Fuel subsidy is any government action that lowers the cost of Fuel for every production, and raises the price received by every producer. It’s anything that rigs to other energy activities that count as subsidies as loans and guarantees at favourable rates, price controls government.
President Bola Ahmed Tinubu in his inaugural speech on Monday 29 May, 2023, said fuel subsidies would be scrapped citing budget concerns the decision led to a steep rise in fuel prices and widespread panic buying of fuel, some car and bus companies have been unable to refuel their vehicles.
President Bola Ahmed Tinubu’ decision to remove the fuel subsidy has left Nigerian shock and terrified about the shock on the effects that it will have on their daily lives, many are concerned that they will be unable to meet the cost of education, food and health care.
The government is to yet to suggest any way to mitigate the effects and impact of the decision for people on low income or salary. The Labour Union came out and protests across Nigeria on Wednesday 2, August 2023 to the higher cost of living under president with calls for the government to improve social welfare intervention.
The removal of fuel subsidy in Nigeria has been a hotly debated topic for many years. Proponents of the removal argue that it is necessary to save the government money and to encourage investment in the domestic refining industry. Opponents argue that it will lead to higher fuel prices and increased hardship for Nigerians.
Advantages of Removing Fuel Subsidy includes; Saves government money: The government currently spends billions of naira each year on fuel subsidies. Removing the subsidy would free up this money for other important expenses, such as education, healthcare, and infrastructure development.
Encourages investment in domestic refining: The lack of domestic refining capacity in Nigeria is one of the main reasons why the country has to import fuel at a high cost. Removing the subsidy would make it more profitable for investors to build refineries in Nigeria, which would reduce the country’s dependence on imported fuel.
Reduces corruption: The fuel subsidy program is rife with corruption. There have been many allegations of fuel marketers diverting subsidized fuel to the black market and pocketing the proceeds. Removing the subsidy would eliminate this source of corruption.
Encourages energy conservation: Higher fuel prices would encourage Nigerians to conserve energy and use public transportation more often. This would have a positive impact on the environment.
On the contrast, the disadvantages of Removing Fuel Subsidy are; Increases fuel prices: The most immediate impact of removing the fuel subsidy would be higher fuel prices. This would put a strain on household budgets and could lead to social unrest.
Reduces purchasing power: Higher fuel prices would reduce the purchasing power of Nigerians, making it more difficult for them to afford basic necessities. This could lead to an increase in poverty.
Harms the economy: Higher fuel prices could have a negative impact on the economy by making it more expensive to produce goods and services. This could lead to job losses and slower economic growth.
Increases smuggling: Higher fuel prices could create incentives for fuel smuggling. This would deprive the government of tax revenue and could lead to shortages of fuel in Nigeria.
The removal of fuel subsidy in Nigeria is a complex issue with both potential advantages and disadvantages. The government will need to carefully weigh the pros and cons before making a decision.
Ultimately, the decision of whether or not to remove the subsidy is a political one, and it is likely to be influenced by a variety of factors, including public opinion, the state of the economy, and the government’s priorities.
– Usman Favour
300 Level, Mass Communication Department, Prince Abubakar Audu University Anyigba, Kogi State.
