How Nigeria's CNG transition may impact pricing of e-hailing services

The recent meetings between the Presidential Committee on the National Gas Initiative and representatives of platforms like Uber and Bolt have sparked fresh concerns among drivers regarding a potential fare reduction arrangement. The move towards Compressed Natural Gas (CNG) in Nigeria has raised uncertainties about pricing metrics and the overall impact on the e-hailing market. Idris Shonuga, the Managing Director and CEO of IOS Magnificent Logistics, shed light on the current pricing dynamics, the transition to CNG, and the outlook for the sector. According to Shonuga, the cost reduction associated with the CNG program could result in savings for drivers, equating to a significant decrease in fuel expenses. However, he emphasized the need for all stakeholders to be actively involved in addressing the challenges that may arise from this transition. One of the primary concerns raised by drivers is the economic burden they face due to high vehicle acquisition costs and loan repayments. Shonuga highlighted that the surging prices of vehicles, compounded by currency devaluation, have made it increasingly difficult for drivers to sustain their operations. To alleviate the financial strain on drivers, Shonuga proposed that the government should consider subsidizing the equipment required to retrofit vehicles for CNG use. By subsidizing the conversion kits, the government could facilitate a smoother transition to CNG-powered vehicles, thereby reducing operational costs for drivers. Shonuga also drew attention to the global shift towards electric vehicles, citing his experience in China where e-hailing services predominantly utilize electric vehicles. While acknowledging the potential cost implications of transitioning to electric vehicles, he urged stakeholders to consider future-oriented solutions that prioritize sustainability and cost-efficiency. Additionally, Shonuga underscored the need for a balanced approach that caters to both current operational needs and long-term sustainability goals. Despite the challenges posed by the transition to CNG and potential shifts towards electric vehicles, Shonuga expressed optimism about the opportunities for drivers to enhance their profitability while providing cost-effective services to customers. He emphasized the importance of proactive government interventions and industry collaborations to ensure a smooth transition and sustainable growth in the e-hailing sector. In conclusion, Shonuga called for a collective effort in addressing the evolving dynamics of the e-hailing market, emphasizing the need for strategic planning and stakeholder engagement to navigate the complexities of the industry.