By Ayo Susan
The federal government’s clean-mobility strategy is confronting a basic market constraint: lower fuel costs will not translate into affordable transport if motorists cannot reliably access CNG. The issue was raised as CNG and electric-vehicle users sought deeper engagement with the Presidential Initiative on CNG and Electric Vehicles (Pi-CNG/EV).
DEVELOPMENT:
Ismaeel Ahmed, Chairman/Chief Executive Officer of the Presidential Initiative on Compressed Natural Gas and Electric Vehicles (Pi-CNG/EV), said that the government’s CNG programme requires simultaneous development of demand and supply across the entire value chain.
Speaking when members of the CNG/EV Users Forum visited his office in Abuja, Ahmed said that Nigeria was effectively building a new industry, requiring investment from gas production and processing through transportation, compression, distribution and retail infrastructure.
“CNG has been in existence for more than two decades around the world and probably in Nigeria for more than 10 years, but it was largely private sector-led and limited in scope,” he said.
“It was this administration that gave it the necessary political backing and put its weight behind CNG as a national project.”
Ahmed also said the central challenge was to “simultaneously create demand and ensure adequate supply”, adding that government alone could not finance the entire value chain.
“It catalyses on both ends — the demand side and the supply side,” he further said.
He also identified public misconceptions about CNG safety as a constraint to adoption, particularly fears that CNG cylinders are similar to LPG cylinders and could easily explode.
NUMBERS:
Nigerians spend between 15 percent and 25 percent of household income on transportation, depending on location and mode of transport, according to Ahmed.
He cited an example of a vehicle owner spending about N22,000 on CNG for a journey that would cost approximately N102,000 on conventional fuel, implying savings of about N80,000 per trip after conversion.
The initial vehicle conversion cost, however, is about N1.5 million.
The economics therefore depend on both the size of the recurring fuel saving and the frequency of vehicle use, particularly for commercial and ride-hailing operators.
SIGNIFICANCE:
For investors and policymakers, the central issue is not simply whether CNG is cheaper than petrol or diesel. It is whether Nigeria can build sufficient infrastructure to make the lower unit cost consistently accessible.
Ahmed put the issue directly: “Anything that is not available is not affordable. For it to be affordable, it has to be available.”
That makes infrastructure deployment a critical part of the clean-mobility investment case. Gas production, pipelines, compression stations, transportation, daughter stations, land, licensing and filling stations all require capital before the consumer can realise the fuel-cost advantage.
For transport operators, the N1.5 million conversion cost also creates an upfront financing barrier. The viability of mass adoption will therefore depend partly on how quickly operators can recover that investment through lower running costs.
Ahmed stressed that the initiative is not intended to immediately eliminate petrol and diesel. Nigeria is expected to operate a mixed-energy transport system comprising CNG, electric vehicles, petrol and diesel.
NEXT MOVE:
The immediate variable to watch is the expansion and reliability of CNG infrastructure, particularly filling stations and distribution networks.
The market should also watch the pace of vehicle conversions, the availability and pricing of CNG, financing options for conversion costs, safety awareness and the emergence of private-sector investment across the value chain.
The response of commercial transport and ride-hailing operators will be particularly important because they offer a high-utilisation customer base capable of recovering conversion costs faster.
The CNG/EV Users Forum also creates a new channel for monitoring end-user experience and identifying operational bottlenecks.
OUR LENS:
The deeper signal is that Nigeria’s CNG transition is moving from a fuel-substitution policy to an infrastructure and market-creation challenge.
The government can create political backing and stimulate demand, but the economics of adoption will ultimately be determined by availability. A vehicle that has been converted to CNG creates a recurring demand for the fuel; if the infrastructure cannot reliably meet that demand, the economics of conversion weaken.
That is why Ahmed’s statement, “Anything that is not available is not affordable,” is more than a comment on fuel pricing. It is a test of the entire CNG investment thesis.
The success of the programme will therefore depend on whether Nigeria can build a commercially viable supply chain fast enough to match the demand it is trying to create, while ensuring that the resulting fuel savings reach the commuters and transport operators the policy is ultimately designed to benefit.
Uzogara captured the emerging stakeholder model from the users’ side: “We are not only users; we are stakeholders. We are not only identifying challenges; we are willing to contribute solutions.”
Ayo Susan is a journalist, covering business, society and emerging developments with an emphasis on credible and engaging storytelling.
Discover more from StakeBridge Media
Subscribe to get the latest posts sent to your email.