Nigeria ramps up CNG adoption: 50% subsidy on conversion kits for transport unions

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In a move aimed at curbing reliance on petrol and promoting a cleaner fuel alternative, the Nigerian government has announced a significant subsidy for converting vehicles to Compressed Natural Gas (CNG). The initiative, spearheaded by the Presidential Initiative on CNG (P-CNGI), offers a 50% discount on conversion kits to members of transport unions like the National Union of Road Transport Workers (NURTW).

The Programme Director and Chief Executive of the Presidential Compressed Natural Gas Initiative, Michael Oluwagbemi, disclosed this at the Northern stakeholders engagement held on Tuesday in Kaduna.

According to Oluwagbemi, the CNG initiative was created to cushion the effects of fuel subsidy removal on Nigerians and open new investment windows for domestic and global investors in the gas sector.

He noted that the subsidised conversion programme was part of President Bola Tinubu’s goal of having one million vehicles converted to CNG by 2027.

Oluwagbemi said, “We are launching what we called the Conversion Incentive Programme with members of the National Union of Road Transport Workers of Nigeria, Road Transport Employees Association of Nigeria and National Association of Road Transport Owners being our immediate focus. This is because they are the operators in the road transport sector providing 90 per cent of the transportation in the country to members of the public.

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“We will be making the conversion kits available to them at 50% discount and we are also ensuring that the installation cost is free. We are already negotiating already with our partners who will initiate that project in the next week.

“We have already identified eight conversion centers in four states, namely Kwara, Lagos FCT and Rivers that will pilot the programme. Immediately after that, we will start expanding to other conversion vent that we have identified and they are 120 of them across the country.”

This policy aligns with President Bola Tinubu’s target of converting one million vehicles to CNG by 2027. The P-CNGI has already procured over 20,000 conversion kits for immediate deployment. The program is expected to begin with pilot schemes in eight conversion centers across four states: Kwara, Lagos, Abuja, and Rivers.

This initiative comes after the May 2023 removal of fuel subsidies, a move intended to streamline spending and potentially lower fuel prices in the long run. The CNG program is seen as a way to ease the transition for Nigerians grappling with higher petrol costs.

ANALYSIS

The program holds promise for several reasons. CNG is generally cheaper than petrol, potentially reducing transportation costs for both operators and consumers. Additionally, CNG burns cleaner, contributing to improved air quality, especially in urban centers.

However, challenges remain. Building a robust CNG infrastructure, including refueling stations, is crucial for widespread adoption. The success of the program also hinges on ensuring the quality and affordability of conversion kits beyond the initial subsidized batch.

The Nigerian government’s CNG push signifies a commitment to cleaner energy sources and potentially more affordable transportation. The initial focus on transport unions is a strategic move, as their large fleets can significantly impact fuel consumption. The program’s long-term success will depend on addressing infrastructure concerns and ensuring the program’s sustainability beyond the initial subsidy period.