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Ndokwa Vanguard

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Alas! Federal Government Removal of Fuel Subsidy, and Its Knock-on Effects on Nigeria’s Economy

Jul 3, 2023 #News
                By Preye Baro

Fuel, formally known as petrol, is a very important economic product not only in Nigeria, but also in Africa and the world at large. As such, the crude industry in the oil sector is highly valued and appreciated with so much regards. One of such regardful appreciation of the oil industrial sector is the granting of subsidies by the governments of various oil-producing countries, to enable it work effectively in its production activities.
A subsidy, by definition, is a specific sum of money given as a financial grant to a productive sector of the economy by the government of a nation or an organization of public goodwill, so as to assist them in carrying-out their economic activities; and to limit the price of their products for consumers. In this light, fuel subsidy concerns itself with the amount of money which the government grants to the oil industry to help improve their production; as well as to reduce the amount of money which consumers will pay them for the consumption of their products, specifically petrol.
The Nigerian Government is one of such countries that used to grant subsidies to various sectors of the economy, which included the oil sector. Due to some plausible reasons, in the past, many people have been yearning for the removal of fuel subsidy by the Federal Government. Hence, subsidy on fuel was first removed on 1st January, 2012, when the Goodluck Jonathan-led administration announced a partial removal of fuel subsidy, leading to a sharp increase in fuel prices. Eventually, the government countermanded its decision due to widespread socio-political protests across the country, known as “Occupy Nigeria” protests. Similarly, the President Muhammadu Buhari regime, in May, 2016, declared a complete removal of fuel subsidy. Of course, this led to significant increase in price of fuel, and nationwide protests became the order of the day. As a result, the petrol subsidy was partially reinstated.
Unexpectedly, the currently sworn-in president, Bola Ahmed Tinubu, announced at Eagles Square, Abuja, during his inaugural speech that fuel subsidy would be removed. Immediately after his announcement, fuel prices all over the country just increased within the blink of an eye. This has instilled the quivering spirit of consternation and dismay into the common populace, as they ponder-over their pathetic fate as the price of fuel, together with those of other economic products in the country, has skyrocketed so high like a soaring eagle. It has been a question of human survival and national development, as the supporters of the situation forsee improvement in infrastructures; while the opponents show concern about the welfare of the common man, whose eudaimonia is now extremely astake.
Amidst whatever supposed benefits which the fuel subsidy removal can bring to the nation, its overpowering negative effects on the economy and the state cannot be over-emphasized. It has effectuated the following dire and enfeebling scenerios on the Nigerian common population, and even the rich also suffers from its adverse consequences.
First, the fuel subsidy removal has caused an overwhelming increase in the price of Premium Motor Spirit, PMS, all the country. Before the subsidy removal, in places like Lagos, fuel was sold for about 185 or 200 naira per litre; but immediately after the pronouncement of the petrol subsidy removal, the price turned over 600 to 700 naira; and that is how it varyingly increased everywhere in the country. Since fuel is very useful for so many purposes, its subsidy removal has put a great burden on the populace in purchasing it.
On a second note, the cost of edible products and other essential commodities, has also sharply increased due to increase in fuel price, all resulting from the removal of fuel subsidy. This has led to increased economic hardship on the people as they find it so hard to buy those things which they need for their survival.
Also, the fuel subsidy removal has led to acute shortage or inadequacy of some essential products. Due to increase in the price of things, most businesspersons and traders find it difficult to procure some wares for sale. First, it is because they may not have enough money to buy goods for sale; and second, even if they struggle to buy, consumers may find it difficult to purchase from them due to high prices. This has, in turn, caused a retardation in trade and other business activities all over the state.
Moreover, the removal of subsidy on petrol has given birth to unreasonably high cost of transportation, because of increased fuel prices. Of course, people must travel or move from one place to another, no matter what happens; because they cannot afford to be constrained to a particular position. Hence, they are burdened with the economic responsibility of paying too high just to move from one place to another in their own country.
Finally, the recent removal of subsidy on Premium Motor Spirit, PMS, has generally affected the nationals negatively. The cost of living in the country now has increased. What was bought for 800 naira before, for instance, is now been sold at 1,200 naira. The penurious population of the state, who are the major sufferers of the fuel subsidy removal, usually strive hard to hardly get one square meal each day. How, then, can they cope with the recent increase in everything, when the amount of money which they used to buy two quantities of a commodity can now hardly serve them one?
To conclude, the removal of fuel subsidy in Nigeria has brought a great economic asperity and severe difficulty-in-living to the Nigerian populace. It has also hardened the economy, as most people who have been struggling to live above the poverty line, now find themselves right there and even far below it! Thus, if there is anything reassuring which the Nigerian Government can do to remedy this pathetic situation of the economy, they should please, do it without any further ado; because from the general look of things, if the country is not able to beat the situation by resolving it, then the situation will beat the country by collapsing its economy! But then, do we wish for this to occur?

                                                                                                                           Baro Preye (Miss), 
                                                                                                               500 Level, Faculty of Law, 
                                                                                            Delta State University, Oleh Campus.
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