Rising fuel costs push Nigerian commercial drivers to early CNG adoption

When we think about early adopters—brave people who often pay a premium in price and risk trying new products—of new technologies, commercial drivers may not readily come to mind. Yet, drivers in major cities like Lagos, Abuja, Ibadan, and Benin are becoming early adopters of vehicles powered by compressed natural gas (CNG).

While CNG is better for the climate than petrol, these drivers aren’t switching because of environmental concerns. Instead, cost is the top-of-mind consideration as fuel prices reach record highs in Nigeria.

CNG vehicles, which run on gas typically stored in the car’s boot, are cheaper than their petrol-powered relatives. While a litre of fuel costs between ₦877 and ₦1,200, a cubic meter of gas is about ₦235. 

While many drivers are skeptical about the safety of CNG vehicles, cost considerations are muting those worries. 

“With ₦5,000 worth of gas,  I can take a round trip from Lagos to Ibadan,” said Olasukanmi, a driver on a waitlist to repurpose his car with the CNG kit at Nigerian Independent Petroleum Company (Nipco), an oil and gas company that has been offering CNG conversion services for over five years. “At the current fuel price, such a journey will cost me at least ₦30,000.” 

Yet the switch to CNG is expensive. Depending on the car and engine, it costs between ₦750,000 and ₦2.5 million to convert petrol-powered cars to CNG-compatible ones.

“The prices are high because importing the accessories is expensive,” said Joseph, an engineer at Autogig, another CNG conversion center in Gbagada, Lagos.  

Stakeholders in the oil and gas sector have asked the government to make the kits duty-free, according to a 2019 report by  Nigerian Independent Petroleum Company (Nipco), an oil and gas company that has been offering CNG conversion services for over five years.

The import duties are still in place, and kits have become more expensive due to the devaluation of the naira. The cost of CNG kits, which ranged between ₦200,000 and ₦300,000 nearly five years ago, has more than tripled.

The federal government is funding conversions for public transport drivers in Lagos, Benin, Ibadan, and Abuja. The government also offers a 50% discount on the conversion kit and installment payment plan to ride-hailing drivers.

Ride-hailing company Bolt said the government has offered 100 vehicle slots to interested drivers. 

“[Nine] vehicles have been successfully converted, and 17 vehicles have been scheduled for conversion,” a Bolt spokesperson told TechCabal.

Bolt is encouraging drivers to convert their vehicles to CNG to save costs, an unsurprising move since recent fuel price increases have worsened driver dissatisfaction with the business model. Those drivers have long demanded fare increases, citing increasing maintenance costs and commissions for ride-hailing companies.

Drivers can save money in other ways when they switch to CNG. Its lower hydrocarbon levels make it healthier for the car engine and petrol.  

“You may not need to service your car engine in three months,” Adeshina Owolabi, a mechanic at a Mobil Station at Ilupeju, Lagos, one of the few CNG gas stations in Nigeria. 

The gospel of CNG’s cost benefits continues to spread among commercial drivers, but it is too early to tell if it will become mainstream. Since 2012, news of drivers turning to CNG has spiked in response to a surge in fuel prices. 

The upfront installation cost was a barrier to adoption for many commercial drivers at the time, and the economic situation has only worsened, so the financial hurdle remains. 

The government financing of the upfront cost may make it mainstream among commercial drivers. However, this renewed interest may also be another fad that will fade when drivers who cannot afford the conversion fees adjust their fares to the new fuel prices.