Fuel subsidy has been in place in Nigeria since the 1970s.The government at that time decided to minimize the impact of rising global oil prices on Nigerians by selling petrol to Nigerians below the minimum cost. Following the promulgation of the price control Act in 1977, fuel subsidies became institutionalized which made it illegal for some products including petrol to be sold above the regulated price. This law was put in place by the Olusegun Obasanjo military regime in order to cushion the effects of the 1970s,caused by a worldwide increase in energy prices.
Over the years, fuel subsidy has increased tremendously and riots have broken out merely over rumors of any increase in past. On January 1st,2012 when president Jonathan tried removing fuel subsidy and the price of fuel increased he was criticized by political opponents as well as the citizens. He had to make a u- turn and keep fuel subsidy .
Over the years, Billions of naira had been spent on fuel subsidy more than any other sector such as infrastructure, education, health etc. This had made many economists including the world Bank to advise to do away with fuel subsidy and re- invest the money spent on fuel subsidy on other sectors of the Nigerian economy. Furthermore it has been a subject of abuse and corruption and it is now turned into lucrative business of smuggling fuel to neighboring countries where it is sold for twice the price.
The previous administration of president Muhammadu Buhari had promised to remove fuel subsidy but still kept paying for it till the end of his tenure and by the time he left office ,the administration had spent 11trillion naira on fuel subsidy. All these disadvantages of fuel subsidy had led to public outcry by members of the public who hitherto were against it. The issue of fuel subsidy became a burning issue in this year’s presidential election and all the candidates of the major parties promised to remove it once elected. Subsequently ,Bola Ahmed Tinubu won the election and was inaugurated as the president of the federal republic of Nigeria.
On the day of his inauguration, he announced that there would no more be fuel subsidy. This declaration led to the increase in petrol price to twice the previous amount. This has caused a very huge impact on the lives of the ordinary citizens. Transporters have doubled their price as a result of the Increase in fuel price and Even in homes which depend on generator for electricity ,the increase in fuel price has made them to budget more for fuel as well as reducing the duration of the use of generator.
The handling of the fuel subsidy by the current administration has led many to believe that the removal of fuel subsidy was a mistake. The removal of fuel subsidy by the government at such a time where no plan has been made to cushion the effects by either the present or previous administration. This had Even led to a threat by the Nigerian labor Congress (NLC) to go on strike in protest of the removal of fuel subsidy. But this was quickly handled by the administration and negotiation between both parties is still ongoing.
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Despite the effects of the removal of fuel subsidy, many still believe it was for the best and that in the nearest future Nigerians would enjoy the benefits of this decision. Only time will tell if this was indeed a mistake or masterstroke by the Tinubu administration.