Fuel Subsidy Removal and the Agony of the Deprived in Nigeria

Abstract

Increase in the price of premium motor spirit (PMS) has always been a source of panic to the average Nigerian as it usually has a multiplier and inflationary effect that reduces the purchasing power of most Nigerians, especially the poor. A major reason for the concern is that most vehicles used in transporting commuters, goods and services in Nigeria are PMS-powered, and any increase in the price of PMS (petrol) directly and immediately translates to increase in the price of virtually all commodities and services. To limit the ripple effects of PMS price increase, government after government in Nigeria had been exercising control over how much consumers were asked to pay for PMS at the filling stations. Since the 1977 price control act, the federal government had been fixing the price of PMS to prevent the forces of demand and supply from swaying inordinately against consumers. However, owing to the massive corruption that characterized government’s subsidization of PMS, and the attendant financial losses borne by government over the years, President Bola Ahmed Tinubu, in his inauguration speech on May 29, 2023, announced the removal of fuel subsidy, thereby provoking a nationwide outcry against the decision. This paper examines fuel subsidy removal and the agony of the deprived in Nigeria as well as the history of fuel price increases in Nigeria. The paper examines vital issues connected with fuel subsidy in Nigeria. A mixed method of data collection was adopted for the paper: relevant data were obtained from 30 respondents who were purposively selected and interviewed while other data were sourced from extant literature. The paper revealed that putting an end to oil subsidy so that the forces of demand and supply would be determining the price of PMS is not a bad policy but that government should have put in place remedial measures to cushion the effect of the subsidy removal on the masses.