Breaking Free from PMS: Challenges and Opportunities in Nigeria’s CNG Transition

For decades, Nigeria’s economic growth has been intricately linked to fossil fuels such as Premium Motor Spirit (PMS) and diesel. These fuels are crucial to sectors like electricity generation, transportation, and industrial activities. However, rising volatility in fuel prices, particularly PMS, has far-reaching implications on the cost of living and business operations in Nigeria. With the government’s recent decision to remove fuel subsidies, the country finds itself at a critical juncture, where alternative fuels like Compressed Natural Gas (CNG) could offer a more sustainable and affordable option.

The Impact of Fuel Subsidy Removal

For many years, the Nigerian government subsidized PMS to shield vulnerable Nigerians from high fuel prices. The philosophy behind the subsidy was that without it, market forces would drive fuel prices to unsustainable levels, worsening the living conditions of the people. However, in a significant policy shift, President Bola Ahmed Tinubu, during his inauguration, announced the cessation of the PMS subsidy, asserting that the government could no longer afford it. This change led to an immediate increase in PMS prices from ?165–?175 per litre to ?488–?550 per litre. By November 2024, PMS prices had surged to around ?1,120 - ? 1,500 per litre, depending on the location—an increase of over 800%. This shift, while aimed at reducing the fiscal burden of subsidies and redirecting funds toward infrastructure, has led to negative consequences: rising food and transportation costs, stagnating wages, and a worsening cost of living.

The Case for Alternative Fuels: Compressed Natural Gas (CNG)

The removal of the PMS subsidy has heightened the need for alternative fuels that are cheaper and environmentally friendlier. In this context, Compressed Natural Gas (CNG) emerges as a promising solution. CNG is not only more affordable than PMS but is also considered a cleaner fuel, which is an essential factor for a country like Nigeria that struggles with the environmental consequences of fossil fuel combustion. The government has introduced CNG as a potential solution to alleviate the financial burden that arose following the subsidy removal.

Barriers to CNG Adoption

Despite its potential benefits, CNG adoption has been slow in Nigeria. Several factors contribute to this reluctance, including the high cost of conversion, limited infrastructure, safety concerns, and lack of awareness.

1. High Conversion Costs One of the primary barriers to adopting CNG is the high cost of vehicle conversion. While many Nigerians are willing to switch to CNG, the conversion process can be expensive. For many, the upfront cost of installing CNG conversion kits is prohibitive. If affordable financing options, such as low-interest loans, were made available, it could encourage more people to convert their vehicles.
2. Limited CNG Infrastructure Unlike PMS, which is widely available at filling stations across the country, CNG refueling stations are few and far between. Most states in Nigeria still lack the necessary infrastructure, such as CNG filling stations and conversion centers. The scarcity of these facilities makes it difficult for consumers to find convenient refueling options, discouraging them from making the switch to CNG.
3. Safety Concerns Another significant obstacle to CNG adoption is the fear of explosions. Many Nigerians are apprehensive about converting their vehicles to CNG due to concerns that the CNG cylinders may explode. While there have been a few incidents, experts argue that CNG is actually safer than PMS. CNG is lighter than air, so in the event of a leak, it disperses into the atmosphere, minimizing the risk of an explosion. Additionally, CNG cylinders are built with advanced materials, making them resistant to punctures or damage. Unlike PMS, which can ignite easily if exposed to a flame, CNG is much less likely to pose a fire hazard.
4. Lack of Awareness A significant number of Nigerians are unaware of the benefits of CNG or confuse it with other fuels like Liquefied Petroleum Gas (LPG). There is a critical need for awareness campaigns to educate the public about the advantages of CNG, address safety concerns, and provide clarity on the differences between CNG, LPG, and other alternatives.

Moving Forward: A Strategic Plan for CNG Adoption

To facilitate the widespread adoption of CNG, several measures need to be taken by the government and private sector:

1. Infrastructure Development: The government must prioritize the development of CNG refueling stations and conversion centers across the country. This will make CNG more accessible and convenient for Nigerians, encouraging more people to switch.
2. Financial Incentives: The government could introduce financial incentives, such as soft loans or subsidies for vehicle conversion, to help reduce the high upfront cost of switching to CNG.
3. Public Awareness Campaigns: A robust information campaign is essential to educate the public about CNG, its benefits, safety features, and how it differs from other fuels. Public confidence will increase with more knowledge and transparency.
4. Private Sector Involvement: Encouraging private sector investment in CNG infrastructure, such as building filling stations and conversion centers, will help scale up the adoption of CNG.

Switching to CNG has the potential to generate significant economic and environmental benefits for Nigeria:

1. Cost Savings: CNG adoption can lead to substantial savings for consumers and businesses, particularly in the transport sector, where fuel costs constitute a large part of operational expenses.
2. Environmental Impact: CNG burns cleaner than PMS, producing fewer greenhouse gas emissions and less air pollution. This will contribute to mitigating climate change and improving public health by reducing respiratory diseases.
3. Job Creation: The growth of the CNG industry will create numerous job opportunities. The establishment of conversion centers, refueling stations, and the supply chain for CNG infrastructure will require skilled labor and create new business opportunities. Additionally, the expansion of CNG infrastructure will require technicians, engineers, and other professionals, boosting employment in these sectors.

Conclusion:

The removal of the fuel subsidy in Nigeria has undeniably created economic challenges, but it also presents an opportunity for the country to embrace cleaner and more affordable energy alternatives, with Compressed Natural Gas (CNG) emerging as a viable transitional fuel. By capitalizing on the advantages of CNG—cost savings, environmental benefits, and improved energy security—Nigeria can address the twin challenges of economic volatility and environmental degradation.

However, for CNG to be widely adopted, it is crucial for the government to implement policies that incentivize vehicle conversions, invest in infrastructure, and address public safety concerns. Public awareness campaigns will also play a key role in dispelling misconceptions and promoting the benefits of CNG. Additionally, fostering private sector investment in CNG infrastructure will accelerate the transition and create new employment opportunities.

Ultimately, the widespread adoption of CNG could help mitigate the negative effects of fuel subsidy removal, reduce Nigeria’s reliance on fossil fuels, and contribute to a cleaner, more sustainable energy future. By strategically supporting CNG as part of a broader energy transition plan, Nigeria can move towards a more resilient and sustainable economy that benefits both its people and the environment.