Advantages And Disadvantages Of Fuel Subsidy Removal in Nigeria: You probably heard about the recent Speech from the Current President of the Federal Republic of Nigeria about the removal of fuel subsidies in his government.
Several years ago, there was debate over the fuel subsidy, with some demanding its elimination and others supporting its retention.
Recall that in January 2012, The former President of Nigeria, His Excellence Goodluck Ebele Jonathan, attempted the removal of fuel subsidies during his tenure. The movement was halted for more than two weeks when the Nigerian Labor Congress, or NLC, opposed the action and shut down the economy.
The protest was so severe that the labor union closed down businesses, offices, schools, and the transportation system, making life difficult for Nigerians who had traveled for the holiday season and were now stuck in their various locations.
The then President, through his Finance Minister “Ngozi Okonjo-Iweala” stated that the reason for the removal was that “the removal of fuel subsidies will help the economy and free up cash for other public services, such as health and infrastructure initiatives”.
Also The immediate past president of Nigeria, “H.E. Muhammaadu Buhari,” moved months ago before the end of his tenure for the removal of fuel subsidies. There were so many Mixed reactions from Nigeria also.
The then Minister of Finance, Zainab Ahmed, stated that fuel subsidies are costing the country resources that could be more beneficial if used in other sectors like education and health.”
Well, like I stated earlier, The current President of the Federal Republic of Nigeria, Stated in his inauguration speech on May 29, 2023, in Eagle Square, Abuja, “Fuel Subsidy Gone”.
Must read: Smallest State In Nigeria By Population
What Exactly is Fuel Subsidy?
Fuel subsidies are one of the government’s intervention measures to lower the price of fuel for its citizens by providing direct financial support to oil corporations.
According to the Tribune, “Fuel subsidies are a form of government intervention to reduce the cost of fuel by providing direct financial support to oil companies, and as such, subsidize the product to consumers (Nigerians).”
So when you hear that the government is removing fuel subsidies, it means the government is removing support for its citizens as to the reduction of fuel prices.
Let us look at the advantages and disadvantages of fuel subsidy removal in Nigeria.
Five Advantages of Fuel Subsidy Removal in Nigeria 2023
1. The primary advantage of the removal of fuel subsidies is to help the government free up resources that will be used in other sectors of the economy and public services, such as health, education, construction of roads, empowerment programs, and so on
2. By removing the subsidy, Nigeria’s reliance on imported fuel might be decreased by encouraging indigenous refineries to manufacture more petroleum products.
3. In some cases, the removal of fuel subsidies could create more job opportunities in Nigeria as domestic refineries will want to expand the production of petroleum products.
4. An increase in local production of petroleum products can boost the economy of the country.
5. Given that marketers now have more margin, the new price’s cost-reflective character is anticipated to aid in boosting product availability and draw investments to the industry.
Five Disadvantages of Fuel Subsidy Removal In Nigeria 2023
1. The first and most critical disadvantage of the removal of fuel subsidies is the Increase in the price of petroleum products in Nigeria.
2. Removing the subsidies can spark protest and social turmoil from some Nigerians as they may perceive the government as insensitive to their needs
3. There is a possibility for an increase in the inflation rate and purchasing power of production and business services.
4. Well, you should expect an increase in unlawful activity, such as the smuggling of petroleum products.
5. There is a possibility of an increase in the cost of transportation in the country.
Different marketers in the oil downstream sector have warned that if the government remove subsidy without adequate preparation which includes an increase in the minimum wage, then there is the tendency for hardship in the country to multiply.
According to Premium Time, the Fuel price may hit #750 per liter if the government successfully implements the removal of fuel subsidy.
I would love to know what you think about the fuel subsidy removal in the comment section.