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Nigeria’s CNG Price Skyrockets to ₦450, As FG Removes Subsidy
A sudden increase in the price of Compressed Natural Gas (CNG) has triggered long queues at filling stations and sparking outrage among motorists and industry stakeholders.
The price of CNG has surged dramatically from approximately ₦230 to ₦450 per Standard Cubic Meter (SCM), following the Federal Government’s decision to withdraw subsidies on the gas commodity.
This move according to the government is part of President Bola Ahmed Tinubu’s broader fiscal reform agenda, came as a surprise to the nation, where over 100,000 vehicles had recently converted to CNG as a cheaper alternative to petrol.
Motorists React to the CNG Price Shock
The scene at CNG stations across major cities like Abuja, Lagos, and Kano has been one of frustration and confusion. Long, snaking queues have returned, reminiscent of the petrol lines that followed the removal of the petrol subsidy in May 2023.
“I converted my car to CNG at a significant cost because the government promised it was the future a affordable and stable alternative,” said Tunde Olawale, a taxi driver in Abuja. “Now, barely months later, the price has nearly doubled. This is a betrayal. We are back to square one, struggling to break even.”
The price hike effectively erodes the cost advantage CNG held over Premium Motor Spirit (PMS), or petrol. With petrol prices currently hovering around ₦700 per liter, the economic incentive for drivers to bear the upfront cost of conversion has been severely diminished.
Government’s Fiscal Reforms and Green Energy Goals
The Presidential Compressed Natural Gas Initiative (P-CNGi), the body overseeing the adoption of gas vehicles, has defended the decision. Officials argue that the subsidy withdrawal is a necessary step towards creating a sustainable and market-driven energy sector.
In a statement, a government representative framed the move as aligning with President Tinubu’s “dual mandate of fiscal responsibility and environmental stewardship.” The administration positions CNG as a critical “green fuel” component of Nigeria’s energy transition plan, aiming to leverage the country’s vast natural gas reserves to power its economy.
The subsidy removal is seen as a way to free up government funds for other critical infrastructure projects within the CNG value chain, such as building more mother stations and conversion workshops. However, the abrupt nature of the change has been widely criticized.
Policy Inconsistency and Economic Strain: Analysts Weigh In
Energy analysts and economists have been quick to highlight the potential pitfalls of the policy shift. The key criticism is one of policy inconsistency, which undermines public trust and investor confidence.
“This sudden U-turn creates a terrible precedent,” said Dr. Ijeoma Nwosu, an energy economist at the Centre for Development Studies. “The government actively encouraged people to invest in conversions with promises of stable, low-cost fuel. Pulling the rug from under them so quickly discourages further adoption and questions the credibility of future government initiatives.”
The price increase also threatens to exacerbate Nigeria’s already soaring inflation rate, which stood at 33.95% as of May 2024. Transportation costs are a primary driver of headline inflation, and a rise in CNG prices will have a knock-on effect on the cost of goods and services across the board.
The immediate future appears challenging for the CNG ecosystem. Potential converts are now likely to hesitate, while existing users grapple with increased operational costs.
While this issue is still fresh more detials will be reported as they unfold.
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