the question remains whether the scale of CNG adoption is sufficient for Nigeria's huge transport market.
Despite the optimistic projections, several challenges need to be addressed. One major issue is the number of commercial vehicles that have actually been converted to run on CNG. Additionally, the availability of refuelling stations is a concern, with only one CNG station located on the Lagos/Ogun ends of the Lagos-Ibadan Expressway. This scarcity can lead to long queues and stranded passengers, making it difficult for CNG-powered vehicles to operate efficiently.
Conversion costs are another significant barrier. For an ordinary commercial driver struggling with vehicle maintenance, union dues, levies, feeding a family, and perhaps loan repayments, conversion costs can be prohibitively expensive. While the government has introduced financing arrangements to help motorists and fleet owners obtain credit for conversion, it is unclear how easy these facilities are to access. If millions of commercial vehicles remain petrol-powered, CNG cannot significantly influence transport fares nationwide.
The President has instructed governors to work with transport unions and commercial operators to ensure that savings from cheaper energy reach citizens through lower fares. However, achieving this will not be straightforward. Transport fares can rise immediately when petrol prices increase but prove much harder to reduce when operating costs fall. It remains to be seen whether transporters will willingly pass the savings on to passengers.
The government's goal of reducing transport fares through CNG adoption is ambitious, but its success depends on addressing the existing challenges. With October 1 approaching, Nigerians are eagerly awaiting the promised reductions in transportation costs. However, the availability of refuelling stations, conversion costs, and the willingness of transporters to pass on savings to passengers are critical factors that will determine the success of this initiative.
Key points
- The Nigerian government aims to reduce transport fares through the adoption of Compressed Natural Gas (CNG) and alternative-energy public transportation from October 1.
- Nigeria has over 120,000 CNG-converted vehicles, 400 certified conversion centres, and 90 refuelling stations, with plans to deploy an additional 500 CNG stations.
- The success of the initiative depends on addressing challenges such as conversion costs, availability of refuelling stations, and the willingness of transporters to pass on savings to passengers.
