• Monday, December 11, 2023
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With petrol subsidy gone, what other options?

Tinubu’s record cabinet in 24 years ignores costs

The current hot topic of discussion around the country is about the removal of subsidy on the price of petrol by the Federal Government. It looks like there is no going back on this decision, especially as the sole importer and subsidy financier, NNPC Limited, has declared its inability to provide any more financing at the risk of jeopardising its own operations. In the circumstances, what other energy sources do we have as alternative to petrol?

In December 2020, in one of its attempts to wean Nigeria away from burning petrol and diesel in the transportation sector, and to reduce harmful emissions, the Ministry of Petroleum launched the National Gas Expansion Programme (NGEP) which includes the AutoGas (LPG) Policy aimed at ensuring that vehicles run on either LPG for cars and Compressed Natural Gas (CNG) for trucks and buses. Both LPG and CNG emit less carbon than petrol and diesel fuels.

This was intended to be a means of reducing the burning of petrol and diesel in our vehicles. In fact, this was more about reduction of the payment of petrol subsidy rather than the pursuit of the reduction of emissions. The pressure on demand for petrol and diesel would not only be reduced but also provide a cheaper alternative to both fuels.

The plan was also to convert existing vehicles to burn LPG and natural gas (through CNG), and for existing filling stations to dispense LPG and CNG to vehicles converted to run on those fuels. Two years after the policy was announced, implementation has clearly not gained much traction.

It is interesting to note that both the NLC and TUC have included adoption of CNG as part of their agenda in negotiations with the government, following the removal of petrol subsidy. They request the government to “revive the CNG conversion programme earlier agreed with Labour centres in 2021.”

Even the Depots and Petroleum Marketers Association of Nigeria (DAPPMAN), in supporting the government’s palliatives, have volunteered to provide CNG mass transit buses. CNG vehicles emit lower levels of harmful pollutants, thereby “improving air quality and mitigating global warming and climate change.” With the new petrol price regime, perhaps vehicle owners will also turn to Autogas as a cheaper alternative to petrol. The good news is that LPG prices are said to have come down recently.

The downside, though, is that LPG is also being used predominantly as fuel for cooking in Nigeria. Currently Nigeria does not have sufficient supply of LPG even though Nigeria LNG (NLNG) is supplying most of the LPG for the Nigerian market, while reducing the quantity imported. Hopefully, the situation should change when the Dangote refinery starts supplying petroleum products into the Nigerian market, and when the NNPC refineries come back into production.

Even though CNG adoption has been minimal, it appears to have been more accepted for trucks and buses, and for power generation in small power plants, probably because of easy access to natural gas in parts of the country. Recently, there has been strong support for CNG adoption for vehicles. Innoson Vehicle Manufacturing Company announced and displayed its CNG-powered vehicles.

The vehicles are being promoted as “offering a sustainable alternative that not only reduces our dependency on petroleum products but also contributes to a cleaner and healthier environment.” The CNG vehicles are considered more cost-effective and more efficient than petrol or diesel burning vehicles.

Innoson says it is also establishing a “comprehensive CNG refueling infrastructure across Nigeria.” This is a breakthrough and certainly provides options in addressing the subsidy removal shock from which we are all recovering.

Is it now time for Nigeria to look towards electric vehicles (EVs)? Given the global quest to reduce carbon emissions, the time may have come. The big question is the economics of introducing EVs for those who can afford it. Nevertheless, hope is round the corner.

Lagos State appears to be blazing the trail. Recently, it announced that the Lagos State Government, in collaboration with Oando Clean Energy Limited (OECL), has entered into partnership with the largest electric vehicle manufacturer, Yutong, to manufacture electric buses and EV supporting infrastructure, including battery charging stations.

The Oando-Yutong Joint Venture Partnership is to take delivery of 12,000 electric buses over the next seven years. In the longer term, the Joint Venture plans to construct a local electric vehicle assembly plant to manufacture electric buses and to expand its operations nationwide.

This Lagos State initiative is in line with Nigerian Energy Transition Plan (NETP) which includes the deployment of electric vehicles, among its implementation strategies. The NETP is Nigeria’s pathway to achieve carbon neutrality by 2060. One of the key insights of the NETP is to create “significant investment opportunities such as the establishment and expansion of industries related to solar energy, hydrogen, and electric vehicles”.

The Lagos State initiative is coming on the heels of a recent announcement by the government of Kenya which has received $378 million from the EU to facilitate the electrification of the country’s public transport. It will feature zero emission electric buses including infrastructure to support the rapid transit system.

Kenya, having achieved electricity access rate of over 75%, is certainly in a position to move things forward. In Nigeria, the population with access to electricity is about 55%. This might call into question Nigeria’s ability to adequately support EVs, by providing reliable electricity and battery charging infrastructure.

EVs are playing an important part in the global quest to considerably reduce emissions of carbon into the atmosphere. Although EVs have been in commercial use for about two decades, there are factors limiting the total acceptance of EVs.

The major one is range or distance it can travel without charging, compounded by the prevalent lack of sufficient charging points in some countries. Any EV initiative in Nigeria will not only face the challenge of reliability of electricity supply from the national grid, but also the availability of charging stations.

In addition, the cost of new electric cars are currently much higher than the petrol engine cars, although some of this may be recovered over the years through lower running costs. EVs running on electricity do not have engines or moving parts, therefore maintenance costs are less.

Nigeria needs to be aware of the trend towards adoption of electric vehicles globally. Perhaps the current petrol price shock will draw the attention of Nigerians to other means of transport. The EU is actively discussing banning the sale of petrol and diesel cars from 2035. Norway has its goal of no more sales of petrol and diesel vehicles after 2025.

The Sustainable Energy Fund for Africa (SEFA) of the African Development Bank Group, which was announced last January, will provide $1million technical assistance grant to the Green Mobility Facility for Africa (GMFA). GMFA provides technical assistance and investment capital to accelerate and expand private sector investments in sustainable transport solutions in pilot seven African countries including Nigeria.

The hike in the price of petrol should present us with an opportunity to look into other energy options in transportation. Our Okada motorbikes taxi business has become a means for mass transportation across the nation. It will, certainly, be impacted by the increase in the price of petrol.

Perhaps in the quest for cheaper alternative to petrol, we should begin to look at solar-charged electric motorbikes for sustainable transformation of our transport system, which also addresses the issues of reducing harmful emissions.

Read also: Seven benefits of new electricity bill for manufacturers

Some African countries, such as Uganda and Kenya, are now using solar-charged electric motor bikes. Even our own neighbours, Benin and Togo, have adopted electric motorbikes. The vehicles are said to have been approved by the government of Togo as part of a policy to reduce harmful emissions.

What is common to some of these countries, which are embracing electric motorbikes, is that they do not have the oil resources that we have and therefore have looked at alternatives.

The withdrawal of subsidy on petrol, though painful, provides an opportunity for the authorities and businesses in Nigeria to think outside the box in looking for options. Nigeria should take advantage of the funding available to African countries in addressing cleaner and cheaper alternative transportation and energy sources.

We should also learn to implement policies that are in our Nigerian Energy Transition Plan, some of which have been in our statute books for years, and are begging for implementation.

Dr Ihetu is a former NNPC Group Executive Director, Engineering and Technical, former MD/CEO Nigeria LNG, former MD Nigeria Gas Company; author of the book “From Oloibiri to Bonny”