As food and transport costs shoot up across the country following the 40 per cent hike in the price of Premium Motor Spirit (PMS), otherwise known as petrol, fresh attention is being called to the Federal Government’s Compressed Natural Gas Initiative (CNGi) which had promised to cut fuelling expenses for commuter buses and haulage trucks by 75 per cent and cushion the cost of living.
The Nigerian National Petroleum Corporation (NNPC) Ltd on Monday raised the pump price of petrol from between N568-N617 per litre to between N855-N897 per litre, depending on location. The new price became effective Tuesday, September 3.
The development came a few days after the NNPC said it was grappling with severe financial challenges as it battles mounting debts to petrol suppliers to the tune of $6 billion.
On Thursday, three days into the petrol price hike, increases of between 25 per cent and 50 per cent in transportation and food costs, among others, were reported across the country and there are outcries on the streets and on social media over the added discomfort all of this is causing.
Following the petrol price hike, many Nigerians have resorted to long walks while others have stayed away from work on account of higher transportation costs.
Meanwhile, the Federal Government’s Compressed Natural Gas Initiative (CNGi), which promised to cut fuelling expenses for commuter buses and haulage trucks by 75 per cent and cushion the cost of living by reducing the cost of transportation, has witnessed a slow take-off.
President Bola Tinubu launched the Presidential CNG Initiative in October 2023, about five months after the removal of petrol subsidy, to deliver cheaper, safer and more climate-friendly energy.
The selling point of the project is that CNG is significantly cheaper and cleaner than the commonly used fuels, petrol and diesel oil. While CNG costs N213 per scm (standard cubic meter), petrol now costs between N855 and N897 per litre and diesel about N1,200 per litre, meaning CNG is only 24.9 per cent the cost of petrol and 17.75 per cent the cost of diesel.
The centre-point of the CNGi project is then the savings to be made by powering commuter buses and goods haulage trucks with CNG and the price reliefs that flow down to the average Nigerian by way of cost of commuting, as well as the costs of goods and services, especially food.
At present, about 40,000 trucks flood Nigeria’s roads and cities, but experts say only about 20-25,000 trucks are required for effective haulage business.
Analysts say that food prices would begin to noticeably trend downwards when up to 25 per cent of the 25,000 haulage trucks (being 6,250 trucks) required to drive business in Nigeria are CNG-powered and that the downward progression would follow incrementally as the volume grows, reducing the burden of high food costs on the wallets of teeming Nigerians, then freeing up disposable income for other pressing needs.
When the Presidential Compressed Natural Gas Initiative (PCNGI) on May 29 announced the commencement of the nationwide Mass Transit Conversion Programme, there were no details given about the introduction of 2,700 CNG-powered buses and tricycles that were initially announced to be introduced hand in hand with the conversion programme on that day.
Procurement and logistics sources say government’s silence on the rollout of the 2,700 buses and tricycles on the scheduled date may have been prompted by challenges with the foreign vehicle manufacturers in meeting stipulated production timelines, or transportation logistics, or both.
Under the CNGi, the Federal Government earmarked N100bn (part of the N500bn palliative budget) to purchase 5,500 CNG vehicles (buses and tricycles), 100 electric buses and over 20,000 CNG conversion kits, with plans to develop CNG refilling stations and electric charging stations nationwide.
In May 2024, the Federal Government said it has commenced the rollout of CNG-powered buses and tricycles beginning from Ilorin, the Kwara State capital.
The report stated that the Federal Government was set to deliver 100 conversion workshops and 60 refuelling sites spread across 18 states before the end of 2024.
The Programme Director/Chief Executive, Presidential Compressed Natural Gas Initiative, Michael Oluwagbemi, was reported as saying that the potential value of the CNG market in Nigeria in the next five years should exceed $10bn, adding that the sector would grow by 1,000 per cent this year as the buses and tricycles hit Nigerian roads.
Oluwagbemi said the deployment of CNG-powered buses would have a significant impact on food prices, stressing that the initiative would cut down food inflation, as the cost of transporting agricultural produce would reduce.
