Yesterday, the Federal Government of Nigeria announced the increase of the pump price of petrol by almost 40% from N86:50 to N145. The honorable minister of state for petroleum resources, Ibe Kachikwu defended this hike by saying that it was the only way out of the exorbitant prices of N150 to N250 Nigerians were currently subjected to at many filling stations across the country.
It is no secret that I have long been a proponent for the removal of fuel subsidies. However this journey must ultimately lead to the deregulation of the downstream petroleum market for any long term benefit to take hold (but this is a discussion for another day). I consider that this should have been done much earlier. However subsidies have now been removed and I applaud Mr Kachikwu for taking the necessary step even though it will be a very bitter pill for Nigerians to swallow. The harsh reality is that if life was tough for Nigerians before, it is going to get much worse.
Fuel is like mother’s milk to the Nigerian. We need it not just to power our cars and transportation system, but to the majority of Nigerians, it is the main source of power for our homes. In a country where the power generation crumbled to zero megawatts as recently as March, the residential generating set is king with the Power Holding Company of Nigeria’s (PHCN) electricity being the backup.
The increase in the price of fuel will exponentially increase the cost of living for all Nigerians. No one will be insulated from the effects of this because the knock on effect goes much further than transport and power. Businesses will undoubtedly feel the sting of this increase. The cost of providing goods and services will skyrocket. Unfortunately, the ultimate loser in all of this will be the Nigerian people as they will have to pay a lot more for the same.
I don’t know about you but that sounds like inflation to me (let’s not get sidetracked by my kitchen economics).
My question today is why? not “why remove the subsidy?” but why subject ourselves to the impending doom. Why have we allowed ourselves to be so reliant on petrol? Calm down. I’m not saying that we magically switch to alternative sources overnight (OK that is partly my argument) but there are alternatives that are not so unattainable in the short term.
Take the example of Indian city of Delhi. Delhi has one of the world’s cleanest bus system and it runs on Compressed Natural Gas (CNG). It has one of the largest CNG vehicle fleets in the world. Walking around the streets of Delhi you can see buses and three-wheeled motorized rickshaws that run on CNG all around you.
CNG (methane stored at high pressure) can be used in place of gasoline (petrol), Diesel fuel and propane/LPG. CNG combustion produces fewer undesirable gases than the other fuels mentioned so it is a cleaner option.
The great thing about CNG is that you don’t have to buy new cars to run on CNG, you have the option, but you can convert vehicles that run on petrol or diesel to CNG. This is great news because it means the cost of switching to CNG need not be prohibitive.
The obvious advantage of switching to CNG is that immediately people are no longer hostage to soaring petrol prices. If a state government could take the initiative to order that all public transportation vehicles switch to CNG (and perhaps provide a grant to cover the cost of the switch), imagine the possibilities. It is even possible to run vehicles on a hybrid basis with both CNG and petrol/diesel. Isn’t this just a common sense step to alleviating the suffering of the Nigerian people?
Ok, say it is not mandatory but for example the state owned BRT buses in Lagos and all other state owned transportation vehicles are converted to or replaced by CNG vehicles. This would be an option with no burden on small business owners (i.e individual taxi and bus owners). Then the roll out to the rest of the public transportation system could be done in phases.
Instantly Nigeria would be free from this bondage of petroleum marketers. People would have an option! No longer would towns and cities grind to a halt because of fuel scarcity. At least the public transportation system will keep going without us having to wait God knows how many decades for a functioning rail system.
In the case of Delhi, it was the Supreme Court that took the bull by the horns in 1998 after a petition from a concerned citizen. The Supreme Court ordered that that all commercial passengers vehicles have to be converted to CNG, including taxis, buses and three-wheelers. The reason in the Delhi instance was for environmental purposes.
I would not propose that such a switch becomes mandatory for all cars(including private vehicles). Public transportation vehicles are a very good place to start. But may I crave your indulgence a little bit. Just imagine you took the initiative to give your private car the CNG option, rolling past fuel queues with reckless abandon because you don’t need petrol to keep moving.
Nigeria has no need to import natural gas. It is in abundant supply in Nigeria’s Niger Delta region, where it is found in gas reservoirs or produced along with oil as associated gas. Unfortunately gas is still being flared in Nigeria because there is no real market for it. CNG run vehicles annihilates this problem. No one would flare if they were guaranteed a market for this commodity.
Nigeria already has a gas pipeline network, I am no expert but I am sure that we would not need to build new pipelines for CNG to be a reality in Nigeria. The same way we transport cooking gas from depots to retailers is the same way CNG can distributed within Nigeria.
Plus, I put it to you that the cost of CNG will be cheaper than the current pump price of petrol. Even if it is cheaper by just a little. The inherent competition between these two sources of fuel will ultimately lead to a reduction in the pump price of petrol because that is just what competition does.
I will end here but I consider that CNG for Nigeria is a very viable option. Only yesterday, I stumbled on a youtube video of a business in Nigeria that converts generator sets to run on CNG. This is a step in the right direction, but we don’t need to stop there. The federal and state governments have a big part to play as well.
Source- Junebug
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