Fuel Subsidy, Nigeria’s Nightmare
The removal of fuel subsidies in Nigeria, the world's 7th Highest Oil-Producing Country has caused significant hardship among residents and business owners.
To mitigate the impact of growing international oil costs, fuel subsidies were first implemented in the 1970s by providing Nigerians with petrol below cost. Many Nigerians were unaware of this issue until the government decided to withdraw fuel subsidies as a result of the strain on its finances.
The World Bank encouraged Nigeria to end petroleum subsidies after General Olusegun Obasanjo, then head of state institutionalised the Price Control Act in 1977. It contended that failure to do so would worsen the nation's budgetary problems and increase the level of its debt, but the government took no action.
However, the removal of subsidies in June 2023 appears to be the most severe impact due to how it has influenced travel costs, pricing of products and services across the board, and foreign exchange.
It goes without saying that the elimination of subsidies in June 2023 will be the first time the government has opted to do so. Since the transition to civilian control in 1979, various administrations have tried and failed to eliminate fuel subsidies.
From President Shehu Shagari, who raised fuel prices without mentioning lifting subsidies, to Ibrahim Babangida, who announced a partial reduction of oil subsidies, causing petrol prices to climb from 20 kobo to 39 kobo per litre. This sparked outrage, and workers, students, and civil society organisations staged large protests around the country.
After several years President Goodluck Jonathan in 2012 cut down fuel subside and attempted to mitigate the effects of subsidy removal by promising to redirect the savings towards critical infrastructure projects and social programs.
His administration still attracted series of protests and was subsequently forced to cut the fuel price by 30% also the implementation of social and structural programs did not provide substantial relief for the masses.
President Buhari's administration declared earlier this year that fuel subsidies will be phased off. It stated that it had granted permission to the petroleum pricing regulatory agency to eliminate the cap price, but that decision was reversed in March.
However, weeks after being sworn in as the 16th President of Nigeria, Bolu Tinubu took the bull by the horn and removed subsidy on petrol. The commodity which use to sell at 350 naira now sells at 520 naira, who suffers most are the masses who grapple with the cost of transportation, the prices of goods and services across board as well as foreign exchange. This decision the President says became necessary because the 2023 budget does not have a provision for fuel subsidy regime. He added that funds for subsidies will be diverted to other things like public infrastructure, education, health care, and jobs.
Despite these promises the questions in the minds of Nigerians are when will the price of fuel be regulated to favour the masses? Will the funds from subsidy removal be channeled to improving the living standard of the Nigerians and when will the old refineries begin to function as a remedy to subsidy removal?
While these questions remain unanswered, Nigerians struggle to live their normal lives hoping to wake up from this nightmare.