By Eze Onyekpere
President Bola Ahmed Tinubu recently gave a directive mandating all ministries departments and agencies of government (MDAs) to stop procuring petrol dependent vehicles and instead, procure compressed natural gas-powered vehicles. On the face of it, this seems to be a positive development but there are underlying issues and challenges which should have been resolved as conditions precedent to this directive. This discourse reviews the dialectics of this directive and what should be done to popularize the use of CVNG powered vehicles.
According to media reports from the Special Adviser to the President on Media and Publicity, Ajuri Ngelale, the directive was in line with the President’s commitment to ensure energy security, in furtherance of Nigeria’s effort to transition to cleaner energy as CNG-enabled vehicles have been adjudged to produce lower emissions, even as they present a more affordable alternative for Nigerian energy consumers. The President further directed the rejection of all memoranda brought by members of the Executive Council of the Federation seeking the purchase of traditional petrol-dependent vehicles, tasking the affected members of the Council to go back and diligently seek value-driven procurement of CNG-compliant vehicles.
The first challenge for the effective implementation of this directive is that there has been no prior plans, preparations and studies showing how a directive of this magnitude can be implemented. This prior arrangement would have reviewed and planned issues related to the cost of acquisition, repair and maintenance of vehicles, availability of CNG in fuel dispensing stations across the federation, available local vehicle production and assembly capacity, etc. In this scenario of pre-planning, tasks and implementation issues would have been identified and apportioned to various stakeholders in MDAs, the private sector and civil society to ensure the success of the directive. An overall coordination centre would have been created in existing governance and regulatory frameworks to oversee the success of the directive, engage in course correction when critical challenges emerge, etc. It is not good practice to start implementing a directive and later to find frustrating challenges which no one has planned for.
The argument may be made that there is a Presidential Compressed Natural Gas Initiative. This raises critical questions. Which stakeholders have they engaged or consulted? Where is their roadmap, targets, initiatives for popularizing CNG? If the PCNGI wants to make CNG an alternative to petrol and diesel, where is the conversion infrastructure and what is the plan for the development of human capacity to manage CNG as a popular fuel? What is the fiscal policy incentive in terms of competitive tariffs in support of the CNG rollout? Has the PCNGI engaged the petroleum marketers and private sector operatives in the sector? Has it even engaged the media to tell the story of the CNG plan? So many questions and apparently no answers.
The second issue is in terms of timing, the best time to have given this directive to the public sector would have been during the pre-budget stage vis, during the preparation of the medium-term expenditure framework (MTEF) and fiscal strategy paper (FSP) 2025-2027. This would link plans, policies, laws and the budgeting framework to ensure that the continuum delivers results. The directive would have fully crystallised in the 2025 budget Call Circular as a definite instruction from the Ministry of Finance/Budget Office of the Federation to MDAs in the preparation of the 2025 federal budget. As a directive in the Call Circular, issues around the cost of CNG powered vehicles would have been accommodated by MDAs in the Appropriation Act.
The third issue is about the availability of CNG across the length and breadth of the Federation of Nigeria where these public vehicles will ply. How many petrol and diesel dispensing stations have facilities to dispense CNG? A situation where the CNG powered vehicles will run out of fuel and get stranded on the way may likely occur. The Nigerian Midstream Downstream Petroleum Regulatory Authority (NMDPRA) states that it is considering compulsory installation of CNG pumps at fuel stations. In essence, they are considering denying licenses to marketers who do not install CNG pumps at fuel stations. No one, including the President, can simply give a directive to private fuel stations to procure CNG facilities if they do not see a commercial or profit driven need for it. It is imperative that private sector operators of these fuel stations are engaged and probably incentivized to provide the CNG infrastructure and services. If the CNG dispensing pumps are produced locally, it presents opportunities to create demand for mass production of the pumps. If they have to be imported, there is a time lag for the pumps to be ordered, shipped down, cleared from the ports and installed. The pumps are not going to be automatically installed because the president or the NMDPR gave a directive.
The fourth issue is about using public procurement to facilitate local production of goods and services. As a follow up to this presidential directive, the Executive Council of the Federation approved a memo for the procurement of 200 CNG powered Toyota Land Cruiser Buffalo V6 for the Nigeria Customs Service at a cost of N12.5billion. However, there are Nigerian Vehicle makers especially Innoson and Nord Motors who have been producing SUVs and have even produced CNG powered vehicles of all descriptions. A N12.5bn contract given to them would have increased their earnings which translates into more corporate income tax for the government, more Nigerians in jobs, more personal income tax to government, etc.This N12.5bn would be used to buy dollars and sent out of Nigeria thereby putting more pressure on the value of the naira against major international currencies. Why is common sense not so common?
The fifth issue is that we still have Nigerian gas produced in Nigeria priced in dollars while the Central Bank and the Economic and Financial Crimes Commission are busy chasing after economic and naira saboteurs. While some countries have started abandoning international trade denominated in dollars, we are doing local trade in a foreign currency. The NMDPRA states that it has reduced the price of CNG to $1.57 per Million British Thermal Units (MBTU) as against $2.92 and $2.42 per MBTU for the commercial and power sectors respectively. This implies a very big subsidy. Has there been any study on how the subsidy will be sustainably financed if there is mass adoption of the CNG tale?
In the final analysis, the CNG initiative needs more thinking through, planning and engagement of stakeholders. It cannot start and end as a political proclamation without the benefit of empirical thinking through. Otherwise, it will be another declaration of fuel subsidy is gone; but we all know that fuel subsidy has increased.