Transportation costs up as fuel subsidy ends, and Nigeria looks at CNG

ABUJA, Nigeria: Since Nigeria removed petrol subsidies, transportation costs have soared, pushing many Nigerians into financial hardship.

Among them is e-hailing driver Ahmed Halilu, who saw his earnings plummet as petrol prices tripled, causing a severe cost-of-living crisis.

In response, the government launched a compressed natural gas (CNG) initiative in August, aiming to lower transport costs by nearly 50 percent and capitalize on Nigeria's vast natural gas reserves-the largest in Africa. The program includes converting petrol-powered vehicles to run on CNG or a hybrid of both and deploying CNG-powered buses.

According to initiative director Michael Oluwagbemi, over 100,000 vehicles have been adapted so far, with at least $200 million invested. The government aims to convert 1 million of Nigeria's 11 million vehicles within three years. However, poor implementation and limited infrastructure have slowed progress.

Despite being a leading oil producer, Nigeria depends heavily on imported refined petroleum products, as its struggling refineries operate at minimal capacity. The removal of the subsidy, part of President Bola Tinubu's broader economic reforms, was meant to save money and attract foreign investment but has significantly impacted transportation and living costs.

Switching to CNG remains challenging. There is a lack of adequate conversion and filling stations, with just 13 of Nigeria's 36 states currently equipped. Public awareness of the program is low, fostering misinformation.

"People are not keen about it because of a lack of orientation," Halilu said, noting that converting his vehicle saved him US$240 monthly in petrol costs. Yet, fears persist about the safety of CNG-powered vehicles, especially after incidents involving unaccredited vendors.

Even in major cities like Abuja and Lagos, CNG filling stations are scarce, and conversion workshops are overburdened, leaving drivers waiting days for subsidized conversions. For private vehicle owners, the cost of conversion is prohibitively high-20 times the monthly minimum wage of $42.

Limited gas pipelines exacerbate the issue, restricting access in northern and eastern regions. These challenges mirror those faced by the electric vehicle sector in Nigeria, where adoption is hindered by unreliable power supply and underinvestment.

The government acknowledges the hurdles. "CNG is a cleaner, cheaper, and safer fuel compared to petrol," said Tosin Coker, head of the initiative's commercial matters.