Nigerian Economy: Fuel Subsidy/ Fuel Scarcity

Nigeria's newly sworn-in president Bola Ahmed Tinubu announced on Monday that fuel subsidies are now gone because no budgetary allocation will be made for them after June.

The sudden reappearance of fuel scarcity across states and the Federal Capital Territory (FCT) caught motorists, workers and traders off guard yesterday.

Many filling stations were locked, while hordes of commuters struggled to board commercial buses at some bus stops.

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There is a possibility that the situation will worsen as depots nationwide stop loading tankers for deliveries to marketers.

Depots and marketers said they would remain shut until they knew what price Nigerian National Petroleum Company Limited (NNPCL) would sell fuel to them.

What is fuel subsidy?

The usage of fuel subsidies is a method through which governments can reduce the price of petrol by providing direct monetary aid to oil corporations and in doing so lessen customer costs (especially those in Nigeria). This is particularly important because one of the crucial resources for Nigeria's economic growth is crude oil production.

The amount earmarked for fuel subsidy in the proposed 2023 supplementary budget is N2.557trn.

These are five benefits of fuel subsidy removal;

• Expert says removing fuel subsidies would increase economic growth and free up resources for other areas.

• Domestic refinery establishment can result in a reduction in imported fuel dependency and progress towards independent petroleum product production in Nigeria.

• This will create massive jobs opportunities for Nigerians.

• The country economy will be boosted due to availability of domestic refineries.

• The allocation of huge amounts for fuel subsidy is hindering the growth of other key sectors like infrastructure development and education.

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