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Nigeria Targets 50% Fare Reduction on Gas Utilization

By Yange Ikyaa

The Nigerian government is looking to gas for a solution to the high cost of transport fare in the country.

This is according to the Minister of Information and National Orientation, Mohammed Idris, who recently revealed that, through its Presidential Initiative to deploy Compressed Natural Gas (CNG) mass transit buses, the Bola Ahmed Tinubu-led government foresees a reduction of over 50% in transport fare across the country.

On May 29, President Bola Tinubu announced the removal of the petrol subsidy, immediately raising petrol prices nationwide. The situation has been further compounded by the skyrocketing diesel, jet fuel and gas prices.

Recent data from the National Bureau of Statistics (NBS) indicated that transport fares paid by commuters in Nigeria moved up by over 64 per cent year-on-year in November 2023. The NBS transport fare watch for November 2023 covered bus journeys within the city per drop, bus journeys intercity charge per person, air fare charge for specified routes, journeys by motorcycle (Okada) per drop and waterway passenger transport.

A further breakdown of the data indicated that, on a year-on-year basis, bus fares rose by 64.44 per cent from N637.10 in November 2022, while the average fare paid by commuters for bus journey intercity per drop was N6, 206.53 in November 2023, indicating an increase of 5.45 per cent on a month-on-month basis compared to N5, 885.68 in October 2022.

According to NBS, “looking at the variations in the state prices, the top three states with the highest average price of the product in November 2023 included Benue State (N1,280.00), Kaduna State (N1,183.45) and Sokoto State (N1,183.33).

“Furthermore, the top three lowest prices were recorded in the following states namely: Rivers State (N875.00), Abia State (N900.77) and Bayelsa State (N920.00).

“The zonal representation of the average price of diesel showed that the North-central zone had the highest price of N1, 123.75 while the South-east zone had the lowest price of N959.69 when compared with other zones.

“On state profile analysis, Kebbi state had the highest average retail price for petrol, at N691.00. Jigawa and Akwa Ibom states were next, with N677.67 and N675.00, respectively.

Then, “on the other side, Taraba, Kaduna and Lagos States had the lowest average retail prices for petrol, at N618.00, N620.29 and N623.12 respectively. Lastly, on the zonal profile, the South-south zone had the highest average retail price of N663.59, while the North-east zone had the lowest price of N632.75,” the report stated.

For gas, the average retail price for refilling a 5kg Cylinder of Liquefied Petroleum Gas (LPG) or cooking gas increased by 5.82 per cent on a month-on-month basis from N4, 562.51 recorded in October 2022 to N4, 828.18 in November 2023.

However, Minister of Information and National Orientation, in a recent statement, urged Nigerians to see the energy management initiative of the government under review as a relief introduced by the Tinubu administration to alleviate the economic challenges stemming from petrol subsidy removal.

He also noted that there is a concerted effort among the relevant ministries and agencies of the Federal Government to tackle inflation, stabilize foreign exchange rates, and establish a genuinely supportive climate for business and investment.

His words: “Impactful interventions are being rolled out, including a Students’ Loan Scheme, a Presidential Initiative to deploy lower-cost CNG mass transit buses to provide alternatives to petrol and diesel, and various low-interest loan schemes for businesses. The CNG interventions will bring down the cost of transportation by more than 50%.  We urge Nigerians to take advantage of these opportunities as they emerge, as they have been designed for the benefit of all”.

“All relevant Ministries and Agencies of the Federal Government are working in coordinated fashion, to bring down inflation, stabilize foreign exchange rates, and create a truly enabling environment for business and investment.” 

While the Nigerian government is counting on gas to achieve much of its intended provision of solutions to the country’s energy and transportation challenges, the Nigerian National Petroleum Company Limited (NNPC) Limited, in January held talks with a South Korean consortium, led by Daewoo E & C on the development of gas projects in Nigeria.

The Group Chief Executive Officer of NNPC Limited, Malam Mele Kyari, led the company’s team to the discussions, which held in Seoul, South Korea, and were aimed at deepening NNPC’s drive to tap into the nation’s vast gas resources to be a supplier of clean and affordable energy to both the domestic and global markets.

It is expected that the talks will pave way for the execution of a Memorandum of Understanding (MoU) that will unlock strategic foreign direct investment in line with the President Bola Ahmed Tinubu administration’s policy of making Nigeria a prime destination for global investors.

South Korea is a major destination for Liquefied Natural Gas exports and the consortium, in collaboration with the Korean Export-Import bank, has expressed interest in advancing discussions on investing in Greenfield and other gas development opportunities.

Gas development remains an important economic goal of Nigeria, with the country declaring the period from 2020 t0 2030 as “The Decade of Gas.” Recently, Kyari sent out congratulations to Temile Development Company, an indigenous player in the Nigerian gas sector, on the commissioning of its 23,000 cubic-meter ultra-modern Liquefied Petroleum Gas (LPG) Carrier in Ulsan, South Korea. According to the NNPC GCEO, the vessel named Alfred Temile 10 represents a significant stride towards deepening the utilization of gas in-country and growing gas revenues.

“It is great that Temile Development Company is able to complete the construction of the 23kt LPG vessel. This will go a long way in improving access to LPG in the domestic market and provide cleaner fuel in our country,” said the NNPC Boss, adding that “Nigeria’s objective is to ensure that everyone has access to clean energy and particularly walk away from bio-mass as a source of energy.”

The importance of gas to the Nigerian economy cannot be overstated, as the country’s 209 trillion cubic feet of gas reserves make it more of a gas than a crude oil nation.

As a result of this, the country’s largest gas facility, the Nigeria LNG, managed to keep some vital supplies, despite a force majeure that it declared in October due to widespread flooding that disrupted supply.

NLNG, with a production capacity of 22 million tonnes per annum, delivers most of its shipments to clients in Europe, including Galp and Endesa, with whom it has long-term contracts. It also operates over 70 spot agreements across major LNG markets across the globe.

Force majeure is a term used to describe unexpected external circumstances that prevent a party to a contract from meeting previously agreed obligations. But NLNG spokesman Andy Odeh said that “NLNG continues to collaborate with its customers to minimize the impact of the consequent gas supply shortage.” Consequently NLNG did not cancel cargoes despite the force majeure, which was only pre-emptive to protect it and notify clients if the situation persists for much longer.