Balancing The Scales: The Impact Of Fuel Price Increase On The Masses And Imperative Steps For Nigeria’s Current Administration -By Abdulrahman Ozichu Fauziah

One of the key reforms that came with the current administration is fuel subsidy removal. Upon the swearing-in of President Bola Ahmed Tinubu GCFR on the 29th of May, 2023; he announced the seizure of fuel subsidy removal across the Federation.

From the moment the announcement was made, the price of fuel skyrocketed across petrol stations located in the different parts of the Country with some stations selling as high as N700 per litre.

The Nigerian economy has been subsidised in various ways for many years. Key sectors of the economy comprising education, forex, electricity, petroleum products, exchange rate, and agriculture have been subsidised before now. Fuel subsidies initially took effect in the 1970s. It became institutionalised in 1977 following the promulgation of the price control act which made it illegal for products like petrol to be sold above the regulated prices.
While the motive behind the concept of fuel subsidy is noble, its implementation in Nigeria has been accompanied by allegations of corruption, mismanagement, and illegal syphoning of the product.

Years after diesel was deregulated, and the kerosene subsidy removed, the subsidy on petrol has proven to be the biggest challenge to the country’s administration. Attempts by different administrations to remove fuel subsidies proved abortive with stiff resistance from the country’s populace, trade/labour unions, and civil society organisations amongst other notable bodies. This resulted in the stretched and elongated subsidizing of fuel pump prices. During its implementation, billions of dollars was spent by the Nigerian government. It is estimated that a total of 30 billion US Dollars has been spent on fuel subsidies over the last 18 years. Also, according to the Debt Management Office, the country’s public debt increased following the need to borrow N1 trillion to finance fuel subsidies in 2022.

Nigeria, as the largest oil producing Nation in Africa, has long been faced with the adverse effects of fuel price fluctuations, fuel price subsidisation and its crippling effects on the economy. The current fuel price has profound implications for the lives of the average Nigerian citizen, taking a huge toll on the poor and vulnerable masses.

The surge in fuel prices has led to a range of challenges particularly the intensification of the financial and psychological burden on citizens. With the increase in PMS (Premium Motor Spirits), motorists and other public transport service providers have been faced with the challenge of buying a substantial amount of fuel for commuting with the over 100% increase in fuel pump price. This increase has undoubtedly led to an increase in transportation fares leaving a huge strain on household budgets, and other essential expenses.

Prices of goods and services have also been on the rise as the Nigerian economy relies heavily on the transportation of goods and services. The inflationary pressure further erodes the purchasing power of the masses making it difficult to afford necessities. The average minimum wage earned by Nigerian citizens is not enough to cater to their basic needs, following the hike in the prices of goods and services.

The fuel price increase does not only affect individual households but also has broader implications for Nigerian society as a whole. Small and medium-scale enterprises that rely heavily on fuel usage may be forced to reduce productivity or shut down completely as a result of the hike in fuel price leading to retrenchment of workers, further increasing the rate of unemployment in the country.

In order to mitigate the impact of fuel hikes on citizens, the current administration ought to take decisive and favourable steps. These steps will help cushion the effect of the hike whilst keeping in mind the best interest of its citizens. The billions of dollars saved from fuel subsidy removal could be channelled to key sectors like education, technology, agriculture, infrastructure development, health and sports. Such investments could yield a greater return for the country compared to the current expenditures spent on petroleum subsidies. Diversifying the energy mix by investing in renewable energy sources is vital for reducing the country’s dependence on fossil fuels. Solar, wind, and hydroelectric power should be fully utilised to increase environmental sustainability and energy security as well as to mitigate the effects of fuel hikes.

Existing local refineries should be revived and given utmost priority. Local refining of crude oil could potentially eliminate the need for petrol subsidies and make fuel prices affordable. It will also put a stop to the importation of fuel, increase revenue, support local production that will increase job opportunities in the long run and boost the economy.

Palliative distribution is also one of the ways the government can provide relief to vulnerable households. However, conscious efforts must be made to ensure that the vulnerable population is identified and given these palliatives.

The issue of fuel subsidy removal which led to fuel price increases in Nigeria is a complex and multifaceted challenge that demands urgent attention from the government. The burden on the masses, the escalation of poverty, and the far-reaching socioeconomic impact necessitate swift and decisive actions. By investing in renewable energy and prioritizing infrastructure development, the current administration can mitigate the effects of fuel price hikes. The current administration should strive to eliminate inefficiencies and leakages in the distribution and management of fuel. The welfare of the masses should be at the topmost of the government’s priorities in its decision-making. A stable and thriving society is built upon the well-being of its people.

Abdulrahman Ozichu Fauziah.
I’m a 200-level student at Ahmadu Bello University, Zaria. As part of my degree program, I am required to write an article for publication within a time frame of 2 weeks. Getting my article published will also earn me thirty marks. I humbly request for my article to be published as it will be my stepping stone to thriving in the field of journalism.