By Uchechukwu E. Eke, PhD

Introduction

The recent removal of fuel subsidies in Nigeria has precipitated an immediate spike in fuel prices, exerting considerable financial pressure on the populace and intensifying inflationary trends. While the government has implemented short-term palliatives to alleviate these pressures, there is a pressing need to formulate a sustainable long-term strategy. Investing in public transportation emerges as a particularly viable solution, offering not only economic relief but also aligning with environmental sustainability goals. The integration of Compressed Natural Gas (CNG), a cleaner and locally available alternative to traditional fuels, further enhances this proposition, promising to redefine the transportation landscape while addressing the multifaceted challenges posed by the subsidy removal.

This paper discusses the benefits of prioritizing public transportation investment as a strategic response to the economic and environmental challenges following the removal of fuel subsidies and the mechanisms to be applied. It also highlights the potential role of CNG in revolutionizing the sector.

Fuel Subsidy Removal and Economic Challenges

Fuel subsidy removal has led to an immediate surge in fuel prices, impacting citizens’ finances and contributing to inflationary pressures. Beyond the short-term issues, there is a looming challenge of reduced economic growth due to higher fuel costs affecting businesses reliant on road transportation. This could hamper productivity, competitiveness, and employment opportunities in the long run.

Current Transportation Landscape

Nigeria’s heavy reliance on petroleum products fueled private cars, mini buses and inadequate public transportation infrastructure exacerbates the impact of fuel subsidy removal. This current situation is unsustainable, necessitating a shift towards prioritizing investments in Compressed Natural Gas (CNG)-fueled public transportation systems.  This shift aims to foster economic growth and sustainability, acknowledging the importance of cheaper alternative and environmentally friendly fuel sources.

The Case for Public Transportation Investment

Prioritizing investment in public transportation, particularly systems utilizing CNG, financed predominantly by fuel subsidy recoveries, presents a strategic approach that addresses both short-term and long-term challenges and lays the foundation for sustained development. This strategy offers several advantages:

• Reduced Individual Transportation Costs: well-developed public transport system reduces the financial burden on citizens, providing affordable and reliable transportation options.
• Economic Growth: Investing in public transportation infrastructure stimulates economic growth by creating jobs, increasing productivity, and enhancing competitiveness.
• Reduced Dependence on Fuel Imports: A robust public transportation system reduces the country’s dependence on imported fuel, enhancing energy security and reducing foreign exchange expenditures.
• Traffic Congestion Alleviation: Efficient public transportation systems decrease traffic congestion, resulting in less time wasted in traffic, lower fuel consumption, and reduced environmental pollution.
• Environmental Benefits: Investing in sustainable public transportation modes, such as electric buses or railways, can contribute to a reduction in greenhouse gas emissions and air pollution.

Alternative Public Transportation Investments

To comprehensively address the multifaceted transportation needs of Nigeria’s diverse population of over 200 million, the government can strategically invest in a range of public transportation alternatives, with a focus on modes that utilize locally available fuels such as CNG. Each alternative serves a specific purpose and is designed to cater to various national, state and local government contexts. The following alternatives are recommended, each accompanied by its rationale:

Bus Rapid Transit (BRT) Systems: BRT systems are characterized by dedicated bus lanes, offering a swift and efficient means of transportation. They are particularly suitable for densely populated urban areas where road congestion is a challenge. BRT systems enhance commuter experience by reducing travel times, increasing reliability, and providing a cost-effective solution for both passengers and the government.

Bus Priority Lanes Services: Bus priority lanes optimize regular bus services by designating exclusive lanes during peak hours. This approach maximizes the efficiency of existing road infrastructure, providing a quick and reliable mode of transportation. Bus priority lanes are ideal for areas with variable traffic patterns, ensuring that buses can navigate through congestion and adhere to schedules.

Express Bus Services: Express bus services connect major destinations with limited stops, offering a rapid alternative to traditional bus services. This alternative is valuable for commuters covering longer distances, reducing travel times, and increasing the attractiveness of public transportation. Express bus services contribute to the overall efficiency of the public transport network by providing swift connections between key locations.

Regular Bus Services: Regular bus services form the backbone of public transportation, operating on well-established routes and schedules. They play a crucial role in connecting residential areas with commercial and industrial zones, serving a broad demographic. Regular bus services are foundational, providing accessibility and convenience for daily commuters.

Light Rail Transit (LRT): LRT systems are efficient and capable of moving large numbers of passengers in urban areas. LRT is particularly effective in corridors with high passenger demand, offering a comfortable and environmentally friendly mode of transportation. The investment in LRT contributes to the reduction of traffic congestion and supports sustainable urban development.

Commuter Rail Services: Commuter rail services connect suburban areas to urban centers, providing a vital link for individuals commuting longer distances. This alternative is suitable for regions with a significant suburban population, reducing dependence on private vehicles for daily commuting. Commuter rail services contribute to regional connectivity and offer an alternative to road-based transportation. This option can be implemented on a regional basis by a group of states.

Long Distance Train: A long distance train system, is ideal for a densely populated country such as Nigeria. It will offer swift, reliable, and affordable transportation for large volumes of people and cargo across regions and states, fostering economic growth by connecting labor markets. Long distance train services free up the roads, resulting in extending the life span of constructed roads, reduction in budgetary allocation for road construction and maintenance and congestion and accident reduction. The high load capacity of long distance train, cost-effectiveness in transporting both goods and passengers, and environmentally friendly nature makes it an efficient and indispensable  choice at the national level.

Ferry and Waterway Transportation: In regions with access to water bodies, ferry and waterway transportation offer a unique and efficient mode of public transportation. Particularly relevant for areas with multiple islands or communities along riverbanks, this alternative provides an effective means of reducing road congestion. Additionally, ferry and waterway transportation contribute to the sustainable use of water resources and offer scenic and practical transportation solutions.

Funding Mechanisms

Government can explore various options for public transportation investment:

• Government Budgetary Allocation from Subsidy Recovery: Allocate a portion of the funds recovered from fuel subsidy removal to public transportation investment.
• Public-Private Partnerships (PPP): Engage in partnerships with private sector entities to share the financial burden and expertise in developing and operating public transportation systems.
• Multilateral Loans and Grants: Leverage international financial institutions and development partners to secure loans and grants for public transportation infrastructure development.
• User Fees: Implement user fees or fare collection systems to generate revenue for ongoing maintenance and expansion of public transportation services.

Case Study: Bogotá, Colombia

Bogotá’s TransMilenio Bus Rapid Transit (BRT) system is a successful example of sustainable public transportation investment. The city invested in a high-capacity BRT system that reduced traffic congestion, lowered air pollution, and improved overall mobility. The scale of investment in Bogotá’s TransMilenio BRT system was substantial, covering infrastructure development, including dedicated bus lanes, stations, and a fleet of modern buses. Funding was derived from a combination of government allocations, user fees, and international financing.

Operators

Public transportation operations can involve both private and public sector entities. Public sector participation, comes in the form of government transportation agencies. Private sector participation can take various forms, such as service contracts, management contracts, leasing, concessions, build-operate-transfer (BOT), and divestiture.

Case Study: Istanbul, Turkey

A successful example of private sector participation in public transpiration operation is Istanbul, Turkey, where public transport expansion was funded through a PPP model involving private companies in the construction and operation of metro lines. The expansion of Istanbul’s public transportation system involved a significant investment which covered the construction of new metro lines, stations, and the procurement of modern rolling stock. The collaborative effort between the government and private sector entities contributed to the overall financial strength of the project.

Swift and Decisive Action

It is imperative for the Nigerian government to act swiftly and decisively in implementing this strategy. Prioritizing public transportation investment aligns with the nation’s goals of sustainable development, economic prosperity, and environmental conservation. By leveraging fuel subsidy recoveries, switching to CNG fueled transportation systems and forging public-private partnerships, Nigeria can establish a modern, efficient, and sustainable public transport system that benefits its citizens and ensures long-term prosperity.

Conclusion

In conclusion, prioritizing investments in public mass transportation systems powered by locally available Compressed Natural Gas (CNG), funded mainly by fuel subsidy recoveries, is not just strategic but an urgent necessity. Delaying this vital strategy would deepen the economic scar from fuel subsidy removal, exacerbate financial burdens on citizens, hinder economic growth, and worsen environmental degradation. The risk of delay also extends to undermining Nigeria’s long-term sustainability and global competitiveness.

The government’s swift and determined implementation of this strategy, will alleviate current economic challenges and pave the way for a more sustainable future. This commitment spans economic growth, social stability, environmental conservation, and resilience, defining Nigeria’s path towards prosperity. The time for action is now, as the consequences of delay are profound, impacting not only the immediate economic landscape but also shaping Nigeria’s trajectory in the global arena.

 Dr. Eke writes from the Observatory for Innovative Policy Analysis (OFIPA)