Nigeria's recent elimination of gasoline subsidies is profoundly reshaping the West African nation's energy landscape.
With sharply rising gasoline prices driving up transportation costs,
the government and private investors are actively turning to the country's abundant natural gas resources for more economical and sustainable energy alternatives.
Subsidy Removal Triggers a Chain Reaction
The Nigerian government's gasoline subsidy policy has long kept fuel prices low,
but this policy consumes approximately 3 trillion naira (approximately US$3.9 billion) in fiscal spending annually, placing a heavy economic burden on the government.
In May of this year, President Tinubu announced the elimination of this long-standing subsidy policy, causing gasoline prices to soar from 185 naira per liter to over 500 naira in just a few weeks, an increase of over 170%.
The surge in fuel prices has directly led to a sharp increase in transportation costs. Road freight rates have increased by an average of 150%,
urban bus fares have doubled, and the surge in logistics costs has been rapidly transmitted throughout the supply chain. According to data from the Nigeria Labour Congress,
national retail prices have increased by an average of 23%, with food prices rising as much as 35%, placing significant pressure on ordinary people. Natural Gas: The Rise of a Competitive Domestic Energy Source
Faced with a fuel crisis, Nigeria is rapidly turning to natural gas, a dominant domestic energy source. As Africa's largest natural gas reserve holder,
Nigeria boasts proven reserves of 206 trillion cubic feet, representing over 20% of Africa's total reserves, a unique resource base.
The government has rapidly launched the National Natural Gas Expansion Plan, aiming to develop natural gas as a primary energy source for transportation,
industry, and power generation. The federal government has approved the construction of 100 compressed natural gas (CNG) refueling stations and plans to expand this number to 500 within the next three years,
covering major transportation arteries nationwide.
The transformation of the transportation sector is particularly significant. The Lagos State Transport Authority has already converted an initial batch of 500 buses to CNG power,
and expects to complete the conversion of 2,000 by the end of the year. Private transport companies are also actively participating. The head of a major logistics company stated,
"Converting a truck costs approximately 800,000 naira, but operating costs can be reduced by 40%, with a payback period of just four months."
