Nigerian governments at federal and state levels are ramping up the push to deploy electric buses across the country as part of efforts to reduce the rising cost of transportation. Edo State is the latest state to announce it has entered a partnership with Oando Clean Energy Limited, to deploy electric buses in 2024.
Ojeifoh Enaholo, commissioner for Mining and Energy, said the electric bus scheme would be rolled out in phases. The takeoff stage will commence with five buses.
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Borno State already has electric city buses carrying passengers from one part of Maiduguri to another. African Motor Works (AMW), the company founded by Mustapha Gajibo partnered with the state government to facilitate the deployment. As of April 2022, the company said it recorded over 21,000 passengers. In November, the company announced the deployment of 50 electric taxis in the Maiduguri metropolis to create jobs and reduce the cost of transportation and carbon emissions. However, the company has had to delay expanding its fleet due to the rising cost of importing the equipment for maintenance of the electric vehicles.
Adamu Muhammad who works with African Motor Works, said the rising foreign exchange which has led to the weakening of the naira makes operating electric buses in Nigeria unprofitable in the short term. However, it is very viable in the long run but requires a substantial amount of capital to deploy and run successfully. In the meantime, AMW is prioritising the conversion of internal combustion engine vehicles to CNG vehicles because the cost is lower. Muhammad notes that converting the vehicles to CNG costs about N1 million. However, converting internal combustion engine vehicles to electric is not sustainable because of the way they were built.
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The federal government and Lagos also have big ambitions for electric buses. Like Edo State, Lagos entered a similar partnership with Oando Clean Energy Limited on April 28, 2022, to enable the deployment of electric buses and other supporting transport infrastructure systems in the state. The state went ahead to announce on 30 April 2023, the delivery of the first set of electric buses (two electric buses) for the scheme. But the buses did not commence operation. According to state officials, the scheme is to run in three phases including the proof-of-concept, pilot, and roll-out phases. Phase one and two will last for nine months. The project may have hit a snag as the second phase is yet to commence, according to a report by ICIR.
Experts say the rising investment is due to considerations of the operation cost of electric buses being over time far lower and leading to a significant drop in the cost of transportation. Gbenga Faleye, CEO of SAGLEV, said the potential for electric vehicles is huge for Nigeria. SAGLEV is an original equipment manufacturer as well as a vehicle assembling company.
According to him, 50 percent of Nigerians have access to 12 hours of electricity a week, this makes them potential buyers of electric vehicles.
“The cost of petrol and diesel already makes electric vehicles viable. This is one of the things our company has been closely monitoring. We have been on the ground working on this for at least 3-5 years. The transportation industry in Nigeria is ripe. If you look at mass transit, there is no argument about whether this is ripe. CNG costs much more to operate,” Faleye said.
A new research conducted by Cox Automotive (parent company of Kelley Blue Book), found that the average price for a new electric vehicle dropped by $14,300 as of September 2023. This resulted in a cost of just $2,800 more than the average paid for a new gas-powered vehicle. The research projects that the price margin will continue to fall in the coming years as manufacturers release more affordable models and improve battery technology which is the most expensive part of an EV.
When it comes to calculations of the efficiency of an EV, the US-based Natural Resources Defense Council makes a note of caution. It stated that EVs vary in efficiency and this is measured by how many kilowatt-hours (kWh) of electricity it consumes per 100 miles -similar to a gas-powered car’s miles-per-gallon stat. An EV with a lower kWh/100 miles rate is better.
“The 2023 Hyundai Ioniq 6 is a standout in terms of efficiency, with 24 kWh/100 miles, but the more budget-friendly 2023 Chevrolet Bolt EUV is comparable, with a 29 kWh/100 miles rating,” the NRDC stated.
To calculate the cost per mile of an EV, the cost of electricity (in naira per kWh) and the efficiency of the vehicle (how much electricity is used to travel 100 miles) must be known. A kWh of electricity in Nigeria is currently at N64, according to the Nigerian Electricity Regulatory Commission (NERC). If electricity costs N64 per kWh and the vehicle consumes 27 kWh to travel 100 miles, the cost per mile is N23.7.
The price varies according to the category of the band a user is on. For example, people who receive more than 20 hours of electricity per day are on band A and pay more than the rest of the customers. Band B customers receive a minimum of 16 hours per day. Band C receives a minimum of 12 hours per day. Band D are customers who receive a minimum of 8 hours per day and Band E receive a minimum of 4 hours per day.
Given that the cost of importing electric vehicles in the country is very expensive, Faleye says the only option for Nigeria is to assemble them locally. This allows investors to tap into the benefits of the Nigerian National Automotive Industry Development Plan thereby improving the cost for Nigerians. But beyond the development plan, the macroeconomics of vehicle assembling – whether for fuel or electric vehicles – in the country is very high for investors. The challenges include a wide skill gap and technical and other personal factors.
Faleye acknowledges that the government has created some policies aimed at encouraging investments in electric vehicles. However, implementation remains a big challenge.
“The government has already created a policy that will allow the electric buses deployment. The National Automotive Industry Development Programme (NAIDP). Unfortunately, that is still yet to be passed. It is going to be one year late. In Nigeria, we are experts in policy-making. We just have not been good at implementing the policies,” he said.
