https://twitter.com/Abraham_Idowu/status/1691838614353711173?s=20


The Fuel Subsidy Removal Palliative Nigeria Needs

Some points that need to be made clear to the public and the govt on this CNG hue and cry👇🏾

CNG is part of the domestic natural gas industry that is subsidised. This subsidy has stunted the industry for decades and is the reason domestic gas doesn't flow as abundantly and reliably as export gas. Industry players have long protested against this and, if the govt is serious about improving power supply drastically, then those subsidies will have to go soon which makes it deceitful to encourage anyone to convert their cars to CNG burners in search of cheap fuel. This price regime cannot last and we shouldn't complicate domestic gas / power sector reform by entangling them with fuel subsidy issues.

The govt's plan to establish 35 CNG stations in by 2024 is inadequate. This works out at roughly one CNG station per state. We can imagine all CNG vehicles in Lagos state for example queueing up to refuel at one station. We shouldn't even imagine all CNG vehicles in the whole of Niger state driving 100s of Kms to go queue at just one CNG station.

After decades of pushing CNG Europe is yet to achieve even 1% penetration in the automotive sector which confirms the unworkability of a CNG solution for transportation. This is despite its significant reliance on Nat Gas and the extensive NG infrastructure it has in place.

Instead of reinventing the gas wheel we should instead go back to our long-standing butanisation policy and build on the progress made so far. Already we have 1,000s of LPG filling stations all over Nigeria with millions of happy users. The govt can within months churn out additional 10m mini cylinders with burners to give to the less privileged all over the nation. Each unit will cost less than the #48k cash palliative that was going to be given to millions of families but, instead of cash that disappears without a trace, it would deliver branded all in one gas cookers with cylinders that the recipients will still be seeing and using when the next elections come.

Subsidising LPG to make it more attractive than kerosine and firewood would ensure the benefits reach all Nigerians including those who already have gas cookers so both the middle class and masses will have an immediate and long-lasting benefit. The volume of LPG that cooking and even running a few converted cars on LPG will use will never break the bank especially as LPG can't be profitably smuggled. Decades after Ghana introduced LPG subsidies most cars still run on liquid fuel.

LNG plants and refineries produce copious amounts of LPG as ‘byproduct’ so as more refineries / LNG / petrochemical plants become reality Nigeria will be awash with enough LPG supply to meet our needs and export. Being a byproduct of other unsubsidized items the subsidy won’t stop investment in those primary products and subsidy payment can be made a tax credit depending on audited volumes supplied to the local market which would eliminate most of the current scams.

The butanisation policy was declared partly to save our forests especially in the drier northern part of Nigeria. This was before the environment became all the rage. Resurrecting that policy now in such a massive way will indeed save our forests but also win for the govt much PR mileage with western govts / influential persons / institutions. With the right packaging the govt may even obtain grants from such entities in support of the roll out.

LPG reduces carbon emission not only when it replaces wood but also when it replaces kerosine as it is cleaner burning. Unlike kerosine it can not be used to adulterate diesel or other more expensive products. Incentives should be provided to domesticate the production of LPG fibre cylinders and burners.

We should be able to not just meet 100% of our domestic needs but also capture the entire ECOWAS market and beyond. Friendly policies also need to be made by state governments to encourage siting of wholesale and retail LPG plants.