Review of CNG adoption for transportation and its potential impact on fossil fuel demand in Nigeria

Having realized the problem caused by fuel subsidy removal and reduction in purchasing power, the Nigerian government attempted to solve this problem with the introduction of Compressed Natural Gas (CNG). The CNG is acclaimed to be cheaper and environmentally friendly. The objectives of this study to examine the rate of adoption, assesses CNG’s influence on the demand for fossil fuel and lastly, to identify the challenges facing the implantation of CNG adoption. Survey of data collected from CNG stations located at Benin in Edo, Kwara, Ibadan and Abuja and Kaduna were through systematic sampling technique. Descriptive statistics showed the adoption rate and Cross-elasticity of demand revealed whether or not the CNG and petrol are substitute, complementary or non-related products. Graphically, the trend of price of the products were forecasted and descriptive analysis of histogram showed the about 18 factors that are challenges to the adoption of CNG in Nigeria. Result revealed growing level of adoption among users but significant with trickle operators and truck users while CNG and petrol are substitute products, the price of CNG does not significantly affect the demand for petrol as it falls within the inelastic cross elasticity. The progressive trend suggested that, by 2030; the price of CNG and petrol may be the same and by extension CNG price increased more than petrol. The identified challenges rage from inadequate CNG station, low awareness, conversion cost, vandalism to safety issues among others. Government needs to be strategic and provide solutions to these challenges and ensure the price of CNG does not go up as predicted to have a stable economy.