Nigeria is a country endowed with vast mineral resources prominent among which are the oil and gas reserves. Fuel subsidy is the nigerian governments financial aid to nigerians to enable the consumption of fuel at a cheaper rate, end unpredictable supply, and ensure stability in domestic fuel price. The removal of nigerias fuel subsidy and its ripple. Origins of nigerias fuel subsidy regime since the 1970s, the nigerian government has exerted influence over domestic fuel prices through a combination of price ceilings and both implicit and explicit subsidies to the oil sector. Pdf the implications of fuel subsidy to nigerian economy. So, the fgn forgot the nigeria people and imposed the fuel subsidy removal program as a new year gift. The solution to fuel scarcity and fuel subsidy issues in. The country produces about 2,4 million barrels of crude oil but the majority if being exported abroad. Nigeria restores fuel subsidy to quell nationwide protests. Fuel subsidy definition of fuel subsidy by the free.
The history of fuel subsidy removal in nigeria is rather a long one particularly with the negative effects it has on the polity. The general issue of perennial scarcity of petrol in the country appeared to have been permanently resolved on may 11, 2016, when the federal government introduced a new pricing regime that increased the pump price of. Fuel subsidy removal and the nigerian economy project topics. We have gone into details to show the imf roots of the fuel subsidy removal policy and program in nigeria because we, as a people, deserve the truth. Occupy nigeria was a sociopolitical protest movement that began in nigeria on monday, 2 january 2012 in response to the fuel subsidy removal by the federal government of president goodluck jonathan on sunday, 1 january 2012. Read all the latest news, breaking stories, top headlines, opinion, pictures and videos about fuel subsidy from nigeria and the world on today. Nigeria introduced petroleum subsidies in the 1960s with the aim of. Why removal of fuel subsidy will help nigerians tinubu. The real cost of fuel subsidy and tax implications pwc. A citizens guide to energy subsidies in nigeria produced by center for public policy alternatives cppa and the international institute for sustainable developments global subsidies initiative. Africas largest oil producer spends four times more money subsidizing fuel than building new schools, health centers and equipping new.
One of the contentious issues in nigeria is the removal of fuel subsidy on petroleum motor spirit pms. The forum visited president jonathan in the wake of the national debate over the payment of the new n18,000 minimum wage. Algeria 1998 food riots, bolivia food riots 1985, jamaica fuel subsidy riots1985, jordan food riots 1996. Nigeria spends n190b on petrol subsidy in one year the.
Nigeria prioritizes fuel subsidy over health, education. O national center for technology management, obafemi awolowo university, ileife, nigeria. They let you know how much petrol is being produced, brought and how much its being sold without subsidy. The major fo cus or thrust of this work is to discuss the socioreligious im plication of the fuel subsidy removal in nigeria.
This work is an attempt to empirically determine, an appraisal of the nigerian oil sectorissues and challenges between 2008 2012. Subsidy is a way to hand over nigerian to the cabal. Rising crude oil prices are set to send nigerias bill for fuel subsidies rocketing, threatening to exacerbate the already precarious economic. Removing the subsidy on fuel is one of the most contentious socioeconomic policy issues in nigeria today. Protests took place across the country, including in the cities of kano, ojota part of metropolitan lagos, abuja, minna, and at the nigerian high commission in london. The real cost of fuel subsidy and tax implications by taiwo oyedele the recent announcement by the federal government of nigeria to remove fuel subsidy with effect from january 2012 has been generating a lot of interesting debates and mixed reactions from different quarters. D eme, okechukwu innocent emeh, ikechukwu eke jeffrey department of public administration and local government, university of nigeria, nsukka abstract a flip over from the economy is the issue of fuel subsidy removal, which many. Energy experts, yesterday in abuja, raised concern over nigerias growing underrecovery of subsidy on premium motor spirit pms, which currently stands at n1. Nigerias daily domestic consumption of petrol is estimated at 32. The issue of subsidy adjustment is highly a sensitive matter.
Umar and umar 20 find the richest 20 percent of households in nigeria benefitting more than four times as much from the fuel subsidy in nigeria than the poorest 20 percent. Home economics summary, conclusion and recommendation in nigeria oil sector and fuel subsidy removal summary, conclusion and recommendation in nigeria oil sector and fuel subsidy removal economics 5. This analysis, though, is static and limited to the first order effects of price changes without taking into account behavioral responses and changes in income to labor and capital. Nigeria joined the organisation of petroleum exporting countries opec in 1971 and established the nigerian national petroleum company nnpc in 1977, a state owned and controlled company which is. Fuel subsidy, agricultural sector, petroleum, budgetary. The benefits of fuel subsidy to the average nigerian was short lived. For some years now, one of the most taunting and complex socioeconomic policy issues in nigeria remains the issue of fuel subsidy removal.
Nigeria is the biggest producer of crude oil in africa but still needs to import pms. In addition to the burden that fuel subsidy is placing on the national budget, keeping petroleum below the market value has discouraged additional investment in nigerias oil sector, because the. Still on fuel subsidy in nigeria economic confidential. Analysis of fuel subsidy removal most times, i wonder why africa, a continent sitting on vast landscape with various mineral resources such as gold, tin, crude oil, silver, etc. In this paper, an economywide framework is used to identify the impact of removing the fuel subsidy on the nigerian economy and investigates how alternative policies might be used to meet socioeconomic objectives related to fuel subsidies. The removal of fuel subsidy by the federal government as a deliberate policy aimed at conserving and maximizing the oil wealth of the words sixth highest petroleum producerexporter, has. The question the proponents of fuel subsidy removal are still able to answer is how significant will the fuel subsidy removal be on the socioeconomic activities in the country given the fact that it is the main source of energy for all facet of the economy. Political economy of phasing out fuel subsidy in nigeria akinwale y.
Nigerias fuel subsidies bill set to soar on rising oil price financial. Fuel subsidy reform and environmental quality in nigeria. Most evaluation of the fuel subsidy situation in nigeria will quickly reveal the trails of betrayal and mysticism of white magic. As at 2014, nigeria imported 886 million barrels of petroleum products, making it the th largest petroleum importer in the world. Governments commonly state they subsidize fuel to help poor consumers gain access to energy.
Nigeria is trying to shed costly gasoline subsidies and enable private companies to import for the first time in years as its fuel regulator meets to. Evaluating the impact of nigerias fuel subsidy regime. Hell yeah that is the story of africa in a nutshell. Nigeria, and india to illustrate a series of lessons for governments. The government introduced the fuel subsidy in nigeria, which has lasted for many years. Gradually, the aim of the military government that introduced fuel subsidy was subdued and defeated. Ogundipea adepartment of economics and development studies, covenant university, ota, ogun state, nigeria. Fuel subsidy synonyms, fuel subsidy pronunciation, fuel subsidy translation, english dictionary definition of fuel subsidy. The possible effects of this policy on nigerias economy are the subject of heated debate. Again, 84 per cent of surveyed respondents do not support the removal of fuel subsidy while 90 per cent believe the removal would have an impact on.
By michael eboh the nigerian national petroleum corporation, nnpc, has spent n112. The country possesses 28% of africas proven oil reserves, second only to libya. Impacts on poverty of removing fuel import subsidies in. But, nigerians did not accept the arguments or fuel subsidy removal program. Fuel subsidy is the money paid by the federal government of nigeria to reduce the cost of.
It is a story that brings to life the pain and helplessness of. For supplying this phantom product to nigeria, some seven companies pocketed a princely n billion naira from the 2011 fuel subsidy payments, the committees report, exclusively obtained by. Nigeria restores fuel subsidy to quell nationwide protests this article is more than 8 years old. Nigeria tries to shed fuel subsidy costs while keeping price control. Presented in partial fulfillment of the requirements for graduation in the college honors program. Those who support the removal of the fuel subsidy have pointed out among other things that the subsidy regime was blighted by corruption and waste. According to him, increasing fuel price in the international market and the corresponding increase in petrol imports have brought about a big price differential between nigerias regulated. The domestic and international implications of fuel subsidy removal crisis in nigeria by onyishi, anthony obayi ph.
S ambassador to nigeria once said nigeria is blessed with all kinds of resources you can think of but the country is afflicted with bad,insincere and corrupt leadership. Nigeria fuel subsidy scheme hit by corruption world news. However, the controversy over the removal of fuel subsidy was sparked off in june 2011 at the instance of nigeria governors forum, which includes governors of the 36 federating states in nigeria. How do nigerian fuel subsidies work, and what is their. Political economy of phasing out fuel subsidy in nigeria. Fuel price subsidies in subsaharan africa u over half of all african governments subsidize fuel to protect consumers, with oil exporters having the largest subsidies.
It can rightly be said that crude oil powers the world economy hence its strategic importance. Nigeria being a large country, removal of this fuel subsidy will help to accelerate the construction and maintenance of nigerian roads since the monies that had been allied in the construction and maintenance of nigerian road so far has not been enough due to the number of roads that needs government attention in the north, south and eastern. According to vanguard, nigeria spent about n10 trillion on subsidy payments. Monetary assistance granted by a government to a person or group in support of an enterprise regarded as being in the public interest. Thus, petroleum product importers were paid billions of us dollars to import fuel that was never delivered to the nigerian people with the subsidy leaking to traders and foreign consumers.
The fuel subsidy in nigeria if removed will translate to a sudden and massive tax on an essential commodity fuel, which will have the knock off effect of raising food prices. The decision by the government to out rightly remove the subsidy on fuel ignited series of arguments and. Fuelling poverty, a documentary made against the backdrop of the january 2012 protest after the removal of the fuel subsidy, attempts to compress in less than 30 minutes the sad story of corruption in nigeria and the mismanagement of oil wealththe mainstay of nigerias economy. Below are the company names and the respective subsidy amount. Compensation mechanisms for fuel subsidy removal in nigeria. Effect of fuel subsidy on the economy of nigeria project. Fuel subsidy removal and national development in nigeria. Impacts of removing fuel import subsidies in nigeria on.
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