Impacts of removing fuel import subsidies in nigeria on. Nigeria is a nation endowed with abundant human and material resources. The aftermath of the conflict on fuel subsidy removal in nigeria. With the recent sharp decline in the global price of crude oil as a result of the impact of the coronavirus pandemic, nigeria, for the first time since 2016, reduced the retail price of petrol by n20 to. The fuel subsidy crisis has woken nigerians up tolu. Remove fuel subsidy, imf tells nigeria punch newspapers. For some years now, one of the most taunting and complex socioeconomic policy issues in nigeria remains the issue of fuel subsidy removal. The opponents of governmentplanned removal of fuel.
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. The partial removal of fuel subsidy in nigeria in 2012 has generated a lot of. Current status of research executive summary this research project aims to investigate the impacts from fossil fuel subsidy reform on poor women in bangladesh, india and nigeria. The objective of this study is to look into fuel subsidy removal and the nigerian economy, to achieve this, the researcher wishes 1. The imf had in its 2019 article iv consultation on nigeria noted that phasing out implicit fuel subsidies while strengthening social safety nets to.
There have been dearth of infrastructural investments. Dilemma of the worlds most populous black nation 05 month trend in nigeria s petrol supply15 how exposed is nigeria s petrol price to exchange rate volatility. Furthermore, the presence of fuel subsidies discouraged competition, and contributed to the neglect of the domestic refineries in nigeria. Similarly, a unit increase in fuel price accounts for a 0. The removal of fuel subsidy will help in a speedy acceleration in agriculture, education, health sector, water supply, power sector, road and rail transportation sector and youth empowe4rment programmes will not only head to transformation of public infrastructures in nigeria, but will also ensure the gainful employment of millions of nigerians. Successive governments in the country have interfaced with this issue as they attempted to reform the economy and the petroleum downstream to reduce corruption and waste and make the sector more effective.
Highlights this paper investigates whether the existence of fuel subsidy in nigeria is a fact or fallacy. An assessment of the impact of petroleum subsidy on consumer. Dilemma of the worlds most populous black nation 05 month trend in nigerias petrol supply15 how exposed is nigerias petrol price to exchange rate volatility. President buhari already attempted to reform fuel subsidies back in 2016. As shown by international experience, efforts to reform energy subsidies have a mixed record of success. This paper would discuss the implications of fuel subsidy in the nigerian economy. In adding fuel to the fire in nigeria, the author makes the fundamental point that ending the fuel subsidy is not about economics it is about the patronage politics that govern nigeria. Nigerians protest removal of fuel subsidy, 2012 time period notes. Out of the 145 vehicles per 1,000 citizens in nigeria, 85 of them are cars belonging to middleclass members of the. Fuel subsidy, agricultural sector, petroleum, budgetary. Direct benefit transfer of lpg cooking gas subsidy in india. Compensation mechanisms for fuel subsidy removal in nigeria executive summary the reform of the fuel subsidy regime is fundamental to the overhaul of the nigerian economy and achievement of inclusiveand sustainableeconomic diversification and growth. Nigeria may be losing the gains of increases in the international oil prices as the federal government subsidy on fuel has risen to n2. Jan 09, 2018 by michael eboh the nigerian national petroleum corporation, nnpc, has spent n112.
Fuel subsidy was, before the coming of the goodluck jonathans administration, a policy of the federal government meant to assist the people of nigeria to cushion the effects of economic hardship. In the early 1950s and at independence, agriculture was the chief foreign exchange earner of this nation. Understanding oil subsidy in nigeria oladoyin zaccheus the college at brockport follow this and additional works at. Many studies have focused on examining the implications of fuel subsidy for the nigerian economy. So we are not yet at the point of removing fuel subsidy. Fuel subsidy is a government programme created to reduce how much nigerians have to pay for petroleum products, which include. Nigeria, fuel subsidy, poverty, income distribution, economywide. Fuel subsidy news latest breaking stories and top headlines. Jan 10, 2012 nigerias fuel subsidy continues to crowd out other development spending.
To do this, researcher developed three major questions and other subminor questions aimed at prying into fuel subsidy removal and the nigerian economy. 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. The elasticity of fuel demand shows that a unit increase in subsidy leads to a 0. These negative consequences coupled with the fact that they often. The decision by the government to out rightly remove the subsidy on fuel ignited series of arguments and. The politics of fuel subsidy, populist resistance and its. Jan 11, 2012 the fuel subsidy crisis has woken nigerians up. Algeria 1998 food riots, bolivia food riots 1985, jamaica fuel subsidy riots1985, jordan food riots 1996.
Fuel subsidy and national development in nigeria, 199920. Fuel subsidy removal and national development in nigeria 1999. To assess what petrol subsidy removal portend for the nigerian economy. We certify that the thesis titled fuel subsidy removal and environmental quality in nigeria. Fuel subsidy removal has become a recurring issue in nigeria. Nigeria s fuel subsidy continues to crowd out other development spending. Impacts of removing refined oil import subsidies in nigeria on. Compensation mechanisms for fuel subsidy removal in nigeria. It aims to improve public understanding of this complex subject. Fact or fallacy opinions have differed sharply in nigeria on the continued existence of fuel subsidy. This is a 400% increase since 2007 and a sum equivalent to % of the federal budget, passed in april 2015. Nov17 dec17 jan18 feb18 mar18 apr18 may18 jun18 jul18 aug18 sep18 oct18 nov18 imported petrol locally re. To assess the rational for the removal of fuel subsidy by the federal government. Protests began after the announcement of the removal of the fuel subsidy on 1 january and ended on 16 january after it was partially reinstated.
At the time, it was supposed to be a permanent removal, yet subsidies were back in under two years. 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. Despite the huge amount of money nigerian government spends on fuel subsidy, the situation in the oil sector has not been promising and nigerians still experience scarcity of premium motor spirit. Part of the african history commons repository citation zaccheus, o. It analyzes how such a reform must be able to adapt to concerns as they arise and to new information, how digital technology was. The political economy of fuel subsidy removal in nigeria citeseerx. As a major oil producer, nigeria has applied fuel subsidies for consumers for decades. It is a story that brings to life the pain and helplessness of. Other mineral deposits like coal, tin and agricultural resources. Indias reform of household subsidies for the purchase of lpg cooking gas stands out for a several reasons.
Indeed, since the 1970s, 11 out of 12 of nigeria s heads of state have attempted to reform fuel subsidies, with no longterm success. Fuel subsidy removal has been a very topical and delicate issue in nigeria. 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. It is a it is a position paper as an extra credit assignment for eco 87501 for dba course at california. Akinyemi, et al fuel subsidy reform and environmental quality in nigeria nigeria for instance, fuel subsidies distort the market, encourage smuggling activities, hinder investment plans in the energy sector and enhance corrupt practices. Also, fuel subsidy contributes to damaging the environment through its effect on marginal investment in new capacity holton, 2012. Pdf the political economy of fuel subsidy removal in. Fuel subsidy removal and national development in nigeria. 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. However, the controversy over the removal of fuel subsidy was sparked off in june 2011 at the instance of nigeria governors forum, which includes. 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. Ecm to establish the relationship between fuel subsidy removal and cpi using. 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. Nigerian govt gives condition for fuel subsidy removal.
Seizing africas energy and climate opportunities by the africa progress panel, which is available at. Kindly share this story nnpc to incur additional n300. This paper provides a detailed picture of the indias. Low fuel prices are considered the only benefit of the subsidy to the people of nigeria, where more than half its population is living under poverty in this oilrich country. Fuel subsidy removal and the nigerian economy project topics.
The political economy of fuel subsidy removal in nigeria. We also met with the world bank power sector team and discussed the way forward on the proposed usd1 billion nigeria. Nigeria prioritizes fuel subsidy over health, education. Nigeria, and india to illustrate a series of lessons for governments. 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. The paper provides a detailed picture of the reform through its various stages, including how the process was conceptualized, coordinated, and implemented. Governments provide subsidies for multiple reasons, yet many economists consider subsidies largely regressive, poorly targeted.
To assess the failure or success of the oil subsidy. Nigeria s fuel subsidy has spiraled out of control. Nigeria restores fuel subsidy to quell nationwide protests. These questions were administered in the form of a questionnaire to 399 respondents who were selected as a sample of the population. The evolution of the fuel subsidy regime is closely related to nigeria. Its interesting to note that the berne declaration calculated no. Read all the latest news, breaking stories, top headlines, opinion, pictures and videos about fuel subsidy from nigeria and the world on today. The subsidy costs have grown sharply from a daily average cost of n774m in march 2018 to n2. Presented in partial fulfillment of the requirements for graduation in the college honors program. The fuel subsidy continues to be a large share of government spending, increases with rising imports and continues to destabilize the countrys fiscal health. The imf had in its 2019 article iv consultation on nigeria noted that phasing out implicit fuel subsidies while strengthening social safety nets to mitigate the impact on the most vulnerable would. The evolution of the fuel subsidy regime is closely related to nigerias process of. On the 9th of january in nigeria began a nationwide protest against a sharp increase in the cost of gasoline.
The reduction of the fuel subsidy by the federal government in january 2012, as a deliberate policy aimed at conserving and maximizing the oil wealth, of nigeria, generated cries of discontent, fear and worry amongst nigerians which led to a national strike. The results showed that fuel subsidy factors fuel subsidy and price accounted for 50. In spite of government assurance that the proceeds from the fuel subsidy withdrawal. Lessons from iran, nigeria, and india subsidies cost the world trillions of dollars each year. 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 nigeria s economy. With a cda analytical approach, the study shows that. The descriptive nature of the study has necessitated the extensive use of desk research. 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. Nigeria reads on boko haram and the fuel subsidy council. Mar 04, 2014 fuel subsidy removal has become a recurring issue in nigeria. The country may have spent about n10 trillion on subsidy between 2006 and 2018, a report by budgit, a public finance focused nongovernmental organisation ngo stated. The study examines the politics of fuel subsidy removal in nigeria.
According to vanguard, nigeria spent about n10 trillion on subsidy payments. Oil price shocks, fuel subsidies and macroeconomic in. In addition, fuel subsidy was grossly ineffective, as there were wide variations in prices across various regions in nigeria as well as reoccurring periods of fuel scarcity. January, 2012, announced the commencement of fuel subsidy removal. Fuel subsidy reform and environmental quality in nigeria. The fuel subsidy crisis and its implications for its fight against boko haram. Pdf on dec 12, 2015, babandi ibrahim gumel and others published the implications of fuel subsidy to nigerian economy find, read and. Importantly however, fuel subsidy removals have always met opposition from the citizens and civil society organisations. The removal of fuel subsidies long pushed for by the imf was a devastating blow to the large number of nigerians who live in absolute poverty, correspondents say. The paper argues strongly that the policy derives its instrumentality from the theory of development racism, which only benefits the rulers of the country and multinational companies and not the citizen. Case studies on energy subsidy reform in subsaharan africa. 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. Empirical analysis of fuel price and subsidy reform in nigeria.
Fuel subsidy probe and revenue accounting in nigeria 5. This initial scoping report finds no primary, quantitative research on. Pdf fuel subsidy removal and the nigerian economy paul. Evaluating the impact of nigerias fuel subsidy regime. Pdf the implications of fuel subsidy to nigerian economy. When the researcher chose this topic fuel subsidy removal and nigerian economyshe was inspired on how nigerians reacted towards the fuel subsidy removal, the strikes, violent demonstrations, high cost of fuel and transportation etc, it was these problems that made the.
The domestic and international implications of fuel subsidy removal crisis in nigeria by onyishi, anthony obayi ph. A dynamic computable general equilibrium approach is an original work carried out by akinyemi opeyemi esther, 05af02008, in the department of economics and development studies, college of business and social sciences, covenant university, ota. Governments provide subsidies for multiple reasons, yet many economists consider subsidies largely regressive, poorly targeted toward intended beneficiaries, and economically distortive and inefficient. Nigerians protest removal of fuel subsidy, 2012 global.
99 1432 1152 608 1474 287 910 187 90 884 798 1575 896 741 405 468 1186 259 1010 653 325 1433 937 164 795 186 507 330 678 847 636 539 796 1220 1004 697 1489 288 1286 518 598 1049 1024